MEASURES aimed at limiting a global average temperature rise to two degrees Celsius would dent Australian thermal coal exports, albeit not as much as competitor coal producing nations.
That’s the analysis of a new report by the Wood Mackenzie group that also predicts a 40% fall in the international thermal coal trade if that two-degree limitation is achieved by 2035.
The report was released soon after the USA and China formally ratified the COP21 Paris climate agreement during the G20 summit in China.
Wood Mackenzie research director of global coal markets, Prakash Sharma, said Australia would be impacted less than most of its competitors due to higher quality of its coal but would still see exports decline 35% by 2035 from current levels.
“Our analysis suggests demand for high-energy bituminous coals will be more resilient compared with low energy lignite-type coals,” Mr Sharma said.
“As a result, we expect Australian exports to fall more slowly than the rest. Australian exports will decline from 210 million tonnes in 2016 to 135 by 2035.
“In comparison, Indonesian exports will decline from 340 million tonnes in 2016 to 193 by 2035. Colombia, Russia and South Africa combined will export less than Australia in 2035.”
Thermal coal (also known as steam coal) is widely used in electricity production, a contrast with metallurgical or coking coal that is to smelt iron ore for steel.
Wood Mackenzie argue the reduction in thermal coal trade in thermal coal, from an estimated 900m tonnes for 2016 to 527m tonnes by 2035, will likely lead to unintended price consequences if market consolidation occurs.
The IEA 450 Scenario for 2035 is based on big improvements in energy efficiency and increased use of nuclear, renewables and gas in energy supply.
This story was originally published on ABHR affiliate Lloyd’s List Australia.