Trade in thermal coal—a key fuel in electricity generation—is likely to fall 40 percent in the next two decades after the U.S. and China signed a climate deal over the weekend, Wood Mackenzie said in a report released Tuesday.
The COP21 compact that was formally ratified by the U.S. and China this month aims to keep temperature increases to "well below" 2 degrees Celsius. The deal had already agreed by nearly 200 countries in Paris last December.
A 2 degree Celsius limit on temperature rise would mean a sharp reduction in the share of coal-fired generation to 16 percent by 2035 from 41 percent in 2013, added Wood Mackenzie. Seaborne coal import demand into Asia, Europe and the Americas will shrink 40 percent.
That is expected to upend the rally in coal prices this year.