By Sophie Vorrath. RenewEconomy, December 16 2014
In yet another sign that the global coal market is in terminal decline, the federal government’s mid-year economic and fiscal outlook (MYEFO) has predicted that thermal coal prices will flat-line through to mid-2016 at $US63 per tonne – well below current market expectations.
The gloomy Treasury forecast for coal reinforces multiple analyst warnings that Australia risks being saddled with billions of dollars in stranded fossil fuel assets, as prices fall, climate restraints kick in and fossil fuel projects become uneconomic and/or unsustainable.
Last week, UK Energy Secretary Ed Davey warned that fossil fuel companies could become “the sub-prime assets of the future… Investing in new coal mines is going to get very risky”.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), the MYEFO coal forecast is further evidence that Australian governments – both state and federal – should exercise extreme caution on any plans to commit taxpayer funds to building infrastructure to open up the Galilee Coal Basin in Queensland.