Wood Mackenzie forecasts a 40 percent fall in thermal coal trade if global temperature rises by only 2 degrees Celsius, according to the company Tuesday.
Wood Mackenzie's analysis of the International Energy Agency's (IEA) 450 scenario, estimates a reduction in trade in thermal coal from an estimated 900 million tonnes in 2016 to 527 million tonnes by 2035.
Prakash Sharma, research director of global coal markets for Wood Mackenzie, said in a company statement that demand in seaborne imports for thermal coal is expected to fall by 40 percent by 2035.
Asia, Europe and the Americas will import 433, 80 and 15 million tonnes, respectively, in 2035 from 673, 170 and 39 million tonnes respectively estimated for 2016.
"The impact on prices is hard to predict in a carbon-constrained world, but they will undoubtedly will be lower," Sharma said
Wood Mackenzie’s analysis of the IEA 450 scenario also shows:
- A two degree Celsius limit on temperature rise would mean a sharp reduction in the share of coal-fired generation from 41 percent in 2013 to 16 percent by 2035.
- Australia would be impacted less than most of its competitors due to higher quality of its coal.
- Prices would likely fall significantly and stay below real $50 per tonne in the long-term.
"The IEA 450 Scenario for 2035 is based on massive improvements in energy efficiency and an increased share of nuclear, renewables and gas in supplying power," the report said.
The report also revealed that China and India have options to support domestic coal industry and restrict imports.
"Our analysis suggests demand for high-energy bituminous coals will be more resilient compared with low energy lignite-type coals. As a result, we expect Australian exports to fall more slowly than the rest. Australian exports will decline from 210 million tonnes in 2016 to 135 by 2035. In comparison, Indonesian exports will decline from 340 million tonnes in 2016 to 193 by 2035. Colombia, Russia and South Africa combined will export less than Australia in 2035," Sharma said.
By Gulsen Cagatay
Anadolu Agency
gulsen.cagatay@aa.com.tr