Energy analysts suggest that South Korea’s commitment to eliminate thermal coal should serve as a significant alert for Australia’s fossil fuel sector.

In a notable development this week, South Korea—a key destination for Australian thermal coal—officially joined the Powering Past Coal Alliance (PPCA), pledging to cease coal power generation by the year 2040.

This decision has been applauded by environmental advocates who have long urged industrialized nations to transition away from fossil fuels in favor of renewable energy alternatives.

As the fourth largest coal importer globally, South Korea relies on coal to support its industrial activities and for residential heating.

However, the nation’s steel industry is progressing towards coal-free manufacturing processes, leading to a steady decline in coal demand.

But South Korea’s decision and similar moves by other nations also brings big implications for Australian coal exporters.

The value of Australian coal exports to South Korea is worth about $2.4 billion a year, data analytics company Kpler said.

The Australian Office of the Chief Economist has forecast a near 15 per cent decline in global thermal coal demand in the three years to 2027.

Thermal coal, along with iron ore, liquified gas and coking coal, make up Australia’s four largest commodity exports from last year.

Climate Energy Finance director Tim Buckley said those major exporters would be “terminally challenged” over coming decades as countries shifted to renewable energy to meet commitments under the 2015 Paris agreement.

“This should send a strong reminder to Australia as the second largest exporter of thermal coal behind only Indonesia that our key trade partners are responding to climate science and their treaty obligations,” he said.

“Australia needs to pivot our export focus to low emissions industries of the future, in particular exporting green iron and aluminium, critical minerals and lithium hydroxide to help our key trade partners jointly deliver on their decarbonisation objectives.”