Offset use by Australian coal mines surges 40% as methane emissions decline, driven by disruptions and accounting, not abatement

Australian Carbon Credit Units (ACCUs) represented the majority of offset use, with around 5 MtCO2e retired, accounting for 79% of coal-sector offsets. Over 58% of the ACCUs used for compliance originate from projects like avoided deforestation, which primarily address carbon dioxide. This creates a significant mismatch as methane accounts for 61% of coal mining emissions.

In contrast, the relatively low volume of Safeguard Mechanism Credits (SMCs) retired for offsets suggests that many facilities are choosing to bank SMCs for future compliance rather than using them immediately, anticipating tightening baselines in the coming years.

Coal mining was the second-largest recipient of SMCs in FY2025. However, Ember’s analysis also highlights the gaps with SMCs. It finds that large open-cut mines, such as Hail Creek and Carmichael, received SMCs despite contributing a significant share of methane emissions. At Hail Creek, reported methane intensity dropped by 38%, allowing the mine to generate roughly AUD 9 million in SMCs. Hail Creek’s reported intensity drop coincides with a switch to a lower emissions factor methodology, not the installation of capture or abatement technology. Furthermore, independent satellite and airborne measurements suggest these reported figures may be significantly undercounted, with some observations showing emissions up to 35 times higher than reported values. Similarly, Carmichael’s baseline has been set at a level that allows credit generation without major emissions reductions.

Further, reported methane emission intensity has fallen by 0.1 tonne of methane/kilotonne of coal in the last ten years, largely due to a growing share of surface mining, which is assumed to have lower emissions. Yet, Ember’s Global Coal Mine Review 2026, released on 29 April 2026, finds that satellite observations indicate emissions from surface mines may be underreported.

Even at mines where emissions actually declined, rather than on paper, it was largely owing to operational disruptions. Methane emissions in underground mines covered by the SGM fell by 1.1 MtCO2e in FY2025 due to disruptions in production. For example, the biggest emissions reduction came from the Grosvenor, where emissions declined by 1.07 MtCO2e after operations were halted for most of the year due to a mine explosion.

Meanwhile, open-cut and mixed mines recorded slight increases in methane, driven by expanded production at newer operations, including Olive Downs, which ramped from 1.5 to 5.8 million tonnes of output.

Even with the drop in underground mines, it is important to note that Ember’s Global Coal Mine Review 2026 finds that Australia’s reported CMM emissions are significantly lower than independent estimates. CMM emissions are estimated at around 0.9 million tonnes in 2024 based on UNFCCC data. However, the IEA estimates emissions were 80% higher in 2024. 

Ember recommends some changes to the SGM to ensure it delivers on-site methane emission reductions. It suggests the requirement of more transparent disclosure of emissions estimation methods and baseline setting to strengthen confidence in reported and baseline data. It also recommends greater oversight of SMC issuance to ensure they are generated through evidence of abatement, not accounting adjustments. Developing targeted mitigation policies for the gassiest mines will help prioritise direct methane abatement, according to the analysis. Finally, Ember recommends aligning offsets with the emissions profile, including limits on the use of non-methane offsets.