China’s unexpected move to reintroduce thermal coal import tariffs of 6% will have a materially negative impact on the viability of the Australian coal export industry according to Tim Buckley, Director of Energy Finance Studies, Australasia, for the Institute for Energy Economics and Financial Analysis (IEEFA).

Mr Buckley has spent many years studying the economic viability of energy projects and companies, and says this latest announcement is just another in a string of serious threats to the demand and viability of the Australian coal exports industry.

“The thermal coal export industry has entered structural decline. This is clearly not cyclical – coal company share price declines of 50-90% over the last 3-4 years show the global equity market is factoring in structural decline as an increasingly central scenario.

“It is not surprising that China is moving to protect its domestic coal industry from further job losses. China will naturally put its own industry needs ahead of the free market as thermal coal demand moves into decline,” Mr Buckley said.

“More importantly, this announcement needs to be considered in the context of the cumulative policy moves by the Chinese government over the last year or so.

“Bringing forward the introduction of the National ETS from 2018 to 2016; introducing maximum coal ash / sulphur content restrictions on coal use in coastal China; doubling the tax on coal-fired power generation; and now introducing coal import duties all strongly support the national strategic agenda to diversify the Chinese electricity sector to move rapidly away from the dependence on thermal coal,” Mr Buckley said.

“These measures all align with China’s clear move towards greater hydro, gas, wind, solar, biomass, and nuclear power generation and greater energy efficiency measures.

“Once again demonstrating that the Galilee Basin in Queensland is a ‘stranded asset’ in the making,” Mr Buckley said.

Dr Adam Smith director of Reef Ecologic and former Director of the Great Barrier Reef Marine Park Authority says, “these economic energy policies from China are good news for both reducing the impact of global climate and the long term protection of the Great Barrier Reef.”

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 trends in global renewable energy.