* Judge cites 'dire' potential impact of Hunter Valley plan
* Developer GRL has right of appeal, considering next steps
* Coal sector scrutiny 'only likely to increase' - analyst
* Transition away from fossil fuels must continue -Climate Council (Adds comment from GRL, analyst; share moves)
By Melanie Burton
MELBOURNE, Feb 8 (Reuters) - Developers have lost a court appeal to build a coal mine in Australia's Hunter Valley over its potentially "dire" environmental impact in the country's first legal review of a coal mine project to hear evidence from a climate scientist.
In the landmark ruling, Justice Brian Preston on Friday denied the appeal on the Rocky Hill project in New South Wales state, citing an increase in greenhouse gas emissions, as well as uncertain economic benefits and adverse social and visual impacts.
The Rocky Hill project was developed by privately held Gloucester Resources, a unit of GRL Holdings Pty Ltd, which has the right to appeal to the New South Wales supreme court.
"Gloucester Resources Limited will assess the implications of today's decision and consider its next steps," it said in a statement.
Australia is the world's biggest coal exporter and the fuel is its largest resources earner. Canberra last year scrapped plans for a national energy policy that aimed to cut carbon emissions as well as power prices in part due to opposition from coal supporters within its ranks. his ruling, the judge found that mine and associated greenhouse gas (GHG) emissions would add to the global total "at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions."
"In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time," Preston found. "These dire consequences should be avoided."
At the end of January the Organisation of Economic Cooperation and Development made waves in Australia when it said the country needed to cut emissions more sharply to meet its Paris Climate accord target as the country remained heavily dependent on coal-fired power. on Thursday a study published earlier on Friday by Australian National University (ANU) researchers found the country is adopting renewable energy faster per capita than the rest of the world. Rapid recent growth in wind and solar power has left it on track to meet Paris carbon emissions reductions targets well before 2030, it found. ruling was set to make developing new coal mines or expanding existing projects more challenging, said Shaw & Partners analyst Peter O'Connor.
"On first pass it doesn't read well for the industry," he said. "And it does indicate an ongoing and increased level of scrutiny of this industry, which is only likely to become greater."
Shares in Australian-listed coal miners Whitehaven WHC.AX and New Hope NHC.AX , which both have coal projects on the drawing board, fell 3.5 and 2.2 percent respectively by 0446 GMT on Friday, in line with lower Australian thermal coal prices. declined to comment on whether it expects any impact on its own development plans. New Hope officials couldn't immediately be reached.
Environmental campaigners welcomed the court ruling.
The chief executive of Australia's Climate Council, Amanda McKenzie, said Australia "must continue to transition away from fossil fuels and embrace renewable energy with storage".
"The science says so, and now the law does too," she said in a statement. ($1 = 1.4156 Australian dollars)