MELBOURNE JAKARTA Reuters - Australia and Indonesia, the world's biggest coal exporters, face an accelerated decline in global demand for their coal shipments after China said it would stop building coal-fired power plants overseas, analysts, environmental groups and industry officials said.
President Xi Jinping announced the move at the UN General Assembly on Tuesday, prompting environmental activists to predict a direct impact on major coal exporters.
Beijing's pledge is the latest blow to Australian and Indonesian coal miners as more energy systems make the shift to renewables, but industry continues to push for role of coal in global energy mix.
I think it's the new normal, said Pandu Sjahrir, chairman of Indonesia Coal Miners Association, when asked whether coal miners must accept that global demand may have peaked.
For more than a decade, Australia and Indonesia have been the dominant global coal exporters, accounting for more than half of all coal deliveries.
Both countries export more coal than they consume, with Indonesia dispatching more than 75% of its coal, while Australia exports roughly 60% of the production, based on the BP Statistical Review of World Energy 2021.
Julien Vincent, executive director of the environmental group Market Forces said: Australia's coal industry has been gambling on increasing coal-fired power generation in developing countries to replace declining demand in places like Japan, South Korea and Taiwan. Analysis by Market Forces shows that since the Paris climate agreement in 2015, the global coal power and energy pipeline has fallen by 76%.
China's statement will only accelerate this trend, Vincent said.
Estimates released earlier this year by Indonesia's Department of Industry see coal exports continuing to increase for both countries - to 213 million tonnes for Australia and 442 million tonnes for Australia in 2023.
Will China's concession to build new coal-fired plants in Indonesia put at risk 29 gigawatts of coal-fired plants the firm had expected to be built in Indonesia over 2025, which could result in higher coal exports from there.
Rystad Energy consultants forecast that global coal demand will peak in 2024 at close to 10,000 terrawatt hours TWh. However the consultancy also said they would have to change their outlook for a fall to 6,000 TWh by 2040 due to China's decision to ban the development of coal plants abroad.
In all probability, Rystad vice president Xi Nan said that the decline from 2025 onwards will be slightly steeper than previously expected.
Yancoal Australia Ltd., Australia's leading pure-play coal producer and leading thermal coal exporter, said it expects continuing demand for coal in Asia for power generation and to make steel and concrete, and said its lenders and investors still see the company as a profitable business.
Australia will continue to play a critical role as a primary source of premium grade metalurgical and thermal coal, said a Yancoal spokesperson.
On Minersgroups New Hope Corp and Whitehaven Coal declined to comment.
The Minerals Council of Australia MCA said governments and industry in Asia should step up efforts to reduce emissions through measures like carbon capture and storage at existing plants.
More of this is what's needed to both reduce emissions and continue to allow countries a full suite of energy options for their development, MCA chief executive Tania Constable said.