Historic increase in Kentucky coal exports results in growth of human welfare

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According to state data, 2012 was officially a record year for coal exports in the commonwealth. By the time Kentuckians rang in the New Year with a bourbon or two, they had exported $73.5 million worth of coal - up by 78% from 2011.

The most significant contribution to the commonwealth's increase in exports was a fall in domestic coal demand, due in no small part to a decline in the price of natural gas - the most competitive alternative energy source to coal. But the growing demand for coal in foreign nations also played a crucial part of the story as rapidly industrializing countries like China and India require more and more electricity for citizens amassing more purchasing power each year.

And the increase in coal exports nationwide backs this story. According to the U.S. Energy Information Administration (IEA), total U.S. coal exports to China rose more in 2012 than did even Kentucky coal exports - a whopping 107% increase from 2011. And China's demand for the power found within the black rock is not likely to wane any time soon. Since 2000, Chinese coal consumption has accounted for 82% of the globe's increase in coal demand.

So what does this mean for Kentuckians, citizens who have a deep-seated coal mining culture and rely on the black rock for some of the cheapest energy rates in the nation, but who also care deeply for their picturesque bluegrass, rolling hills, and some of the purest water sources in the country?

That depends on how one subjectively weighs the costs and benefits of Kentucky's energy sector. There are some who would weigh the costs of coal and coal-fired power plants much heavier than the benefits such an energy source has brought to the impoverished people of east Asia, the Indian subcontinent, and even Appalachia. Without such a proven and reliable cheap energy source, these people would not have the steady increase in standard of living we have begun to see over the past decade. To some, the speculative and far-into-the-future costs of increased carbon emissions trump all, no matter the benefits brought to their fellow human beings.

But those with a more humanistic viewpoint disagree, and see the way Kentucky is contributing to the growth of human welfare in developing regions of the world as a beautiful thing. The incredible increase in Asian coal demand and the growth of these economies over the past decade demonstrate that no people need Kentucky's most valuable resource as much as developing nations - and Kentuckians deserve the rewards such contributions bring.

The so-called "paradox" of how to view this export phenomenon is described by IEA Executive Director, Maria van der Hoeven:

"To the degree that affordable coal has allowed hundreds of millions of people in emerging economies to enjoy the conveniences that the industrialized world began taking for granted long ago, its proliferation is a blessing," she wrote. "Yet for a society increasingly concerned about the amount of carbon it is sending into the atmosphere, the surge in coal burning is not good news."