NGERS Proposed Changes to Open Cut Coal Mine Fugitive Emissions

The Department of Climate Change, Energy, the Environment and Water (DCCEEW) has announced proposed changes to the National Greenhouse and Energy Reporting scheme (NGERs), including the phase out of Method 1 used to report fugitive emissions from open cut coal mines. These proposed changes will be rolled out in tranches, beginning with Safeguard Mechanism facilities that produced more than 10 million tonnes of run of mine (ROM) coal in FY2023 from 1 July 2025, and other Safeguard Mechanism facilities from 1 July 2026. Currently, 22 of the 51 open cut coal Safeguard facilities use Method 1.

Method 1 refers to the simplified estimation of fugitive emissions by applying the state-based emissions factor to the ROM tonnes produced in the reporting period.

Method 2 involves developing a mine specific gas reservoir model for the in-situ methane and carbon dioxide in place prior to extraction of coal. This model should be used to estimate the fugitive emissions each year when extracting coal.

The impact to these open cut facilities is not to be underestimated. There are a few immediate challenges that will need to be worked through:

1. Impact on baselines: Each Safeguard facility now reports against a set baseline to measure the year-on-year reductions. However, if these baselines were determined using Method 1, there will likely be a difference when moving to Method 2. If this difference is higher than the current baseline, the support from the Regulator will be required to set new baselines.
2. Availability of capabilities: The process to move to Method 2 is comprehensive, with a drilling, gas sampling and analysis, and reservoir model development required. The number of people who have the skillset to be an “Estimator” as deemed by the Regulator is low, which will inevitably cause a delay in the shift to Method 2.
3. Cost: Moving to Method 2 will be costly. There’s no way around that. However, in a time when coal prices are down, it’s not the ideal time for this capital expenditure. The longer miners wait to begin the process, the more it is likely to cost, due to a squeeze on the small talent pool, availability of rigs, access to consultants, etc. Unfortunately, the cost to shift methodologies will simply add another layer to the cost of compliance.
4. Emissions reductions: To reduce fugitive emissions in an open cut coal mine, pre-drainage ahead of mining is essential. However, to begin this process, most operations will require an amendment to their current approvals. This is a time and cost intensive process. Unravelling red tape and simplifying this process to make it easy for operators to decarbonise is essential at both NSW and Qld state governments.

While most of these challenges have a resolve, it’s how that plays out that will be of interest. The time to develop the work plan and execute on Method 2 will take the full 12 months, so when do you start to move? The consultation period closes 24 May, with commencement of the rule change from 1 July 2024.

National Greenhouse and Energy Reporting (NGER) scheme – 2024 proposed updates: https://consult.dcceew.gov.au/national-greenhouse-and-energy-reporting-nger-scheme-2024-proposed-updates.