Exporting global warming? Coal trade and the shale gas boom

Abstract

We examine the effect of the US shale gas boom on the international trade and consumption of coal and emissions. We estimate a structural model that links the domestic to the international coal market and use it to simulate counterfactual scenarios. Our results show that the total quantity of coal traded around the world in the absence of the boom is essentially the same as the actual. Moreover, the change in total coal consumed worldwide is also small. Although a compositional change towards coal with different heat content could have significant environmental effects, we show that this is not the case either. Hence, US coal exports simply displaced other coal exports without affecting the total CO${\hspace{0.17em}}_2$ and SO${\hspace{0.17em}}_2$ emissions. Despite the small overall effects, several countries experience a substantial decrease in their imports of US coal and the associated emissions in the absence of the boom.