New NSW coal mine a clear sign the Safeguard Mechanism is failing

 New NSW coal mine a clear sign the Safeguard Mechanism is failing

That the NSW government has just approved the state's biggest coalmine is a signal that the Federal government's tool for regulating industrial emissions is not working, and is in fact enabling further coalmine development, global science and research institute Climate Analytics said today. 

The approval of the massive Glencore and Yancoal's HVO coal mine continuation project greenlights the biggest coalmine ever approved in the state. Its lifetime emissions, including from combustion overseas, are projected to be nearly twice Australia’s current net emissions.

The government's Safeguard Mechanism is supposed to regulate large industrial projects like new coal mines, but instead of reducing emissions year on year, it allows industry to buy offsets so that emissions may not decrease at all.

The critical numbers illustrating this can be seen in the SGM data for the 63 coal mines it covered in 2023-24 and 2024-25. Actual emissions increased by 4.3% while the baseline allowed net emissions to decrease by 5.9%, all legally enabled by the companies being allowed to buy unrestricted offsets. Emissions from these 63 mines were 18% above baseline in 2024-25.

"We are in a global climate crisis, and New South Wales is what I'd describe as being a  frontline state for climate impacts, having experienced terrible floods and bushfires in recent years- and with a massive El Niño coming are likely to face severe conditions this summer," said Bill Hare, Climate Analytics CEO. 

"The Federal government's main instrument for regulating high emissions projects like this coalmine is the Safeguard Mechanism, but it's abundantly clear it's not working and is not fit for purpose. All these companies need to do is simply buy cheap offsets to enable them to continue emitting, and even increase emissions." 

He noted the International Energy Agency has stated that there's no need for any new mines, and this should be one of them. 

Climate Analytics, in its submission to the government's current review of the Safeguard Mechanism, is calling for a proper emissions trading scheme for the industrial sector - including mining that will provide in sentence for industry to invest in and profit from emission reductions.  

"Introducing a proper emissions trading scheme would do away with using offsets to discount emissions, and set up a system of financial incentives for companies to cut emissions," said analyst Thomas Houlie, author of the submission.

"If Glencore and Yancoal had to pay for their emissions under an ETS instead of buying cheap offsets, they would likely be having a good long think about whether it's financially viable to extend the life of a massive coal mine. That's the role the Safeguard Mechanism should play."