Australia dominates the list of nations developing or expanding coal mines aimed at export markets, tapping record demand for the carbon-polluting fuel, which is projected to edge higher until at least 2027.
The analysis from the International Energy Agency, released at its Paris headquarters on Wednesday, found the world’s consumption of coal is set to rise 1 per cent this year to 8.77 billion tonnes.
Growth in demand for the fossil fuel in China, India and developing nations in Asia is more than offsetting a further slowdown in Europe and North America, which have largely turned their back on a fuel that is a primary contributor to climate change.
Still, the rapid deployment of clean energy technologies is reshaping electricity generation, where two-thirds of the world’s coal is used, said the IEA’s director of energy markets and security Keisuke Sadamori.
“As a result, our models show global demand for coal plateauing through 2027 even as electricity consumption rises sharply.”
A new peak for coal use comes after the COP29 international climate summit in Baku, Azerbaijan, ended without a pledge to transition away from fossil fuels, and as 2024 looks set to be the hottest year on record, according to the World Meteorological Organisation.
Australia, the biggest metallurgical coal exporter, is expected to become the fourth-largest producer of coal overall by 2027, overtaking the US and Russia.
Gavan McFadzean, manager of the climate change program at the Australian Conservation Foundation, said the IEA’s latest forecast flies in the face of what climate science has been saying for years: that to keep the global temperature rise to within the critical 1.5 degree threshold, “we must stop burning coal now”.
He said the report “confirms the Albanese government’s cynical two-faced approach to climate action” because even as it is doing an admirable job replacing coal with renewables in the domestic electricity sector, it is “letting rip” approving coal for export.
Producers meanwhile argue that modern coal technologies can help sustain global climate goals, and point out that coal remains essential to key sectors including steel, cement and aluminium and those critical for renewable energy and battery storage.
Matthew Rennie, co-founder at energy transition advisory Rennie, said the world was approaching a crossroads in climate policy as the rhetoric around net zero ambitions meets the realities of a society needing more power and steel than ever before.
“The next five years will present hard choices for the Australian government as Australian coal producers seek to expand production to meet growing markets, in an environment where international pressure will support increasing climate legislation,” he said.
Demand for coal is expected to rise only marginally, reaching 8.87 billion tonnes by 2027, according to the IEA. Of this year’s total, China accounts for 4.9 billion tonnes, 30 per cent more than the rest of the world put together. Due to slow progress on carbon capture and storage, emissions from coal are not expected to fall during that period.
While the number of projects for new or expanded coal mines targeting export markets dropped by 31 million tonnes a year compared to the IEA’s last report, Australia easily tops the list of countries pushing ahead with new mines.
Coal represents Australia’s second-biggest commodity export earner after iron ore, accounting for an expected $75 billion of exports this financial year, according to the government.
Some 62 per cent of coal projects under consideration are in Australia, easily ahead of Russia’s 11 per cent and South Africa’s 10 per cent, the IEA said, while noting uncertainty around the figures because of a lack of transparency in countries such as Indonesia. The IEA cited 47 coal projects in Australia at either an advanced or less advanced stage.
Documented NSW government approvals for projects include an expansion at Narrabri, an underground mine at Ravensworth and a project at Mount Pleasant. In the US and Canada, only 13 mines are in the project pipeline, mostly involving metallurgical coal, while there are none in Europe.
Australia also stands out when it comes to coal royalties, with Queensland imposing by far the highest worldwide.
Royalties accounted for 22-28 per cent of total mining costs in Queensland in the last three years, netting the state government more than $US9.1 billion over that time.
The IEA said coal exporters overall were making “solid” profits. It noted the price of Australian thermal coal of about $US140 per tonne is up from $US90 per tonne on average at the end of last decade.
Production of coal this year is set to top 9 billion tonnes for the first time, with the three largest producers – China, India and Indonesia – all posting all-time highs.
