OREANDA-NEWS. August 13, 2014. Beijing’s move to close coal-fired powerplants and ban coal use is expected to be followed up in neighbouring provinces as the Chinese government attempts to reduce chronic air pollution across its major cities.

The latest announcement from the capital is part of a broader shift in China towards clean energy, which is posing a significant long-term challenge for the Australian coal industry.

However, analysts said Beijing’s decision, announced late Monday, to ban coal sales in its six main districts as well as close coal-fired power plants by the end of 2020 will have a limited impact on Australian miners in the near term.

“China consumes roughly 4 billion tonnes of coal per year and, of that, Beijing accounts for just 15 million tonnes,” said Wood Mackenzie China consulting manager Rohan Kendall.

“Most imported coal into China goes to the southern provinces, so there would be an impact if they followed Beijing, but we don’t think that’s likely.”

Still, provinces surrounding Beijing, in China’s north, such as Hebei, Shandong and Shaanxi, will probably take similar measures to the capital, said Liu Dongna, a coal analyst at Zuo Chuang Information Group.

Shandong is the largest coal-consuming province in China, burning as much coal as Germany and Japan combined, according to Greenpeace.

Analysts said the more immediate threat to Australian coal producers over the next few years was the growing pressure on China’s government to introduce policies that are favourable to domestic players in a tougher operating environment.

At a recent meeting with the National Development and Reform Commission, the China Coal Industry Association pushed for more restrictions on imports of high-sulphur coal and an increase in import tariffs.

While the government will need to weigh up a potential backlash from the power sector because of the higher costs associated with an increase in coal-import tariffs, the lobbying from the local coal industry has become more aggressive in recent weeks.

China Coal Industry Association president Wang Xianzheng told state media on July 24 that 70 per cent of local miners were losing money. He said import and export charges should be adjusted to the same level. Currently, the export tax on coal is 10 per cent, whereas import tariffs range from 3 per cent to 6 per cent.

China’s shift to green energy is being closely watched by the Australian coal sector. So far, six Chinese provinces have included absolute coal-consumption reduction targets in their air pollution action plans, according to a recent report by Greenpeace. In all, the coal control measures imply a reduction in coal consumption of about 350 million tonnes by 2017 and 655 million tonnes by 2020.

However, Wood Mackenzie’s Mr Kendall believes these policies are unlikely to have a big impact on coal imports in the short to medium term. That’s because imported coal is generally a lot cleaner than domestic coal, so any moves by the government to curb imports would be counter-productive to its stated aim of reducing air pollution.

“In the longer term, a switch to gas on a much larger scale is a very real possibility in China,” Mr Kendall said. “But currently, there are not sufficient gas supplies to facilitate such a large-scale shift.”