Coal news and updates

CHRIS UHLMANN: China will hit peak thermal coal demand by 2016. That's the conclusion of a report to be presented later today at the climate summit in New York.

 

The report, produced by the non profit think tank Carbon Tracker, says this means there should be a rethink of all GreenFields coal developments, including Australia's Galilee Basin.

 

Energy Transition Advisors also had a hand in the report and its head, economist Mark Fulton, spoke to Sarah Dingle.

 

MARK FULTON: I've been working with the Carbon Tracker Initiative looking at the demand, supply and capital expenditures in the thermal coal industry. And one of the most important drivers of that report is indeed the fact that Tim Buckley of IEEFA (Institute of Energy Economics and Financial Analysis ) forecasting coal demand in China to peak in 2016. 

 

SARAH DINGLE: That's pretty soon, on what does he base this prediction?

 

MARK FULTON: It's not just policy, a lot of people always talk about policy, climate policy, air policy and so on. Certainly that plays a role, but he's done a very detailed analysis of the build up in renewable energy, the switch towards gas, the push on efficiency is very important and just the trends that already show that China's demand has slowed down dramatically. 

 

SARAH DINGLE: We've also got global per capita emissions figures out today, which show that Chinese emissions per capita are rising, they are now greater than per capita emissions in Europe. 

 

How does peak demand by 2016 square with this picture of Chinese per capita emissions rising? 

 

MARK FULTON: Yeah, the data shows that indeed, Chinese coal demand has been rising very strongly in the last couple of decades, particularly the last decade, and hence those figures are very concerning. 

 

What we're saying is now, we're getting... we're going to be starting to look for the peak in that over the next few years with coal you know, being a key indicator. 

 

What we're saying is that demand will be less than the industry thinks and therefore as a starting point it's important for the industry not to go out and spend large amounts of capital expenditure on new GreenField mine sites, which we don't think are warranted even on current policy.

 

SARAH DINGLE: How does prediction of peak demand for coal in China by 2016 square with a McKinsey report that was out in July predicting that coal demand in China would grow around 7 per cent per annum till 2030?

 

MARK FULTON: Well, I don't know, we haven't, we've done our work, they've done theirs for market, you've got to have a look at it. 

 

You know, we think very importantly also, I should've said, the rebalancing of the Chinese economy, that growth is shifting towards less intense carbon type of industries and consumption. 

 

SARAH DINGLE: If Chinese coal demand does peak, what will be the flow on effect for nations like Australia, which supply China with a lot of coal?

MARK FULTON: We think that what we call a breakeven price for development will be more like $75 a tonne, rather than what I think the industry hopes might be closer to $100. 

 

There are stronger implications and our conclusion is that there's not a lot of need for new GreenField mines to come online and in fact, in our report there is a case study on the Galilee, which is written by Tim Buckley again. 

 

CHRIS UHLMANN: Economist Mark Fulton in New York speaking there to Sarah Dingle.

 

 

Source: http://www.abc.net.au/