INSIGHT

Latest coal mine decision concludes scope 3 emissions are the end customer's responsibility

By Felicity Rourke, Naomi Bergman
Climate Change Environment & Planning Mining Resources

In brief 5 min read

The Rix's Creek Continuation Project (Project) has been approved by the NSW Independent Planning Commission (Commission) only weeks after the refusal of the Bylong Coal Project (Bylong). In its approval of the Project, the Commission accepted that scope 3 emissions are the responsibility of the end customer for coal exports. This conclusion significantly departs from the position taken by the differently constituted Commission on Bylong.

Key takeaways

  • Recent decisions of the Commission reveal potentially inconsistent approaches to the assessment of greenhouse gas (GHG) emissions and climate change impacts. This makes it more difficult for sector participants to predict the position likely to be taken by the Commission in relation to future coal projects, whether they be expansions / continuations or greenfield proposals.
  • The Rix's Creek approval suggests the Commission is willing to accept that scope 3 emissions are the responsibility of the end user and should be accounted for in the emissions reduction targets of the countries to which the coal is exported. However, it may still be necessary for applicants for future projects to demonstrate measures to address scope 3 emissions, given the comments made by the Commission in the Bylong decision.
  • It is unclear whether, in future assessments, the NSW Climate Change Policy Framework (CCPF) will have any bearing on the assessment of coal mining proposals – and, if so, how it should be applied. The Commission has taken different approaches to the CCPF in its last two decisions. The Department of Planning, Industry and Environment (Department) clearly remains of the view that the CCPF is not relevant to private sector proposals.
  • A clear distinction appears to be emerging between the Commission's preparedness to support expansion / continuation projects compared to greenfield projects.

Background

On 12 October 2019, the Commission granted approval for the continuation of coal mining at Rix's Creek for a further 21 years.

The approval came after a false start in the previous week, when the Commission, in what has been described as a somewhat embarrassing administrative blunder, issued approval before the deadline had passed for written comments in response to additional information from the Department. The Commission retracted its earlier decision a few hours later to allow the period for comment to run its course.

The revised period for comment concluded at midday on 11 October 2019. The Commission published its decision to approve the Project the following day.

While the Commission's decision followed extensive consideration of the Project's likely environmental, social and economic impacts, it is the Commission's assessment and conclusion in relation to GHG emissions which is likely to attract intense interest.

Scope 3 emissions

The Commission accepted that the Applicant, Bloomfield Collieries Pty Ltd (Bloomfield), does not have direct control over scope 3 emissions and accepted Bloomfield's view that scope 3 emissions are the responsibility of the end customer for coal exports. The Commission was satisfied by Bloomfield's commitment to do what it can to minimise scope 1 and 2 emissions, and imposed conditions of consent requiring Bloomfield to take all reasonable steps to improve energy efficiency and reduce the scope 1 and relevant scope 2 GHG emissions of the Project.

On this issue, then, the Rix's Creek decision appears to be directly contrary to the position taken by the Commission in relation to the Bylong proposal.

The Commission considered that because the countries to which the coal from Rix's Creek is proposed to be exported are either signatories to the Paris Convention or have developed GHG reduction targets, market forces are likely to lead buyers in those countries to minimise associated emissions in order to achieve the relevant domestic emissions reduction targets. The Commission therefore concluded that GHG emissions have been adequately minimised as far as practicable and 'within the capability of the Applicant's control'. The conditions noted above were considered by the Commission to be 'adequate and reasonable for a project of this size and nature given the current national and state policies'.

This decision comes less than four weeks after a differently constituted Commission refused approval for the Bylong Coal Project, in a decision which cited the Applicant's failure to minimise scope 1, 2 and 3 GHG emissions to the greatest extent practicable as a relevant factor.

On this issue, then, the Rix's Creek decision appears to be directly contrary to the position taken by the Commission in relation to the Bylong proposal.

Application of Climate Change Policy Framework

While the CCPF is included in the list of policies and guidelines considered by the Commission in reaching its decision in relation to the Project, the Commission's comments suggest the weight placed on the CCPF in this instance also differs from the Bylong decision.

In the Bylong assessment, the Department concluded that the CCPF does not apply to the private sector or to development assessment or control. This was not accepted by the Commission, which concluded the CCPF had a direct bearing on their determination in that case.

Again in the Rix's Creek assessment, the Department concluded that the CCPF does not set emission reduction criteria, targets or outcomes that have application to the private sector or to development assessment or control. On this occasion, the Commission accepted that the Department's assessment took into consideration the relevant State and national policies, programs and guidelines concerning GHG emissions, suggesting the Commission accepts the Department's characterisation of the CCPF.

Brownfield vs greenfield projects

A key reason for approval given by the Commission was the fact that the application was in respect of an existing brownfield site, with existing operational mining infrastructure. The Commission found that intergenerational equity had been addressed through maximising efficiency of the coal resource recovery and productivity on an existing brownfield site.

This supports the observation made in our previous Insight in relation to the Bylong decision that a clear distinction appears to be emerging between the Commission's assessment and conclusions on expansion / continuation projects in contrast to greenfield projects.