SYDNEY, 08 January 2014 – The internationally renowned scientific journal Nature today published new research by University College London (UCL) stating 95% of Australia’s coal reserves are unburnable by 2050 if the world is to have a 50% chance of avoiding global warming in excess of 2 degrees Celsius.

The research finds global fossil fuel reserves are approximately three times higher than the amount that can be safely burned by 2050.

“This research is further affirmation that undeveloped export thermal coal proposals in Australia – such as the Galilee Basin – are far beyond the carbon budget,” said Tim Buckley, Director of Energy Finance Studies, Australasia, for the Institute for Energy Economics and Financial Analysis (IEEFA).

“With the world moving towards a lower carbon-intensive energy system, it is a stark reminder that these unexploited reserves and related rail and port infrastructure are stranded assets in the making. Wise investors are taking their money elsewhere.”

Alongside the proposed Galilee Basin rail infrastructure and the Abbot Point coal port, this report highlights the financial risks associated with the soon to be commissioned $3 billion Wiggins Islands Coal Export Terminal (WICET) and the recently approved $4.8 billion Newcastle Terminal 4 expansion proposal being pursued by the NSW Government.

“This UCL research is another clear signal the thermal seaborne coal markets have entered structural decline,” said Buckley.

“The key question now for Australian decision makers is how to manage the inevitable transition.”

Policy action leadership has been brought to the fore by the China-US Climate Agreement jointly announced in November 2014. Australia is increasingly at risk of being left in the cold by this global policy direction.

The research is also a wake up call for proponents of Carbon Capture and Storage (CCS). According to UCL, even in the highly unlikely scenario in which CCS is in place, 93% of Australia’s coal reserves still remain unburnable – only a 2% difference from a non-CCS scenario.

The research additionally states that CCS is too expensive, too late and too inefficient. This echoes findings from the International Energy Agency (IEA) Medium-Term Coal Outlook, 2014, which stipulates CCS is well behind schedule and yet to be commercially proven.

“Carbon Capture and Storage is evidently no white knight for the thermal coal export industry,” said Buckley.

Tim Buckley is the Director of Energy Finance Studies, Australasia for the Institute for Energy Economics and Financial Analysis. He has 25 years of financial markets experience, including 17 years with Citigroup culminating in his role as Managing Director and Head of Australasian Equity Research.

Mr Buckley has spent the past five years investigating the trends in global renewable energy and as a result questions viability of the Galilee developments. Tim has produced detailed reports on Lanco Infratech, GVK and Adani, plus the Indian electricity sector.