The U.S. coal industry is betting on China’s appetite for coal to justify its proposed Pacific Northwest terminals. But, the reality is that public opposition to coal is growing … and the Chinese government is creating policies to cap coal production and consumption.
It’s clear that addressing China’s air pollution crisis will require reducing coal consumption. In response to the air pollution crisis, Deutsche Bank issued a report on measures needed to bring air quality to acceptable levels. Their conclusion was that to meet national air quality targets even by 2030, China’s coal consumption will need to peak and decline within this decade. That would have big impacts on the global coal market – as Bloomberg News reported, “Global shipments of thermal coal could be 18 percent lower than forecasted by 2015 should China, the biggest importer, toughen measures to curb air pollution to safe levels.”
In fact, this trend has begun, and a note from Goldman Sachs predicts that “2013 will represent a watershed event for the seaborne market” because China’s thermal coal imports will fall this year, the first time that has occurred since the financial crisis in 2007-2008.
The prospect of reduced Chinese coal demand is already impacting the business plans of coal producers. A proposed coal export terminal in Australia was recently put on hold with the project backers citing “weak Asian demand,” as well as community opposition. Immediately after the Deutsche Bank report, Peabody’s stock fell 4.6%, “the result of an analyst citing the potential for Chinese coal demand to wane as the country fights pollution.”
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