China bans dirty coal from Australia

The Australian coal industry is scrambling today with the news that China’s National Development and Reform Commission has banned the import of sulphurous or dirty coal. Any coal with more than 16% ash and 3% sulphur is out from 1 January 2015. And who are the prime producers of such coal? Australia and Indonesia. 50 million tonnes of thermal coal comes from Australia, over one third of the total 140 million metric tonnes exported every year. Most of that is mined in the Hunter Valley and goes through the port of Newcastle.

The major reason: to cut air pollution. For instance, in 2012, 25% of Beijing’s energy was produced by coal. The immediate aim is to get rid of dirty coal, but the larger aim is to bring down the amount of coal used for power to 10% by 2017. By 2020 the sale and use of coal will be banned in Beijing’s six districts. To be added are the facts that the increase in coal imports has come to a halt and that while China is the still the largest user of coal in the world, it has also become a global leader in hydro, wind and solar power. The trend is reasonably clear.

What puzzles me is the way this has caught the Australian coal industry by surprise. I recall a few years ago the clearly stated aim of reducing China’s reliance on coal, due to its high price and the pollution effects. Further, demands by the populations in China’s major cities have been loud and clear – clean up the air. So this one has been coming for some time. A further factor is geopolitical: the shift to closer ties with Russia and the Shanghai Cooperation Organization. This includes significant energy deals. Along with BRICS, it makes the efforts by the USA and NATO to ‘isolate’ China, Russia and the others rather futile.

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