Two weeks ago, the head of Australia’s Coal Industry, Dr Nikki Williams, railed against “environmental extremists” who were seeking to prevent miners from digging their reserves of thermal coal out of the ground. One wonders what she would make of the International Energy Agency.

The IEA, a highly conservative organisation created after the 1970s oil crisis to ensure the developed world had sufficient access to energy supplies, has repeated and intensified its call for the world to leave nearly all its supplies of undeveloped thermal coal in the ground.

The IEA said that to meet the 2°C global warming targets, the world could only afford to use less than one-third of its current proven fossil fuel reserves before 2050, unless carbon capture and storage (CCS) is widely deployed (which it probably won’t be).

Even with CCS, the IEA says only about 50 per cent of the oil and gas reserves can be developed and consumed under this scenario (because low-carbon transport options are less available than low-carbon electricity), but only 20 per cent of today’s coal reserves, which are much larger, can be exploited.

This graph below, from the IEA, highlights the situation. It shows the difference in emissions if all reserves were exploited, if promised policies were introduced (New Policies), and if the 450 Scenario (meeting the 2°C global warming target) were enacted. Coal, on the left-hand side, is the most affected.

The IEA says that even in its “New Policies” scenario, more than 60 per cent of the proven reserves of thermal coal are left in the ground, but the world misses its climate targets – quite badly – and will probably end up paying trillions of dollars extra in catch up payments to try to fix the situation.

In effect, the IEA is endorsing the ambition, if not the tactics, of environmental activist groups such as Greenpeace and Bill McKibben’s 350.org, which are trying to stop the development of huge new coal projects – something that the IEA describes as “lock-in”.

This message about the “unburnable carbon” as it is now widely described – Williams insists it should be “burnable carbon” – is now filtering through to financial institutions, and to major businesses.

The risk of stranded assets is now being identified by all the major investment banks – Citigroup, HSBC, Deutsche Bank, among others – and the leading asset management advisory firms; and the asset managers themselves. Some corporates, such as AGL Energy, the owner of a large brown coal-fired generator in Victoria, are calling for stringent carbon budgets to be imposed.

The IEA says it is inevitable that the coal industry will suffer huge losses. It says four-fifths of the allowable carbon budget from the electricity sector are already “locked in”.

That means that many older, inefficient, fossil-fuel plants will have to be either idled or retired before the end of their anticipated technical lifetime, and some power generation capacity additions under construction will become uneconomic and be retired early, despite originally appearing to be economically sound investments.

It estimates that an additional 2,300GW (that’s 2,300,000MW, or more than 40 times larger than Australia’s entire grid) of fossil fuel generation, will have to be retired early, idled or have CCS added. It expects CCS will account for a small fraction of these (partly because so little progress has been made on the technology) and 37 per cent will have to be closed early – and around half idled.

In all, the IEA says revenues from the coal industry (mining) can be expected to fall by $4.2 trillion over the years from 2020-35 if serious action is taken to meet the 2°C scenario – which probably explains best of all why the coal mining industry is resisting such measures.