US plan to cut coal bad news
THE US’s plan to curb its coal use will ripple across the globe to Asia, where the world’s biggest consumer and miners are balancing demands for cleaner air against cheaper energy.
THE Obama administration’s plan to curb US coal use will ripple across the globe to Asia, where the world’s biggest consumer and miners are balancing demands for cleaner air against cheaper energy.
The hard line in President Barack Obama’s Clean Energy Plan released on Monday compounds pressure from a similar stance by China, the world’s biggest coal burner and carbon emitter, to reduce reliance on the fuel.
It has also given ammunition to opponents of the hydrocarbon in top exporting nations including Australia in the run-up to international climate talks in Paris in December.
“The news out of the US will toughen the rhetoric against global coal use,” said Helen Lau, an analyst at Argonaut Securities (Asia) in Hong Kong. “For coal as an industry, it’s definitely bad news.”
The rules, partly designed to put the US on track to meet the goal Mr Obama laid out in talks for an international climate accord, come as prices struggle to recover from their lowest point in almost eight years amid slowing growth in China.
As countries from China to Brazil make commitments to cut carbon emissions, Australia’s coal miners say technology exists to limit pollution from their fuel, which releases twice as much carbon when burned as gas. And, as Glencore’s head of coal assets Peter Freyberg said, it is “the cheapest way of powering people out of poverty”.
Meanwhile, Australia’s gas industry is promoting itself as a cleaner-burning alternative.
“The civil war going on between the gas and coal industry is not helpful,” Dean Dalla Valle, chief commercial officer at BHP Billiton, the world’s biggest miner, said in Sydney. “It plays into the hands of others.”
Miners in Australia are focused on how China and other buyers in Asia respond to Mr Obama’s plan.
Coal was Australia’s secondbiggest export earner with shipments valued at about A$40bn ($29bn) last year, according to the figures of Minerals Council of Australia.
“More important is what’s happening in China,” said Mathew Hodge, a Sydney-based analyst at Morningstar. “China, Japan, and South Korea — they are the customers. What they decide is really important.”
China will limit coal consumption to about 4.2-billion tonnes by 2020, reducing the fuel’s share of its energy generation to less than 62%. Coal accounted for 64% of its energy consumption last year, according to the country’s National Energy Administration.
Shipments by China Shenhua Energy Company, the nation’s largest coal producer, dropped 24% in the first half of this year from the same period a year ago. It blamed falling consumption and “heightened pressure for environmental protection”.
“Coal is on its knees,” said Tom O’Sullivan, founder of Mathyos, a Tokyo-based energy consultant. “Declining usage in China and environmental issues in the developed and developing worlds may be putting unprecedented pressure on the sector.”
In a plan formally adopted earlier this month, Japan said it expected coal to generate about a quarter of the nation’s electricity by 2030.
The country will need to depend on new coal technology that is more than twice the cost of traditional plants.
It will also need to restart a significant number of its 43 nuclear reactors, shut since the 2011 Fukushima disaster.
Declining demand among US power plants may force the country’s coal to be exported, at a time when benchmark prices in Asia have fallen about 50% in the past four years.
Coal is on its knees. Declining usage in China and environmental issues may be putting pressure on the sector