--Clyde Russell is a Reuters columnist. The views expressed are his own.--
By Clyde Russell
LAUNCESTON, Australia, Sept 3 (Reuters) - It's tempting to mould events to suit your view of how the world should be, and there seems to be plenty of that in the coal debate.
There is certainly enough evidence to suggest seaborne coal volumes are trending lower, but it's probably a mistake to use the sector as a proxy for the total market.
Environmentalists are keen to see coal as a sunset fuel that should be phased out as soon as possible given its role as a major contributor to climate change.
They have been heartened by recent news of the closure of a small coal mine in Australia and the decision by the city council of Australia's Newcastle, home to the world's biggest coal export harbour, to divest from the fuel.
Falling imports by China and India, the two largest buyers of the dirty fuel, have also been cited as further evidence that coal is on the way out.
In contrast, BHP Billiton (LONDON:BLT), the world's biggest miner, BHP.AX said in its results presentation last week that it remained positive about coal, especially the "robust" long-term outlook for coking coal - used to make steel - as the fuel is likely to become scarce.
While coal miners have struggled to make profits in recent years after the massive expansions in capacity undertaken earlier this decade led to a collapse in prices, there appears no shortage of buyers for quality assets.
Rio Tinto's RIO.AX RIO.L Australian coal mines may be up for sale, and bidders may include Glencore GLEN.L and cashed-up newcomer X2 Resources, according to recent media reports.
Clearly the view that coal is on its last legs can't be reconciled with a bullish outlook for the industry's long-term health, and it's probably the case that environmentalists and coal industry executives are talking past each other.
STRUGGLES AHEAD
So, what is the true state of the coal sector?
There are some facts that probably all can accept, namely that both thermal and coking coal are currently oversupplied, which is largely to blame for the fuel being worth only about one-third of what it was 4-1/2 years ago.
It's also increasingly evident that new coal mines in exporting countries such as Australia and Indonesia, the world's two largest exporters, are going to struggle to be built, mainly from an economic perspective.
Witness the ongoing delays to Adani's ADEL.NS $16 billion Carmichael coal project in Australia's Queensland state that have raised questions as to whether it will proceed at all.
Even if new coal mines make financial sense, it's also increasingly clear that they are going to struggle to win the social licence from local communities and will as well face virulent opposition from environmental groups.
This is particularly true in developed countries like Australia, but may also be on the rise in developing nations such as Indonesia.
But how are these trends likely to play out in the future?
SEABORNE DECLINE ISN'T OVERALL DECLINE
Environmentalists run the risk of seeing lower imports by China and India as a sign that coal use is declining, when what they are actually seeing is the softening of the seaborne market.
This has been a trend that is fairly recent, but appears it has further to run.
While it's true that China aims to lower coal's share in its energy mix, in absolute terms, it will still burn more of the fuel, at least in the coming decade and perhaps longer.
What is also apparent is that China has largely sorted out its internal transport bottlenecks and is now capable of moving coal from inland mines to coastal users.
In addition, China is trying to transport electricity rather than coal, with the result that the world's biggest user of the dirty fuel is in a position where it can probably get by without imports, and could possibly become a net exporter once more.
Likewise India, which seemed poised to overtake China as the world's biggest coal importer, may also slow its overseas purchases, because - much to the surprise of many - state-owned Coal India COAL.NS seems to be making progress towards meeting a target of 1 billion tonnes of local production by 2020.
The Indian government wants the nation to be largely self-sufficient in coal, and cut reliance on imports in order to improve the balance of payments.
But weakness in seaborne coal markets doesn't necessarily mean weakness in coal overall.
The International Energy Agency (IEA) expects coal demand to grow by an average 2.3 percent a year to 2018, which doesn't sound like much but equates to about an extra 146 million tonnes being burned by 2018.
It also expects India to add 342 gigawatts of coal-fired generation by 2040, the equivalent of 300-500 large power plants, each requiring at least 1.5 million tonnes of coal a year.
Add to this rising coal-fired capacity in Southeast Asia, with 35 gigawatts planned in Indonesia and 12.2 gigawatts in the pipeline in the Philippines as just two examples.
TIME FOR ANTI-COAL MOVEMENT TO SHIFT FOCUS?
Many of these power plants under construction or planned aim to rely on domestic sources of coal, which is bad news for exporters like Australia.
But mining and burning domestic production in developing nations also makes coal a more distant issue for the environmental activists in developed nations who are leading the charge to rid the world of the polluting fuel.
This suggests that at the very least the war on coal should shift the front to developing nations, where the fuel is still the number one choice for providing affordable electricity.
The position of coal has weakened in the developed world, notably through the subsidisation of renewables in Europe and the emergence of shale gas in the United States.
Given that environmentalists are largely opposed to natural gas as an alternative to coal, that means they may also need to launch massive campaigns in favour of renewables in the developing world.
(Editing by Tom Hogue)