sectoral economic costs and benefits of ghg mitigation - IPCC

Ron Knapp
The top seven coal export countries covered 85% of the global coal trade in 1998: Australia,
USA, RSA, Indonesia, Canada, PRC and Colombia (Russia and Poland accounted for a further
10%).
Around 36% (189 Mt) of coal exports are destined for the global steel industry with the
remainder for energy, principally for the generation of electricity, and other industrial energy
requirements.
The metallurgical coal export trade (for the steel industry) is dominated by Australia, USA and
Canada, who together supply over 80% of the market. Under Kyoto, this coal trade market sector
is less exposed to reductions unless overall global economic activity is affected. However, the
location of the trade could be susceptible to re-location due to changes in cost-competitiveness
imposed by Kyoto on Annex B steel producers relative to non-Annex B steel producers [eg a
shift from Japan to China, Republic of Korea (ROK) and Chinese Taipei].
The thermal coal trade represents about 334 Mt (64%) of total traded coal – and Annex B
destinations accounting for 2/3 rds of this thermal coal trade.
The RSA, Indonesia, China and Colombia are more exposed than the three leading Annex B
export countries due to coal type. These four leading developing country coal exporters have
high exposure to the thermal market:
Colombia 95+% RSA 90%
Indonesia 90% China 85%
The RSA exports over 60% of its thermal coal to the vulnerable EU-15 destinations.
Colombia exports 70% to the EU-15 … and has further Annex B exposure in the US
market (10%) … almost all of Colombia’s export tonnage enters the more vulnerable
thermal coal market. China has an overall Annex B coal exposure of 48% – but slightly lower
(45%) in the thermal sector. [China’s metallurgical coal trade is dominated by two customers:
Japan and ROK.] Indonesia’s thermal/steam coal exports have achieved a stronger non-Annex B
customer base with only around 40% being shipped to Annex B destinations.
On the other hand, Canada has around 80% of total coal exports entering the metallurgical
market sector.
The USA was around 60% in 1998, but the global market conditions of the past two years will
see this ratio increase as the US producers reduce the level of coal made available to the thermal
export market due to declining world prices.
Australia, the largest exporter, supplied around equal amounts to both market sectors in 1998
(total exports of 167 Mt). The FOB value of coal exports was about $A8.3 billion accounting for
around 13% of Australia’s commodity exports (10% of total merchandise exports and 7.5% of
total exports of goods and services). Australia delivers just under 50% of its total steam coal
exports to Japan.
The circumstances of the coal industry in Australia, USA and Canada show a further difference:
Australia exports around 75% of production while Canada’s coal industry is almost 90% exportfocussed.
The USA is the reverse with exports accounting for less than 8% of production in
1998, with a decline to around 5% in 1999.
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