Blogging is much harder when all government websites I rely on for my morning entertainment are shut down. This past week, mostly due to a few inquiries from reporters, I have learned a lot about Petroleum Coke.
For those of you not living in Detroit, Petroleum Coke is “a carbonaceous solid derived from oil refinery coker units or other cracking processes.” Or in other words, it is a low quality byproduct of the refining process, which is mostly made up of carbon (90%) and high in sulfur content. Coke itself is a key ingredient to making steel and in the process of making aluminum, yet the pet coke we are talking about here is not of high enough quality to be used in these industries. What makes this stuff politically interesting is that it is a byproduct from traditional petroleum production as well as the new tar (pardon me, oil) sands processing. So ramping up the processing of tar sands will generate more of this essentially free, yet difficult to store byproduct.
The EPA, it appears, will no longer issue permits to burn pet coke in the United States, largely due to air quality concerns. So what do we do with this stuff? In times where there is lots of low cost ocean freight capacity, pet coke gets shipped overseas, where it is burned in electricity generators and cement kilns. Am I making this up?
China’s annual imports of pet coke for the past two years are double of what they were three years ago. To put this in perspective, China’s net imports of oil are 6.2 million barrels per day, which is significantly more than the 0.14 million barrels per day of pet coke from the United States. However, this is some of the dirtiest most carbon intensive fuel to be found.
Depending on who you talk to, once burned it emits slightly or significantly more CO2 than traditional coal (which depends on what type of pet coke and what type of coal you are talking about). Most calculations also do not take into account the CO2 emissions from shipping this fuel over very long distances. Burning this fuel, however, results in significant emissions of SO2, which unless scrubbed out, end up in Chinese citizens’ lungs. This is yet another example of leakage. A valuable resource, which is dirty, is shipped to places where environmental regulation is relatively lax. The other countries buying US pet coke in significant quantities are India, Brazil and Mexico.
We know that short and long run air pollution is bad for human health. Michael Greenstone’s most recent study on the subject showed again the significant economic costs in terms of life years lost of sustained exposure to air pollution. How do we get these fuels out of the global mix? You guessed it. A global carbon tax (or equivalent enforced at the country level). And an SO2 tax. We can continue to play whac-a-mole as Severin said so nicely, yet there are too many pet cokes and too few mallets.
Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the University of California Berkeley. His fields of expertise are environmental and energy economics, with a specific focus on the impacts and regulation of climate change and air pollution.