The path forward: Strengthening measurement & managing expansion risk

Fugitive emissions reporting across Australia’s coal sector is at its lowest levels on record, but urgent regulatory change is needed to ensure these results are sustainable.

Over the last three decades, Australia’s coal mine production has more than doubled but reported fugitive emissions from the sector have hardly shifted. When compared to Australia’s emissions reporting baseline under the Nationally Determined Contribution, Australia’s reported coal mine fugitive emissions have reduced by over 20%, marking a reported emissions reduction rate similar to that of the electricity sector.

This incredible shift in reported emissions intensity is largely due to significant emissions reductions across gassy underground mines in NSW,  which have either permanently or temporarily closed due to safety concerns. This highlights the potential value in strategically closing or limiting production in gassy, underground coal mines. However, the reported emissions shift has also been due to a seismic shift in the proportion of Australia’s coal that is produced from open-cut mines, and the corresponding share of the industry’s fugitive emissions coming under direct measurement.

In this report, we have highlighted the potential risk embedded within both of these key emissions reporting trends. Despite the CSIRO projections estimating that close to 44 coal mines are scheduled to close by 2040, a significant proportion of some of the gassiest underground mines are currently applying for extensions, and a number of mixed or surface mines are applying to expand into underground mining. What’s more, governmental projections highlight that critical opportunities in onsite mitigation may be overlooked due to the relative opportunity cost of offsets under Australia’s reformed Safeguard Mechanism.

This report also raises concerns about the significant reductions in reported fugitive emissions from open-cut mines. The shift to site-specific emissions estimates, particularly in NSW, has led to a marked decrease in reported emissions, effectively disconnecting surface mine production growth from emissions reporting. This raises serious questions about the accuracy and transparency of the data provided, and its non-alignment with previously estimated state-based emissions factors, compiled and periodically reviewed by state and federal regulators. A thorough and transparent regulatory review of this discrepancy is essential to ensure transparency and accuracy.

This is especially pertinent considering the Climate Change Authority’s year-long review of Australia’s methane reporting system. In their review, the Authority noted that the “disorderly process” of emissions reporting “will erode confidence in the National Greenhouse and Energy Reporting (NGER) scheme”. In response the government has now made site-specific emissions factors compulsory for all open-cut coal mines, and promised to establish an Expert Panel to provide advice on atmospheric measurement of fugitive methane emissions in Australia.

The Authority’s review, and these regulatory shifts highlight the urgency of improving Australia’s approach to fugitive emissions reporting. However, this report calls into question the industry-wide shift towards site-specific emissions reporting, which may increase the emissions reporting risks identified in this report. While a parallel review of Method 2  is currently underway, this report reinforces the critical role of this review in not only re-establishing long term confidence from the coal industry, but international supply chains and observers alike. This is especially relevant in the context of increasing international trade and regulatory standards, such as the European Union’s Carbon Border Adjustment Mechanism, and its regulatory requirements for Australia’s metallurgical coal exports. 

The last three decades of coal mine emissions reporting has shown that the sector’s emissions can be significantly reduced through the closure of high emitting facilities. However, this opportunity will require proactive engagement from state and federal regulators if historical emissions declines are to continue. It will also require the proactive implementation of emerging best practice in emissions measurement, reporting and verification.  If not, the coal sector’s ongoing expansion risks reversing this historical emissions decline, while undermining confidence in Australia’s inventory at the same time.