Future mining projects in NSW will happen (with restrictions) under new Strategic Statement

Key planning decisions made in recent years have brought to a head the tension between the economic and energy security advantages of coal powered energy supplies and its contribution to greenhouse gas emissions. The Land and Environment Court’s refusal of the Rocky Hill mine project, and the Independent Planning Commission’s (IPC) rejection of KEPCO’s Bylong Coal Project, in part, due to the effects on “downstream” greenhouse gas emissions, raised concern about the future development of the coal industry.

The NSW Government has moved to provide greater certainty to the sector, with the release of the Strategic Statement on Coal Exploration and Mining in NSW (Strategic Statement) which clarifies that future mining projects will either be extensions of existing projects or new projects in specific locations across the Sydney, Gunnedah and Gloucester Basins.

Background: new Bill, and the role of the Strategic Statement

In October last year Minister Stokes responded directly to the cases noted above by introducing the Environmental Planning and Assessment Amendment (Territorial Limits) Bill 2019, which seeks to remove the direct requirement in the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 that the decision-maker consider the "downstream greenhouse gas emissions" of the development (ie. from the transport and combustion of that coal overseas).

Additionally, it would eliminate the possibility of a consent authority imposing extraterritorial conditions on mining consents, as was the case with the IPC’s approval of the United Wambo Project. That project was approved subject to conditions that the coal it produced be exported only to signatories of the Paris Agreement or countries approved by the Secretary of the Department of Planning, Industry and Environment (DPIE) as having similar policies.

The progress of this bill has stalled and it is currently unclear when and if it will be enacted into law. The Strategic Statement follows as another measure the NSW Government is taking to provide certainty to the sector, and its communities, moving forward.

Four areas of focus during transition to alternative energy sources

The Strategic Statement acknowledges that the NSW economy is an economy in transition towards alternative forms of energy consistent with the NSW Government’s Electricity Strategy. However, in the short to medium term, there is an important place for coal mining and coal fired energy while the transition to renewables and other lower greenhouse gas emitting sources of energy – such as gas fired power stations or hydrogen projects – are brought online.

Currently in NSW 80% of electricity comes from coal and coal supplies a third of all electricity globally. The coal mining sector is a significant source of government revenue and economic stimulus with 85% of coal mined here being exported to Japan, China, South Korea and Taiwan. The transition away from coal and towards low carbon sources of energy will be a gradual and progressive one in line with the commitments under the Paris Agreement. The Strategic Statement states that ending or reducing thermal coal exports while demand remains strong has little to no impact on global carbon emissions as coal consumers will go elsewhere. The emphasis instead should be on replacing coal fire electricity with cleaner alternatives.

The Strategic Statement sets out four areas of focus for the NSW Government during this transition:

1. Improving certainty about where coal mining should not occur

The NSW Government has released a map clearly indicating the areas where coal exploration and mining cannot occur. In practice there are broadly three land categories where mining is prohibited:

• Areas where coal mining cannot be carried out because of prohibitions in State Environmental Planning Policies;
• Land reserved under the National Parks and Wildlife Act 1974 where coal exploration and mining is already prohibited; and
• Areas which the NSW Government has identified will not be subject to proactive release under its Strategic Release Framework for Coal and Petroleum Exploration.

The accompanying map specifically identifies the Benelabri area, EL7223 Watermark buy-back area, EL6506 Caroona buy-back area, the Rocky Hill project area and Doyles Creek area as areas where coal mining is prohibited by a State Environmental Planning Policy.

2. Support responsible coal production

The NSW Government has pledged to recognise existing coal mining investment, namely by:

• considering responsible applications to extend the life of current coal mines and streamlining processes for exploring areas adjacent to current operations; and
• considering the release of a limited number of areas for new coal projects.

These "new" areas will be those identified as having high production potential and minimal conflicting land uses and where adverse impacts can be appropriately managed.

The accompanying map identifies the potential areas for release under the Strategic Release Framework and these include Gorman North, Coolah South, Giants Creek, Wollar, Hawkins, Rumker, Ganguddy-Kelgoola and Wollombi areas. The only other areas where new coal exploration can take place are those adjacent to existing coal titles.

Ultimately the release of new areas will be the subject of a separate competitive tender process, and then further planning approvals. However the Strategic Statement clearly indicates the areas in which new coal exploration and mining will be contemplated.

3. Reducing the impact of coal mining

The NSW Government has committed to further reducing and/or mitigating adverse impacts from current and new projects through:

• strengthening regulatory requirements for mine rehabilitation and closure planning;
• supporting the improved management of impacts from these projects on air and water;
• facilitating beneficial uses of land at the end of a mine’s life;
• ensuring communities share the benefits of mining;
• addressing the impacts of mining on the Greater Sydney Water Catchment;
• reducing the greenhouse gas emissions associated with coal mining; and
• monitoring the security of supply of coal for domestic coal users throughout the transition.

4. Supporting diversification of coal-reliant regional economies to assist with the phase-out of thermal coal mining

This will involve place-based planning to help transition communities that are reliant on the coal mining industry. Assistance will first be provided to those regional communities expected to experience the earliest decline in coal production, and the Upper Hunter region because of the prominence of this industry for the local economy.

Key take-out for mining proponents in NSW

For the NSW coal industry the Strategic Statement provides affirmation of the importance of coal energy sources in the economy and a commitment that coal projects have a place in the short to medium term. The Strategic Statement is a clear policy indication that new coal-based development in NSW is limited to extensions of existing projects or new projects in specific locations across the Sydney, Gunnedah and Gloucester Basins. All coal mining applications for determination currently listed on DPIE’s Major Projects register are modifications to existing mining projects.

Despite the Strategic Statement, there is still uncertainty for mining proponents seeking to expand their operations. Legislation addressing the relevance of extraterritorial environmental impacts from coal mining projects and clarifying whether scope 3 greenhouse gas assessments are needed has not yet been passed. Applicants seeking to extend existing projects or embark on new projects, following the strategic release of new coal exploration areas, will need to navigate this planning approval process. The Strategic Statement will however be a relevant consideration for a determining authority to take into account. It is clear from the statement that the NSW Government’s current policy position is that coal mining will have a place in the energy transition in NSW in the short to medium term.