According to recent research performed by experts at The Australian National University, China’s need for coal imports, particularly from Australia, will decline dramatically by 2025. (ANU).
The researchers looked at China’s decarbonisation ambitions as well as investments in local railroads in order to minimize reliance on seaborne coal imports and improve the country’s energy security.
Between 2019 and 2025, its custom-built model predicts that China’s thermal imports will drop by at least 26%, from 210 megatons to 155 megatons per year. If China enacts stringent climate regulations, thermal coal imports could fall to 115 million tons per year in 2025, a 45 percent decrease.
Dr. Jorrit Gosens, the study’s lead author, said the modeling reveals that major coal exporters like Australia would suffer the most from the changes.
Dr. Gosens stated, “Our findings are unequivocal; Beijing’s goals for rapid decarbonisation and energy security herald the end of Australia’s current coal export boom.”
“And this isn’t something that will happen in the far future; it will happen right now.” According to our calculations, Chinese thermal coal demand in 2025 will be between 30 and 40 megatons, down from over 50 megatons in 2019.
“Australia is the country that stands to lose the most when it comes to coking coal imports. “Coking coal exports from Australia to China are likely to drop to between 20 and 22 megatons in 2020, down from around 30 megatons in 2019.”
According to the researchers, China accounts for roughly a quarter of Australia’s thermal and coking coal exports in typical years. Dr. Gosens advises that even if the current import ban is repealed, Australian businesses and politicians should not expect an increase in demand for Australian coal.
“Our findings are clear; Beijing’s plans for rapid decarbonization and energy security signal the end for Australia’s current coal export boon, And this isn’t going to happen far off into the future; it is imminent. Our modeling predicts Chinese demand for Australian thermal coal will fall to between 30 and 40 megaton in 2025, down from about 50 megaton in 2019.”
Dr. Gosens said.
“Our findings primarily illustrate that China’s investments in coal transportation infrastructure have considerably lowered the cost of China’s cutting imports, whether to impose punitive trade embargoes or to support domestic mining sector demand and employment,” Dr. Gosens stated.
Even if Australia’s current political differences with China were to be resolved, it should expect Chinese demand for its coal to be substantially below pre-conflict levels and to continue to erode.
Even if the Chinese restriction on coal imports from Australia continues in place, any reduction in Chinese demand affects. Such reductions would allow current Chinese suppliers to seek new customers in the global seaborne sector, displacing Australian suppliers.
For many years, China has been investing extensively in coal transportation infrastructure in order to lessen its reliance on foreign energy. Beijing’s determination to reduce its reliance on global energy markets has been strengthened by recent market volatility. “
One of the study’s co-authors, Professor Frank Jotzo, predicted that the changes would have long-term implications for the Australian economy as well as political debates over climate change.
Professor Jotzo remarked, “Our findings demonstrate how energy security concerns and a fragmented global security and trade landscape, combined with climate action, are putting a strain on coal—not in the distant future, but now.”
“More than the short-term profits from current energy market volatility, governments and investors would be prudent to incorporate these findings into their medium to long-term view.”
“The coal industry and Australian governments should be very concerned about our findings.” Coal will be in short supply. Alternative economic futures must be encouraged. In a low-emissions society, Australia’s resource and energy businesses have every chance to thrive.
