Assessing Thermal Coal Production Subsidies

Key findings of the report

Production subsidies summing up to:

  • Nearly US$8 per tonne in the US Powder River Basin ($2.9b/year); and

  • Nearly US$4 per tonne ($1.3b/year) in Australia.

The removal of these subsidies would result in:

An 8%-29 % reduction in demand for US PRB coal, with associated cumulative reductions of 0.7 to 2.5 GtCO2 to 2035, equivalent to 9 to 32 coal plants.

  • A 3%-7% reduction in demand for Australian Seaborne coal, though with unknown carbon reductions due to substitution of coal from other (often also-subsidized) producers.

Removing subsidies to coal extraction should be a central plank of any country’s fiscal and environmental plan.

Particularly as subsidies to renewable energy come under increasing pressure, subsidies to the mature coal sector should not be ignored. A broader geographic range for coal subsidy elimination will boost the carbon benefits, as the ability for coal supplies to move in from other subsidized markets will be constrained.