LONDON - A wave of liquefied natural gas due to hit energy markets over the next couple of years is expected to displace tens of millions of tonnes coal demand globally, helped by government initiatives to move away from polluting power generation. Both coal and LNG are oversupplied after higher prices during the past decade triggered investments in new projects and expansion plans. At the same time the gap between their prices has narrowed as LNG has become more competitive, particularly where governments penalise coal via taxes or emissions trading schemes. “There is a monstrous amount of LNG coming into the market, on pure cost economics you can say coal is cheaper than LNG at any realistic price, but it’s going to be used somewhere and if it is coming in the volume that’s forecast, it will be displacing coal,” a coal trader said. “New coal generating capacity is less likely to be realised in a world awash with LNG.” One of the biggest factors in how much switching occurs will be what the world’s largest coal consumer China does. Environmental concerns and a desire to help financially distressed domestic coal miners has led to a dramatic fall in Chinese coal imports, with shipments down 30 percent in the first nine months of the year, compared with the same period a year ago. Smog has emerged as a major problem for the government, which has relied on coal and highly polluting heavy industries to fuel its economic growth, especially in northern regions. “In China, gas will be cheap, gas will be oversupplied, LNG will be oversupplied for the next 3-5 years and that will give an opportunity for policymakers to work harder to switch from coal to gas, but it will take time,” said Torbjörn Törnqvist, chief executive of Swiss-based trade house Gunvor. “Everyone in Beijing knows what the problem with coal fire stations in China is and they will go for gas.” Beyond China, Europe is also seen as a region where switching is likely to take place. Trevor Sikorski, an analyst at consultancy Energy Aspects, said around 130 million tonnes of thermal coal was vulnerable to being replaced by gas for power generation on an annual basis in Europe. Sikorski suggested that given the amount of new LNG projects due to come on line in the coming two years, gas prices could be low enough to encourage this level of switching by 2017. Energy Aspects forecasts some 35 million tonnes of additional LNG supply hitting the market next year, a 16 percent increase on 2015. Earlier this month oil and gas industry bosses again urged governments to ditch coal in favour of less polluting natural gas, which emits around half of the CO2 coal does, in power plants and heavy industry. “LNG will continue to cannibalise the coal market, coal’s not going to die, but it’s hard to be bullish,” said Jeffrey Landsberg, managing director of U.S. based consultancy Commodore Research.