Australia faces rapid decline in coal exports amid global push for decarbonisation

An analysis by modelling firm Climate Resource has warned that overseas demand for Australian thermal coal could collapse far faster than many industry stakeholders expect, with exports potentially plunging by as much as 78% by 2035 relative to 2024 levels under a “low demand” scenario tied to a 1.8C‑consistent warming pathway. Metallurgical coal , used in steel‑making , is modelled to fall more slowly but could still decline about 54% by 2035. According to the original report, that steep thermal‑coal drop assumes major buyers such as China and India shift toward preferencing domestic supplies rather than imports.

The warning sits alongside other recent modelling and market signals that point to an accelerating global retrenchment in coal trade. Researchers at the Australian National University modelled a marked reduction in China’s seaborne thermal coal imports, finding that imports could fall by at least 26% from 2019 to 2025 and, under ambitious policy scenarios, by as much as 45% , a shift the lead author said would hit large exporters like Australia hardest. Industry trading floors in India have also signalled waning import demand: delegates at a major conference in New Delhi projected India’s thermal coal imports would decline for a second consecutive year in 2025, with estimates ranging from a modest fall to a roughly 10% plunge, reflecting higher domestic production, record stockpiles and switching within industries to cheaper fuels.

Policy moves by customer countries are reinforcing those market trends. South Korea, one of Australia’s biggest thermal coal buyers, has committed to phasing out coal for power generation and joined international initiatives to end the “unabated” use of coal, a development observers say will further weaken long‑term export prospects. India has publicly signalled an ambition to eliminate coal imports by 2026, a direct threat to current Australian export volumes if realised.

Domestic analyses echo the external research. Treasury modelling released alongside Australia’s recent emissions target review indicates the combined value of coal and gas exports could drop by roughly half by 2030, with estimates of annual export earnings falling by more than A$60 billion under scenarios consistent with strengthened global and domestic emissions action. Energy economists have interpreted those numbers as suggesting an earlier and steeper downturn in fossil‑fuel earnings than many regions and firms have planned for.

Climate Resource’s decarbonisation lead Anita Talberg told AAP: “We should be planning for that low‑demand case because there’s a real possibility.” She added: “We need to plan for a rapid phase‑out, not a gradual one.” The modeller argues transition planning must be geographically nuanced , noting that New South Wales’ coal profile is dominated by thermal coal while Queensland is more metallurgical‑focused , and that policy and investment needs to accelerate to help coal regions adapt.

The policy imperative is clear in international fora: more than 90 countries backed the Belem Declaration at recent climate talks, supporting a just and speedy transition away from fossil fuels. Brazil’s government has moved to fast‑track a national roadmap away from oil, gas and coal, setting a precedent that analysts say will increase pressure on major exporters to chart credible exit strategies.

For Australia , a major supplier of both thermal and metallurgical coal , the combination of modelling, buyer commitments and Treasury projections amounts to a strategic challenge for industrial decarbonisation planning. Industry data shows demand for critical minerals and green metals is expected to grow as the world electrifies and builds out low‑carbon infrastructure; policy makers and firms have pointed repeatedly to critical‑minerals supply chains as a natural growth pathway to offset shrinking fossil‑fuel revenues.

That transition, however, is not automatic. Analysts caution that without accelerated planning and targeted investment, regions dependent on coal exports risk being caught off guard by a more rapid demand shock. According to the original report, the choices made now , on workforce retraining, investment in alternative industries, and the timing of mine closures , will determine whether communities and the national economy manage an orderly shift or face abrupt economic stress.

The company claims it is already preparing for change, but the modelling and international commitments suggest Australia must move faster if it is to avoid the economic pain of a suddenly contracting coal market while capturing the industrial opportunities of decarbonisation.