An independent economic analysis has warned New South Wales that thermal coal exports are stagnating and will significantly decline in the next two decades.

The Institute for Energy Economics and Financial Analysis (IEEFA) economists warned NSW it must begin preparing for alternatives as the market for Coal-fired power is in terminal decline.

AAP Newsagency reports the IEEFA’s Report has painted a bleak future for the coal industry, where global trade volumes contract an average of four per cent every year.

About three-quarters of all the coal Australia exports for electricity generation comes from NSW.

Most passes through the Port of Newcastle, which accounts for more than 10 per cent of global coal exports.

The IEEFA report warns the outlook for new coal-fired power stations in Asia, Australia’s main export market, has changed dramatically in the past four years.

IEEFA examined the status of NSW coal export destinations and found the pipeline of new coal plants in major Asian markets experienced a 74 per cent decline since 2015, with more contraction expected.

The report said any increase in exports to Southeast Asia would not be enough to make up the difference in lost sales, and an economic transition plan is required.

In response to IEEFA’s report, NSW Mining, the state’s mining industry representative body and lobby group, published a press release stating that NSW’s thermal coal export market is healthy and expanding.

IEEFA cites the “unprecedented decline” in the cost of renewable energy generation and the increase in renewable energy projects coming online.

“While the Australian coal industry and its lobbyists continue to maintain that the nation’s thermal coal export industry is booming on the back of record export revenues, the reality is very different,” the report said.

Finding finance for new projects was also cited as a key difficulty for the sector.

IEEFA said NSW Mining mistakenly attributed an International Energy Agency (IEA) scenario whereby coal consumption in Southeast Asia will double by 2040 to 390 million tonnes per annum (Mtpa), as a forecast.

This scenario estimate comes from the IEA’s New Policies Scenario, one that assumes the world fails to deliver on the United Nations sponsored Paris Agreement target of limiting warming to below two degrees.

It is worth noting the IEA has a history of consistently revising down coal demand under the New Policies Scenario, year after year.

The IEA’s new World Energy Outlook report will be released in November 2018 and IEEFA confidently predicts that coal demand under the New Policies Scenario will be revised down yet again, as technology and policy changes are occurring much more quickly than previously predicted.

IEEFA also said Indian mining giant Adani had just announced funding issues had led it to scale back plans for its massive Carmichael coalmine in Queensland.

The IEEFA’s analysis lent on IEA forecasts on the basis the world meets internationally agreed objectives on climate change, air quality and universal access to modern energy.