The risk level on coal investment has stepped up significantly with the announcement of a historic climate pact between the world’s two largest greenhouse gas emitters, the United States and China.

For a long time investors have placed their bets on the basis that, for all the talk, the world’s leaders would do nothing about climate change. Quite suddenly, those bets are less safe.

A quarter to a third of Australia’s coal mines are already losing money at current prices, and only a weakening dollar is putting a floor under the industry’s prospects. Growth in demand for Australia’s coal exports is going to be increasingly hard to come across, and the coal industry, battling to get costs down, is no longer in a position to spend the billions needed to develop new, competitive low-emissions technology. In any event, “clean coal” technology like carbon capture remains the same pipe dream it’s been for a decade or more.

Any serious climate action is bad news for thermal coal used for power generation. And China is serious: yesterday’s announcement follows shock restrictions and tariffs on coal imports imposed over the last two months. What if China’s coal consumption really does peak this decade? India’s coal consumption will double, but most of that will be mined locally — last night the country’s energy minister said he would eliminate coal imports within three years.

Australia can try to be free rider on climate action, but we won’t escape the impact on the world’s most emissions-intensive power source. The scenarios in which coal has a “big future”, as Tony Abbott claims, are now getting very hard to see.