Loophole allowing new coal and gas to avoid stricter climate laws

Coal and gas avoiding stricter laws by expanding existing mines, Climate Council warns In short: Coal and gas mines have to follow less strict emissions laws when they are expanded compared to outright new mines. The Climate Council says that amounts to a "loophole" being used by the industry to add new emissions without having to follow "best-practice" limits. What's next? The Safeguard Mechanism, which sets emissions laws for heavy industry, is under review. Coal and gas mines are using what the Climate Council warns is a "loophole" to expand operations and add new emissions while avoiding stricter laws imposed on new coal and gas projects. The Climate Council says unless emissions from mine expansions are treated the same as emissions from new mines, it will cause an additional 4.5 million tonnes of CO2 a year by 2035. Coal and gas mines are among the roughly 200 facilities covered by the Safeguard Mechanism — climate laws that require Australia's biggest polluters to cut or offset emissions by about 5 per cent a year or else face heavy penalties. Under the laws, which are currently being reviewed, new coal and gas facilities are required to follow more strict, "best-practice" limits that take into account the most efficient technologies available for mines. But existing facilities are not required to meet that higher standard when expanding or extending the life of an existing mine. Modelling by Reputex has estimated that across 22 planned coal and gas expansions and extensions over the next decade, which will be treated as existing facilities, they will be able to emit 11 times more than if they were treated as new facilities. The Climate Council says expansions are being used widely across the industry, taking advantage of that favourable treatment and leading to more emissions. "Companies have an incentive to characterise everything as an expansion rather than a new facility," chief executive Amanda McKenzie said. "We're arguing that is one of the loopholes that needs to be shut." The Safeguard Mechanism is under review and due to be revisited next year, when the government will decide whether to set a steeper trajectory towards net zero emissions by 2050. The Climate Council says when that time comes, "best-practice" CO2 limits should be applied to all new coal and gas emissions, regardless of whether they come from a new mine or an expanded one. It says fossil fuel facilities are not doing enough to transition to net zero, and those covered by the Safeguard Mechanism actually increased emissions in the most recent year. Most new coal and gas emissions from expansions The council says since the Safeguard Mechanism laws were amended in 2022, more than three quarters of all new coal development have been expansions or extensions to projects. It pointed to last month's approval for an open-cut coalmine in the Hunter Valley, which owners Yancoal and Glencore applied to extend by more than a decade. Its life extension into the 2040s, which includes the mining of deeper coal seams, represents an additional $2.7 billion capital investment and will add an extra 809 megatonnes of CO2 emissions — or a bit less than two years' worth of Australia's annual emissions. Because the Yancoal-Glencore owned coalmine was already covered by the Safeguard Mechanism, the extension will be treated under rules for existing projects, which the Climate Council estimates will result in emissions 60 per cent higher than if it was treated as a new project. The NSW Independent Planning Commission, which approved the life extension, said while it would contribute to climate change and add to Australia's emissions, that was outweighed by its benefits, including supporting up to 1,400 local jobs and ongoing tax revenue from the mine. "Despite these new investments being significant enough to require a new environmental approval, the vast majority of their pollution will not be considered 'new' by the Safeguard Mechanism," the council said. Mining sector rebuffs Coalition promise to scrap Safeguard Mechanism The Coalition has vowed to "take a chainsaw" to the Safeguard Mechanism, saying they would scrap the laws claiming they are driving up costs for heavy industry and manufacturing. But after more than a decade of policy instability, the mining sector has urged not to up-end climate laws again. On Friday the Minerals Council of Australia said the Safeguard Mechanism should be retained, saying it was working as intended to reduce emissions. "The industry seeks change that is manageable, orderly, and establishes an appropriate regulatory framework for industry and the nation to achieve medium- and long-term emissions targets," MCA chief executive Tania Constable wrote on Friday. The Minerals Council also urged the government not to push big polluters to cut emissions even harder after 2030, when requirements to cut emissions by about 5 per cent a year will soften to 3.3 per cent a year. The industry argues existing projects should not be asked to meet "best-practice" emissions requirements since expansions and extensions are still using existing infrastructure, whereas new facilities are able to invest in more efficient technologies. The Climate Council says if mining operations cannot be expanded under "best-practice" rules, then they should not seek to do so. "We have to have laws that are genuinely getting us out of coal and oil and gas, so finding ways to enable the companies to continue to expand is nonsensical," Ms McKenzie said. A spokesperson for Climate Change Minister Chris Bowen said the government's reforms to the Safeguard Mechanism were "working well". "The focus of the review set out in the consultation paper is ensuring they continue to deliver," the spokesperson said in a statement. "No decisions have been made to change current settings and our department is engaging with stakeholders to hear their views."