Australia’s coal industry could lose $US25 billion ($32 billion) per year if coal mines become stranded assets in response to decarbonisation targets, researchers from Imperial College London, Queen Mary University of London and Deloitte have found.
The research, which was publish in scientific journal Joule, modelled the risks of “stranded assets” for coal investment under possible decarbonisation scenarios.
The scenarios included business as usual, where investment in coal mining and consumption continues at today’s levels, and a sustainable pathway where coal consumption is reduced to keep global warming well below 2 degrees Celsius.
According to the researchers, the sustainable pathway considered that a third of today’s coal mines would become stranded assets by 2040, which means they will become economically unviable before their mine life runs out.
In response, the researchers predict coal mines will be forced to be scrapped under the sustainable scenario, which could possibly cause Australia to lose $US25 billion.
More than 2 million coal industry related jobs could also be at risk under this scenario.
Imperial College London lead researcher Iain Staffel said financial institutions and governments must prepare for the looming change by divesting early from coal and fund the retraining of coal workers.
“This is not to say that not all new coal investments – such as the deep mine planned Cumbria – will be unprofitable, but investors must carefully assess the financial as well as reputational and environmental risks when pursuing new coal mining projects,” he said.
Staffel said the job losses will cause a significant blow to the mining industry if workers aren’t reskilled.
“Businesses have a limited window of opportunity to get out in front of the sweeping changes that face the coal industry. We must build the human and financial resilience so that workers do not lose out, and make the transition to a coal-free world easier,” he said.
“The financial and job losses are small on a global scale, but they will be heavily concentrated in mining regions, meaning some developing economies, like Indonesia, will disproportionately suffer if the transition isn’t managed carefully.
“When economic and job losses start to happen it will be too late – we need to start preparing for these changes now.”