OREANDA-NEWS. November 21, 2014. The historic climate deal between the US and China may impact Australian coal exports less than feared, but will put pressure on Australia to toughen its emissions reduction targets domestically.

China’s announcement that it will cap its total carbon emissions by 2030, and introduce its own renewable energy target, could also result in increased consumption of low-emission liquid natural gas from Australia.

In return for the Chinese concessions, the US has agreed to emit 26 per cent to 28 per cent less carbon than it did in 2005 – double the previous rate of targeted reductions.

The Minerals Council of Australia welcomed the deal, arguing it would increase demand for high-quality Australian coal and potentially uranium.

“The announcement by the US and China on their future climate change targets puts technology, and particularly low emissions coal technologies, at the centre of efforts to reduce global CO2 emissions,” chief executive Brendan Pearson said. “In the case of China, the agreement shows that it is possible to constrain emissions while keeping a central role for coal in meeting strong energy demand.”

Former Reserve Bank of Australia board member Warwick McKibbin said according to modelling, in a scenario where significant global action was made on climate change, Australia’s fossil fuel industries would not necessarily be worse off. “We produce very good quality coal at low cost. We’d be the last coal industry in the world to close down,” Professor McKibbin said. Bank of America Merrill Lynch economist Saul Eslake also said the deal could be a positive for Australian LNG exports, with a number of very large projects currently in the works.

“This is a major milestone in the US-China relationship and it shows what’s possible when we work together on an urgent challenge,” US President Mr Obama told a joint press conference with Chinese President Xi Jinping in Beijing.

But the deal is threatening to over-shadow the economic agenda of this weekend’s G20 summit in Brisbane, after Australian Prime Minister Tony Abbott fought hard to keep climate change in the background.

“If they don’t discuss climate change, it will be the elephant in the room,” said a US State Department source who asked not to be named.

The agreement, which was the centrepiece of Mr Obama’s two-day visit to Beijing, comes ahead of talks in Paris next year where an ambitious new climate change pact is on the agenda.