SLOWING demand for coal in China is turning the coal production industry into a major financial risk for investors, it has been warned.
Demand for coal in China could peak as early as 2016, as the country brings in measures to tackle air pollution and boosts its use of renewables, gas, nuclear power and energy efficiency, the Carbon Tracker Initiative (CTI) said.
The CTI also warned that governments and policy makers needed to address coal emissions in order avoid catastrophic climate change, while new technology has the potential to out-compete coal and provide cheap renewable energy.
"Investors need to ask whether the writing is on the wall for coal as constraints continue to be added," warned the report by the financial specialists who assess climate risk and investment.
Efforts by China to cut imports will cause a "seismic shift" in the global coal market, with impacts on coal mined for export in the US, Australia, Indonesia and South Africa, a new report from the initiative said.
The construction of new coal plants in Europe and the US will be severely constrained in western markets as attempts are made to tackle emissions, and India will have to overcome infrastructure and financial constraints if it wants to import more coal.
Investment to the tune of £68bn in future coal mine expansion and development would be in excess of requirements under forecasts of lower demand for coal, the report said.
The analysis suggests that mines with high costs will not be profitable, will lower demand cutting the price of coal imports.
Some of the world's biggest new coal projects in Australia's Galilee Basin, which have provoked controversy over the damage exporting coal from the region could do to the Great Barrier Reef, are already "out of the money" under low-demand scenarios.
James Leaton, research director at CTI, said: "The world's coal industry is playing musical chairs with demand - every time the music stops another piece of the market is being taken away."
The initiative's chief executive Anthony Hobley added: "King Coal is becoming King Canute, as the industry struggles to turn back the tide of reducing demand, falling prices and lower earnings."
The findings of the report will be presented at a UN summit on climate change in New York this week, which aims to drive action and momentum ahead of talks in Paris next year, at which it is hoped a new global climate treaty will be secured.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here