The politically toxic proposed coal mine at the centre of the election battle between Deputy Prime Minister Barnaby Joyce and Tony Windsor appears doomed after its Chinese owner outlined an accelerated transformation plan away from mining into cleaner electricity generation.

China Shenhua, which owns the contentious Shenhua-Watermark project on the NSW Liverpool Plains, has warned of plunging demand for fossil fuels and slashed its global budget for investing in new coal projects.

The company has surprised analysts with the depth of its pessimism on the coal market in its annual report released on Good Friday.

The proposed mine at Gunnedah is now almost certainly "commercially unviable", according to Tim Buckley, Australasian director of the Institute of Energy Economics and Financial Analysis and it is only a question of whether the Chinese government proceeds to development in an attempt to "save face", he said.