Coal mine emissions reporting methods remain a major blight on Safeguard success

Australia’s Safeguard Mechanism is finally beginning to do what it was designed to: place real limits on the country’s biggest polluters.

After years of climate inaction, the scheme has been significantly strengthened through the tightening of baselines, the removal of unused “headroom,” and a commitment to annual emissions reductions across 219 major facilities.

For a policy once written off as ineffective, these reforms mark a vital step forward.

When it comes to emissions from the coal sector, though, which are responsible for about one quarter of all emissions covered under the scheme this year, the story is far less clear.

Not only did the coal sector’s emissions barely move year to year, but its onsite emissions were higher than its sectoral ‘baseline’ goal, and largely reliant on offsets. What’s more, some of the biggest emitting mines were issued over a million Safeguard credits, due to yearly shifts in production rather than sustainable emissions cuts. 

However, the Safeguard’s success depends on one thing above all: trust in the data. Coal mine emissions reporting, particularly from open-cut coal mines, remains a major blind spot.

While underground coal mines still account for the majority of coal sector emissions under the Safeguard Mechanism, it is open-cut operations, and their use of the so-called “Method 2” estimation approach, that are driving the largest and most questionable changes in reported data.

Method 2 allows mine operators to calculate their own emissions factors based on site-specific assessments, rather than relying on default national figures.

In theory, this should result in more accurate reporting. In reality, it has become a pathway for companies to significantly lower their reported emissions without any external verification.

This year’s emissions data illustrates just how problematic this has become. Four open-cut coal mines used Method 2 to reduce their reported emissions by between 40 and 76 per cent.

These reductions were not the result of operational changes or improved abatement technologies. Instead, they were entirely the result of a change in the accounting method. In total, these mines removed 952,184 tonnes of carbon dioxide equivalent from their emissions totals.

At Collinsville, coal production increased by 33 per cent, yet reported emissions fell by 52 per cent. Clermont Coal also saw a 16 per cent rise in output, while emissions dropped by 59 per cent. These changes do not reflect a shift in environmental performance. They reflect inconsistencies in how emissions are calculated.

The most striking example is Mount Pleasant, which recorded a 76 per cent drop in emissions, amounting to 619,837 tonnes of carbon dioxide equivalent, even though coal production was expected to remain flat.

In its 2023 annual review, Mach Energy reported a new emissions factor of just 0.020 tonnes of CO2-equivalent per tonne of run-of-mine coal. This figure is more than three times lower than the state emissions factor used across New South Wales. Without this adjustment, total coal mine emissions under the Safeguard Mechanism would have increased compared to the previous year.

Method 2 does not always lead to convenient reductions. After years of international and state pressure highlighting that Hail Creek coal mine was likely emitting significant amounts of methane, the mine’s owners have adjusted its estimated emissions upwards this year, but not as far as atmospheric scientists were expecting. 

In the last year, estimated methane emissions at Hail Creek increased by 152 per cent despite a 5 per cent rise in production. Glencore, the operator of Hail Creek, Collinsville, and Clermont, confirmed that all three mines changed their reporting method last year.

While the net emission result of these shifts effectively paints a balanced picture, the fact that we have at least four mines whose emissions estimates have fallen, and one increase is barely a balanced result. 

These wildly different outcomes highlight how unpredictable these unverified site-specific results have become, and we still have no public access to how these assessments were conducted.

This matters. If emissions can be dramatically altered by changing a calculation method, the emissions reductions recorded under the Safeguard Mechanism lose credibility.

Strong climate policy must be grounded in accurate, verifiable data. If companies are allowed to lower their emissions liabilities through accounting changes, rather than real mitigation, the Safeguard Mechanism cannot be relied upon to deliver on Australia’s climate commitments, at least not for our open cut coal sector.

At Ember, we have been closely monitoring these trends. Earlier this year, we published an analysis of historical coal production and emissions growth in Australia, along with a focused assessment of Method 2 usage in New South Wales.

Our findings revealed a growing disconnect between coal output and reported emissions in open-cut mines using Method 2.

To assess the credibility of these numbers, we turned to satellite data. Our new satellite analysis, out today, found that actual fugitive methane emissions from coal mines in Australia are likely at least 40 per cent higher than currently reported. This includes what may be the first satellite-based reconstruction of fugitive emissions from open-cut coal mines in New South Wales.

The data is challenging, and measuring and verifying emissions across vast open cut mines is a genuine challenge that isn’t going to be solved overnight. But the atmospheric data to date strongly suggests that reported emissions from open cut mines are currently underestimating what is actually being released into the atmosphere.

This is not a marginal issue. Methane is more than 80 times more potent than carbon dioxide over a 20-year timeframe. Reducing methane emissions from coal mining is one of the most effective tools we have to slow short-term global warming.

If the Safeguard Mechanism is going to succeed, it must start with accurate reporting from the coal sector.

Reform is urgently needed. This does not mean eliminating Method 2 entirely, but it does mean changing how it is applied. Australia must:

– Reform Method 2 to ensure that all emissions factors are independently verified, transparent, and consistent with regional benchmarks and historical performance;

– Diversify bottom-up sampling across mine sites to ensure that measurements are representative, repeatable, and based on sound science;

– Mandate the use of top-down satellite data to verify company-reported emissions and ensure alignment with real-world atmospheric observations.

The Clean Energy Regulator is currently reviewing the use of company-led emissions reporting within the Safeguard Mechanism. That review must lead to strong, enforceable reforms that close loopholes and align emissions reporting with best practice.

The Safeguard Mechanism is a good policy. It is one of the strongest and most promising climate tools Australia has implemented in over a decade and it has the potential to shift the incentive structures for real onsite emissions cuts on coal mines. But if we allow unreliable coal mine emissions reporting to persist, we risk undermining the policy just as it begins to deliver real change.

Fixing this issue is not about punishing industry. It is about delivering equity. The Safeguard Mechanism is a valuable platform for the next government to encourage real mitigation across our coal sector, but those incentives need to be handed out on merit, and should be subject to the same checks and balances across the industry, and across the 219 biggest emitting facilities across our economy.

We have a critical opportunity in the next few years to build on this platform, and ensure that every tonne of climate warming pollution we add or abate, is a tonne we can trust, and a tonne we can take to the bank. 

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