Carbon Price 2011: coverage of fugitive emissions from coal mining

17 Aug 2011Archived News Climate Change Matters

Fugitive emissions of greenhouse gases (i.e. methane and carbon dioxide) from open cut and underground coal mines will count towards the 25 ktCO2-e threshold and also be subject to the carbon price. The only exception is fugitive emissions from decommissioned mines.

Assistance for “gassy” mines

Due to the variable nature of coal deposits, some mines extract coal that contains more greenhouse gases than others. The Government document, Securing a Green Energy Future, refers to additional carbon costs of up to $25 per tonne of saleable coal for a very gassy mine.

The government has proposed a six year program of assistance to gassy mines. A gassy mine is defined as one having an emission factor of greater than 0.1 tonne CO2-e per tonne saleable coal in 2008-09. These mines will be able to gain assistance of up to 80% of their fugitive emissions exposure above 0.1 tonneCO2-e per tonne saleable coal. In most (if not all) instances, gassy mines are underground mines.

The assistance will not be available to new mines or expanded production.

This is capped by basing assistance on production levels from the either 2007-08 or 2008-09, whichever is higher.

Support for abatement projects

There will be a program of grants called the “Coal Mining Abatement Technology Support Package" worth $70 million over 6 years. Funding will be provided on a co-contribution basis towards the implementation of "carbon abatement technologies".

Implications for miners

  • In order to make a claim for assistance as a gassy mine, it will be necessary to use “higher order methods” for estimating fugitive greenhouse gas emissions from coal mines. That is, estimates based on measurement and monitoring or sampling, rather than the use of default emission factors.
  • It is not clear whether non-gassy mines will be required to report emissions estimated using the higher order methods, however, it will be in the interest of the mine to do so where the actual emission factor is lower than the default figure.
  • In addition to being directly taxed for fugitive emissions, mines will potentially also be exposed to increased prices for electricity, as the carbon price is passed on, as well as increased increase diesel fuel excise or reduced tax credits.
  • The Technology Support Package will provide an opportunity for some sites to turn what was once a waste product of mining (i.e. coal seam methane) into a resource.

Written by:

Jody Asquith

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