Session 1. Oral Presentation for: The market substitution argument – what can we learn from the 2020–2023 Chinese coal import bans?

Presented on 19 May 2026: Session 1 Following diplomatic tensions between Australia and China in the late 2010s, China implemented an unofficial ban on Australian coal imports from late-2020 until early-2023 (the Ban). The Ban provides an opportunity to review what transpires when a major commodity trading relationship is disrupted. Specifically, we look at whether substitution occurs, and the market substitution argument (MSA), given its relevance to legal cases involving fossil fuel exports. In the context of energy, the MSA states that the demand for energy commodities is relatively inelastic and therefore in the absence of supply of an energy commodity from a given source an alternative supplier will still provide the energy commodity. This is relevant to coal exports, where the courts have been asked to consider whether the MSA is sufficient to support coal mine approvals. We contend that the MSA is relevant to liquefied natural gas (LNG) exports. Coal import, production and consumption data during the Ban illustrate that China substituted Australian coal imports with greater imports from Indonesia, Russia and Mongolia, while also boosting domestic production to avoid shortfalls. There are strong climate change related arguments to avoid the ongoing unabated combustion of fossil fuels for energy. We have illustrated with data, however, that at least in the short term, a reduction in Australian coal exports to China didn’t lead directly to lower coal consumption or lower emissions in China. To access the Oral Presentation click ‘Supplementary data’ below. To read the full paper click here