Japan, one of the world’s largest coal importers, is proposing a tax on coal imports designed to encourage the country’s steel industry and power utilities to move towards “greener” fuels such as natural gas.
Japan is the world’s biggest importer of coking coal, used in steel-making, and is also one of the largest consumers of thermal coal, used to generate power.
For power generation, natural gas is widely considered to be less polluting than other fossil fuels like oil or coal.
The proposed tax would likely be levied on thermal coal rather than coking coal, as there are fewer alternatives available to Japan’s steel industry.
However, analysts suggest that any move to impose new taxes on imported coal is likely to prove highly unpopular with the Japanese power industry, which also feels that there are few alternatives. Japan used coal for about 18% of its electric power generation in fiscal 2000-01. Nuclear power accounted for about 34%, liquid natural gas 26% and oil 11%.
A report published in Australian Financial Review following Japan’s announcement has confirmed fears that any such move is likely to have regional and possibly international repercussions.
Japan represents the Australian coal industry’s largest customer, and the Review reported that the share prices of major coal exporters such as Rio Tinto, BHP Billiton, and MIM Holdings all suffered as a result of the coal tax announcement.
The coal industry in Australia is worth A$13 billion annually.
For our part, Canada exported 10.7 million tonnes of coal to Japan in 2001.
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