Unlocking cost-effective methane abatement in the NSW and QLD coal industry

2025

There is a significant opportunity for state policy in NSW and QLD to complement the Safeguard Mechanism and unlock cost-effective, near-term and on-site fugitive emissions abatement from coal mines. Through an intensive co-design process, we developed and modelled the benefits of a suite of three complementary policy measures to help industry overcome these barriers and accelerate the adoption of cost-effective, on-site abatement.

Key takeaways

Fugitive emissions from coal mines are currently responsible for 9.7 MtCO2e in NSW (7% of annual emissions) and 11.6 MtCO2e in QLD (8% of annual emissions). Fugitive emissions could increase significantly, by 75% in NSW (to 17 MtCO2e) and by 90% in QLD (to 22 MtCO2e).
We estimate that there is approximately 5.1 MtCO2e per year of abatement available in NSW and 5.5 MtCO2e per year of abatement available in QLD that is likely to be cost-effective (< $30/tCO2e).
These abatement estimates are based on current technologies applied at just the 9 highest emitting underground mines in NSW and 6 highest emitting underground mines in QLD, which collectively account for 63% of national reported coal mine fugitive emissions but only 12% of coal production. Greater abatement is likely possible if solutions are adopted by more underground and open cut mines in these states.
However, there are material barriers to industry investment to mines investing in this on-site abatement.
We identified and modelled the costs and benefits of a suite of complementary, self-funding, state policies that could support industry to overcome these barriers. These measures include a methane abatement fund, regulated emissions intensity thresholds and state-wide methane measurement networks.
Our modelling found that state policy makers have many different design choices over the scope and scale of these policy measures that would accelerate abatement with a high net public benefits and low to negative cost to the coal industry. Combining the most effective design options across all three measures may:

- reduce NSW emissions in 2035 by 5.4 – 6.9 MtCO2e and contribute $3.4 – $4.3 billion to the economy, at a net cost to the mining sector of $2.70 to $4.10 per tonne of CO2e abated
- reduce QLD emissions in 2035 by 0.9 – 3.1 MtCO2e. The impact on the wider economy ranges up to a benefit of $1.8 billion at a net cost to the mining sector as low as $9.70 per tonne CO2e abated (noting that material, but comparatively lower, QLD benefits are expected due to significant abatement planned under the Low Emissions Investment Partnerships (LEIP) fund).

Unlocking cost-effective methane abatement in the NSW and QLD coal industry

Key takeaways

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