Independent Planning Commission sets new greenhouse gas performance measures in approval for Narrabri Mine extension - Clean Air / Pollution

On 1 April 2022, the NSW Independent Planning Commission (Commission) granted approval for the Narrabri Underground Mine Stage 3 Extension Project (Extension Project). The development consent granted in respect of the Extension Project incorporates a number of unprecedented conditions targeted at the minimisation of greenhouse gas emissions (GHGE). For proponents, these conditions and the reasons behind them indicate a shift in focus towards ongoing GHGE operational requirements and a push to embrace technological transformation.

The Extension Project

Narrabri Coal Operations Pty Ltd (Applicant) applied for an extension of the Narrabri Mine (Mine), an existing underground thermal coal mine located 25 km from Narrabri in NSW. The proposal for the Extension Project sought to extend the mining operations from 2031 to 2044, as well as seeking approval for a range of other changes to the surface infrastructure and surface development footprint.

In January 2022, the Extension Project was referred to the Commission after receiving a significant number of submissions which raised concerns relating to GHGE, climate change, water, biodiversity, noise, rehabilitation and the socioeconomic costs and benefits of the Extension Project.

The Mine was estimated to produce around 1.36 Mt CO_2-e annually in Scope 1 emissions, 0.12 Mt CO_2-e annually in Scope 2 emissions and 19.81 Mt CO_2-e annually in Scope 3 emissions.

Following their review, the Commission determined to approve the Extension Project, subject to stringent conditions including a new requirement for the Applicant to develop and implement a Scope 1 Emissions Minimisation Plan. Whilst the existing development consent for the Mine required the Applicant to submit a one-off greenhouse gas minimisation plan prior to carrying out longwall mining operations, the Commission described the new minimisation plan to be 'aimed at achieving Scope 1 emission intensities commensurate with the availability of new technologies and the maintenance of the 2022 to 2031 predicted level of GHG intensities for the life of the mine' (Scope 1 Condition).

The Scope 1 Emissions Minimisation Plan must outline reasonable and feasible measures to minimise Scope 1 emissions from the development, including abatement measures and technologies currently used or potentially available in NSW, Australia and internationally, including:

flaring methane and generating electricity from methane;
ventilation air methane capture technologies such as regenerative thermal oxidation;
low concentration methane enrichment or separation technologies;
carbon storage and sequestration technologies; and
other emerging technologies.

The Scope 1 Emissions Minimisation Plan must describe the actions to be implemented by the Applicant based on the above measures and must be updated every three years.

The Extension Project conditions also impose an obligation on the Applicant to comply with new Scope 1 and Scope 2 performance measures which require:

(Scope 1 – Emissions Intensity) – less than 0.218 tonnes CO_2-e emitted from the development per tonne of ROM coal per calendar year, or a lower emissions intensity in accordance approved emissions reduction targets; and
(Scope 2 – Electricity Consumption) – minimisation of GHGE by using electricity generated by renewable or carbon neutral energy sources where reasonable and feasible.

Scope 1 emission minimisation

Over the past few years, climate change related development concerns have brought an increased prevalence of GHGE mitigation requirements in the project approvals space. Project GHGE are generally placed within three categories, being Scope 1 – the direct emissions within an organisation's owned or controlled source, Scope 2 – indirect emissions from the consumption of an energy commodity, and Scope 3 – all other upstream and downstream emissions which are the result of activities from assets not owned or controlled by an organisation.

In considering the implementation of the Scope 1 Condition, the Commission noted their understanding that 85.7% of the Extension Project's Scope 1 emissions would be fugitive emissions for the extraction of coal, including unmanaged gas drainage and direct venting. The Commission also concluded that the Extension Project's Scope 1 and 2 emissions were measured using methodologies consistent with current national and NSW policy settings and commitments, but in the absence of any clear policy guidance on performance criteria or offsets, the project was lacking in consistency with the NSW Climate Change Policy Framework, the New Zero Plan and Australia's obligations under the Paris Agreement.

The Department of Planning and Environment's (Department) Assessment Report for the Extension Project, which was referred to in the Commission's Statement of Reasons, had recommended performance measures that may be improved overtime, and a condition requiring the Applicant to prepare a three yearly Fugitive Emissions Minimisation Plan. In recommending this condition, the Department noted that:

while the emissions intensity of the Mine was lower than comparable mines such as the Dendrobium Extension Project or the Tahmoor South Project, the total resource to be extracted is significantly higher and therefore overall emissions are higher;
the Mine's annual fugitive emissions would be approximately three times higher than the historical levels of the Mine;
the highest annual emissions would occur in approximately years 12 to 19 of the Extension Project when the longwall extraction would be occurring in the part of the coal seam with the highest methane; and
that only very substantial mine design changes would be effective in reducing the overall fugitive emissions.

Finally, the Commission's Statement of Reasons interestingly provided an insight into current preferences regarding emissions mitigation by offsetting. While it was noted that the Applicant will always have the opportunity, over the entire life of the Project, to offset any GHGE over the prescribed limits in order to maintain compliance with the conditions, the Commission confirmed that it does not consider it, reasonable or appropriate, to require offsetting of all of the Project's GHGE. Rather, the Applicant will retain the practical flexibility of choosing whether to continuously implement and deploy appropriate technologies (which is the outcome that the Commission intended to encourage) or offset exceedances of GHGE.

Insights on Scope 3 emissions

The Commission's Statement of Reasons also provides further insight on its current position on Scope 3 emissions. For proponents of coal mining projects, Scope 3 emissions are generally the highest and also the most complex to navigate, regulate and mitigate. In their Statement of Reasons, the Commission reflected on their current interpretation of Scope 3 emission considerations under the State Environmental Planning Policy (Resources and Energy) 2021 stating:

'The Commission also agrees with the Department that the key areas for active management of GHG emissions within the development assessment and approval process for NSW are reductions in direct emissions and improved energy efficiency... while the Project's Scope 3 emissions would contribute to anthropogenic climate change, they are more appropriately regulated and accounted for through broader national policies and international agreement (such as the Paris Agreement)'.

This is a turning point for the Commission, particularly in comparison to their previous approvals, for example their 2021 approval of the United Wambo Joint Venture Open Cut Coal Mine which required the proponent to develop and implement an Export Management Plan that would only allow the delivery of coal to signatories of the Paris Agreement.

What to expect in future approvals

This approval of the Narrabri Extension Project confirms that GHGE remain a key area of focus throughout the planning assessment process, from environmental impact statements, to public submissions and determination. Over the past few years, the coal industry has faced significant uncertainty surrounding what would be required to obtain a project approval. This decision shows a step away from a previous approval focus on scope 3 emissions and an ongoing focus towards minimisation of scope 1 and 2 emissions over time as technology improves.

McCullough Robertson Lawyers has extensive environment, planning and approvals expertise across the resources sector, including in areas of GHGE and meeting climate change demands.

Special thanks to Yasmin Box for her contribution to this article.

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