Tackling Australia's Coal Mine Methane Under the Safeguard Mechanism is Cost Effective and High Reward

Australia’s coal mines could almost halve methane emissions by using just 1% of annual profits. By integrating reforms into the safeguard mechanism, Australia can start to tackle its growing coal mine methane problem.

Annika Reynolds

Climate Policy Advisor (Coal Mine Methane)

2 March 2023 | 4 min read

The Australian Federal Parliament is currently considering reforms to the safeguard mechanism to incentivise Australia’s largest greenhouse gas emitters to reduce their emissions in line with Australia’s climate targets. In light of Ember’s research that revealed that Australia could deliver two-thirds of its commitment under the Global Methane Pledge by tackling emissions from coal mines, the Federal Parliament has a great opportunity to achieve rapid emissions cuts by integrating methane emissions measurement and mitigation into the safeguard mechanism.

In February 2023, The International Energy Agency (IEA) published its 2023 Methane Tracker Report, finding that Australia’s coal mines produced 1673 thousand tonnes of methane in 2022. This is 60% higher than the official 2020 figures from the Australian government.

Methane is a fast-acting greenhouse gas and traps 82.5 times more heat than carbon dioxide over 20 years, accelerating short-term global heating. To keep 1.5C within reach, methane emissions from coal mines must decrease by three-quarters by 2030. 

However, Australia’s coal mine methane emissions are continuing to grow, according to the IEA, they now represent 30% of Australia’s annual methane emissions. Australia’s 2022 coal mine methane emissions have the same climate warming impact as 138 million tonnes of CO2 – equivalent to the entire annual CO2 emissions of a small European country such as the Netherlands.

The Australian federal government has proposed reforms to the safeguard mechanism through the introduction of the Safeguard Mechanism (Crediting) Amendment Bill 2022. The Bill is intended to deliver an estimated 205 million tonnes of CO2 abatement by 2030, by imposing a production-adjusted emissions intensity baseline. This baseline is proposed to decline by 4.9% each year to 2030, to ensure that Australia’s major greenhouse gas emitters are reducing their total emissions.

However, the safeguard mechanism does not directly regulate or incentivise the reduction of methane emissions, representing a missed opportunity for Australia to drive significant methane emissions reduction that is critical to limiting near-term global warming.

Ember’s research presents a pathway for Australia to significantly reduce its coal mine methane emissions by 2030, which can be integrated into safeguard mechanism reforms.

No new coal mines or mine expansions

Our analysis found that if most of Australia’s approved coal mine proposals were to go ahead, annual coal mine methane emissions would increase by 50% by 2030, representing an additional 1.5 million tonnes of methane emitted per year. Any further approvals for new coal mines or mine expansions further hinders Australia’s capacity to reduce its methane emissions. 

The additional methane emissions, alongside other greenhouse gas emissions, from new coal mines or coal expansions could result in an abatement gap of up to 184 million tonnes of CO2-e by 2030 above the proposed emissions intensity baseline set by the safeguard mechanism.

Reducing methane pollution from existing mines through the safeguard mechanism

There are three major reforms that should be integrated into the safeguard mechanism to ensure that methane emissions reduction from existing coal mines is realised. Cumulatively, these policies would enable 713 thousand tonnes of methane to be mitigated at existing coal mines.

First, all coal mines should be required to implement best practice methane measurement and monitoring, equivalent to Level 5 of the Oil and Gas Methane Partnership 2.0. More rigorous methane measurement is a foundation of the EU’s proposed methane regulations and is essential to ensuring that mitigation measures at Australian coal mines are delivering genuine emissions reductions.

Second, the safeguard mechanism should incorporate a separate production-adjusted emissions intensity baseline for methane. Ember recommends baseline emissions standards based upon international best-practice. The standard should be set at 3 kg of methane per tonne of coal for coking coal mines and 1 kg of methane per tonne of coal for thermal coal mines. 

Third, coal mining companies should not be able to purchase carbon offsets to meet the emissions intensity baseline for methane. Methane is most potent over the short term. There is therefore no reason to delay methane emissions reductions with carbon credits because such offsetting will seriously risk Australia’s capacity to meet its 30% reduction in methane by 2030 target enumerated under the Global Methane Pledge. Moreover, given the cost-effective and proven technologies to tackle methane emissions from coal mines, it is a missed opportunity to not embrace these tools to deliver real-world emissions cuts, while leaving offsets for the hardest-to-abate sectors. 

These measures are both technically and economically feasible for coal mines in Australia. Rapid action to reduce methane emissions from coal mines ensures Australia will meet its Global Methane Pledge commitments while enabling hard to abate sectors, like agriculture, to sustainably reduce their methane emissions over the medium term.

These Reforms are Low Cost and High Return

We estimate that the cost of implementing on-site methane mitigation to meet the emissions intensity baseline for methane will cost coal companies just $0.5 AUD per kg of methane emitted from underground coal mines and $1.1 AUD per kg of methane emitted from surface coal mines.

According to the IEA’s analysis, the total cost of implementing best practice methane mitigation measures across Australia’s coal mines is approximately $500 million AUD annually. This is just 1% of the annual profits of the coal mine industry and would deliver a 42.6% reduction in Australia’s coal mine methane emissions by 2030. 

Not only are these measures low cost and feasible for the coal industry to meet a separate production-adjusted emissions intensity baseline for methane, they are costs that will be reinvested into coal mining innovation and coal mining communities.

They represent $500 million AUD annually being injected into coal mining communities and additional high quality jobs in the measurement, monitoring and reduction of methane emissions at existing coal mines. These methane mitigation measures also contribute to better work health and safety outcomes for miners as methane pollution is a major explosion risk. The utilisation of coal mine methane can lead to the generation of heat and electricity, resulting in further benefits to Australian society.

This is critical investment to support coal mining regions as the industry transitions away from coal in the coming decades. Methane mitigation is a skillset that will continue to be employed after mines close, as emissions continue for many decades, while captured methane can continue to be utilised for electricity and heating.

The safeguard mechanism could move Australia from laggard to leader on global methane emissions reduction, if the Australian government commits to reforms that directly tackle its growing coal mine methane problem.

Our research and the IEA’s 2023 data shows that it is possible to tackle almost half of Australia’s coal mine methane at a low cost, and that the safeguard mechanism can be reformed to incentivise this important mitigation onsite. A separate emissions intensity baseline for methane in the safeguard mechanism tackles coal mine methane at the source, for low cost and with high returns. Australia’s coal mine methane problem is growing, there can be no more excuses for allowing coal mines to continue emitting methane unabated.

Annika Reynolds Climate Policy Advisor, Ember

Supporting Material


Methodology

Sources

This analysis uses the 2022 coal mine methane estimates from the International Energy Agency (IEA), and does not cite the emissions officially reported to the National Greenhouse and Energy Reporting (NGER). The IEA estimate does not include emissions from abandoned or closed coal mines.