Coal plays a large role in Australia’s domestic energy system, and Australia is a large exporter of coal. Australian coal output is over 500 million tonnes per year. Almost all coking coal produced and around 70% of steam coal produced is exported. Australia supplies about a fifth of the global steam coal trade. The remainder is used mostly for electricity generation, where it accounts for around 60% of total power output. Coal production in Australia is likely to be on a long term declining trajectory. Export demand is a function of economic, technological and policy developments in other countries, all of which point to the likelihood of falling coal use over time, especially for steam coal. There is a clear prospect of lower coal export demand. It is uncertain how international developments will affect Australia steam coal exports, and there is a clear risk of strong reductions in exports demand. But Australia has very large and readily accessible renewable energy resources which promises to be the country’s energy future. The picture is clearer for domestic coal use. Australia’s coal fired power plant fleet is relatively old with about half the plants and about two thirds of overall generating capacity older than 30 years. At the same time, renewable power has become competitive, and Australia has practically unlimited opportunities for renewable energy installations. New coal fired power stations would not be commercially viable in competition with renewables, and existing coal plants are likely to come under increasing economic pressure as the amount of renewable electricity generation increases. This is likely to cause accelerated closure of coal fired power plants.
|IDDRI and Climate Strategies
|Published - 2018