August 3, 2015 Read More →

Seaborne Thermal Coal: ‘Dead, or at Least in Permanent Structural Decline’

Peter Hannam for The Sydney Morning Herald:

Tim Buckley, a former Citigroup analyst now with the Institute of Energy Economics and Financial Analysis, said India is committed to accelerate the take-up of renewable energy fivefold, raising the clean energy capacity in the nation to 175 gigawatts by 2022 from about 37 GW now.

He notes a recent auction for 300 megawatts of solar secured average winning bids of just 5.35 rupees (11 cents) per kilowatt-hour – locked in for 25 years, without an adjustment of inflation. That compares with a landed coal price of 6 rupees and 5.75 rupees for gas.

IEEFA takes a starkly contrarian view of India’s coal import appetite, predicting such imports will cease by 2021.

And China’s prospects for coal demand appear to be fading too, Buckley says, noting Shenhua’s 5.8 per cent drop in coal-fired power in China, compared with a year earlier.

In sum, the seaborne coal trade is “dead, or at least in permanent structural decline,” he says, with the IEEFA tipping a 30 per cent decline this decade from a peak in 2013.

Hard times for the coal industry may get a lot tougher yet

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