China’s pledge to cut project finance is the new normal for coal

Australia and Indonesia are the world’s biggest coal exporters. They are now facing an accelerated decline in the global demand for their coal shipments. This is after China said that they would stop building coal-fired power plants overseas. Chinese President Xi Jinping announced their new move at the United Nations General Assembly. This has prompted many environmental campaigners to predict a direct impact on major coal exporters.

Beijing’s pledge is the latest blow for Australian and Indonesian coal miners. Because more energy systems globally make the shift to renewables. Pandu Sjahrir, chairman of Indonesia Coal Miners Association, when asked whether coal miners must accept that global demand may have peaked, said that he thinks it is the new normal. More than a decade, Australia and Indonesia have been the dominant global coal exporters. More than half of all coal shipments have been covered by them both. They also export more coal than they consume. Australia ships out more than 75% of its coal and Indonesia exports 60% of production.

Julien Vincent, executive director at environmental group Market Forces said that Australia’s coal industry has been gambling on increasing coal-fired power generation in developing countries to replace declining long-term demand in places like Japan, South Korea and Taiwan. Consultants Wood Mackenzie said China’s pledge to stop financing new coal-fired plants abroad puts at risk 29 gigawatts of coal-fired plants. Rystad vice president Xi Nan said that as per this announcement, the decline from 2025 onwards will be slightly steeper than previously expected. Yancoal Australia Ltd is the Australia’s largest pure-play coal producer and leading thermal coal exporter.

They stated that they are expecting continuous demand for coal across Asia. A spokesperson from there stated that Australia will continue to play a critical role as a primary source of premium grade metallurgical and thermal coal. The Minerals Council of Australia (MCA) said that the governments and industry in Asia should step up efforts to cut emissions through measures like carbon capture. MCA Chief Executive Tania Constable said that 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.