Coal is loaded for railway transportation in Tongliao, Inner Mongolia autonomous region. [Photo/Xinhua]

China's decision to limit coal usage may have a far-reaching impact in the United States, particularly in Wyoming where it is the mainstay of the economy.

Last week Premier Li Keqiang said China wanted to reduce its energy intensity - the amount of energy used per unit of gross domestic product - by 3.1 percent this year. That translates to an annual reduction in coal usage of 176 million tons. China's industrial sector, excluding power generators, plans to cut coal use by more than 160 million metric tons by 2020, officials at the Ministry of Industry and Information Technology said earlier this month.

Observers said the latest announcements from China coupled with last year's agreement by the US and China to cut carbon dioxide emissions represents a blow to Powder River Basin coal companies in Wyoming that have staked much of their future growth on boosting exports to China and the rest of Asia.

"The recent agreements regarding CO2 in China, and recent policy initiatives are not good for Wyoming exports. Other factors have also undermined exports (and) these include falling prices, and environmental concerns along with the need for significant infrastructure development (ports and rail expansion) and the financing challenges those entail. With respect to China, it is possible that Wyoming may have missed the boat on coal exports," Robert Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming, said in an e-mail.

Lawmakers in landlocked Wyoming recently granted a state agency the authority to issue up to $1 billion in bonds to finance in part the construction of coal ports in the Northwest US to expedite shipments to China and Asia.

"The actual bill gave the Wyoming infrastructure authority expanded ability to bond many projects. The ports were just the example people were talking about. It also expands the ability to bond transmission line projects out of the state, or other projects including port expansions elsewhere in the US. So I would not call it a mistake - the idea was to facilitate development of additional markets for Wyoming energy. Ports were just one example where it could be used," said Godby.

Despite the emissions agreement with the US, coal will continue to be the most important energy source for China, said the CEO of coal giant Peabody Energy Corporation. "Over 70 percent of all energy in China comes from coal," Gregory Boyce, chairman and CEO of St. Louis-based Peabody, told China Daily last December. "China will remain dependent on coal but will seek to take advantage of new technologies to reduce emissions."

Godby said even if China continues to reduce coal usage, Wyoming has alternatives. "Wyoming is looking at other markets - specifically Japan and South Korea in Asia. While these markets are not as large as China, they could offer 25 million tons or more annually of demand. Alternatively, Wyoming has been looking at expanding exports to Europe and other Atlantic destinations."

It is not just producers in the US that will be affected as China's domestic coal industry also faces challenges, according to Stephen Duck, a senior consultant with international mining consulting company CRU.

"The Chinese industry is struggling to cope with domestic oversupply and weakening demand growth and Chinese coal prices have undergone a continuous deterioration through 2014; thermal coal and coking coal prices declined by 23 percent and 26 percent (year-on-year) respectively," Duck said in a note earlier this month on CRU's website. "According to the China Coal Association, around 70 percent of coal companies made losses for the year and Chinese coal imports fell by 9 percent year over year. This was the first time that China's annual coal imports declined in the last six years."?