Safeguard Mechanism implementation: production variable updates and international best practice benchmarks

22 January 2024

Safeguard Mechanism Operational Policy Team
Department of Climate Change, Energy, the Environment and Water
John Gorton Building
King Edward Terrace
Parkes, ACT, 2600

RE: Safeguard Mechanism implementation: production variable updates and international best practice benchmarks

Whitehaven Coal (Whitehaven) welcomes the opportunity to provide feedback to the consultation: Safeguard Mechanism implementation: production variable updates and international best practice benchmarks, which is focused on the exposure draft to amend the Safeguard Rules to establish further updates to implement the Safeguard Mechanism reform.
Whitehaven is a leading Australian coal producer, exporting predominantly to Asian markets. In addition to our operating mines, we currently have two coal development projects which would be covered by the Safeguard Mechanism’s definition of new facilities, the Winchester South Project and the Vickery Extension Project. The Winchester South
Project is an open cut mine which would produce a majority of metallurgical coal, while the Vickery Extension Project is an open cut mine which would produce a majority high-calorific value thermal coal.
Whitehaven’s feedback is focused on the international best practice benchmark proposed for new coal facilities, and follows our August 2023 submission on the draft Guidelines: setting international best practice benchmarks.
We reiterate the concerns raised in our August 2023 submission in relation to the approach taken for determining the greenhouse gas emissions (emissions) intensity benchmark for new facilities, notably the adoption of a benchmark based on the lower of the top 10% of international and Australian industry performance as measured by production volume. This proposed benchmark fails to accommodate for the inherent geological factors that differentiate each coal resource and the technologies currently available to mine them. This is likely to disincentivise investment in Australia, and shift this investment to foreign jurisdictions.
It is vitally important that policy changes maintain the international competitiveness of Australia’s coal export sector to support Australia’s economic prosperity, global energy security and an orderly global transition to low carbon power generation. Metallurgical coal is essential to meet the growing steel demand which is required to deliver Australia’s and the world’s ambitious renewable energy build out.
Emissions intensity for new coal mines
The draft amendments (Item 15) propose a best practice emissions intensity, which will apply to new Safeguard-covered coal mining facilities, of 0.00592 t CO2-e per tonne of run-of-mine coal. As outlined in the explanatory statement to the draft amendments, this benchmark ‘is based on the top 10% of Australian industry performance, as Australian mines were found to be less emissions-intensive than overseas mines with suitable, high-quality data’. We understand the benchmark is based on data from between 2012-13 and 2016-17.
The benchmark for new coal facilities represents a 91% lower emissions intensity than the industry average emissions intensity of 0.0653 t CO2-e per tonne of run-of-mine coal, and based on our estimates, is lower than the emissions intensity achieved by any Safeguard-covered coal mine in recent years.
The benchmark does not accommodate for the variation in emissions-intensity across the coal sector, which is materially more diverse than any other Safeguard sector. This was acknowledged by the Federal Government in its approach to setting the emissions intensity baseline for existing coal facilities. The extent of this variability is driven by the geology of a coal deposit which determines the mining method that is suitable, and the level of fugitive emissions. Please refer to
Whitehaven’s August 2023 submission which included a more comprehensive explanation of the impact of geological factors in determining mining methods.

Whitehaven Coal Limited ABN 68 124 425 396

Level 28, 259 George Street, Sydney NSW 2000 | PO Box R1113, Royal Exchange NSW 1225
02 8222 1100 | info@whitehavencoal.com.au | www.whitehavencoal.com.au
In addition, with the technology gap between existing and new open cut coal mines modest at best, imposing a significantly lower emissions intensity baseline to new facilities will create competitive distortions.
For the coal mining industry, there are currently limited commercially scalable technology options available to abate emissions in the short term, and there is significant uncertainty on the availability and time frames of technically and commercially feasible abatement technologies in the future. There is no commercially available or technically suitable replacement for the large haul diesel trucks and excavators used in open cut mines, with original equipment manufacturers not expected to have low or zero emissions technologies available until after 2030. It should further be noted that capturing and flaring fugitive methane emissions at open cut mines is only practicable for mines with high in- situ methane gas content.
The proposed best practice benchmark represents a textbook example of arbitrary emissions targets being imposed across sectors before the technology is ready to play a meaningful role in contributing to those targets. This will only make the energy transition more difficult and more costly for Australian companies, their employees and other stakeholders relative to international competitors.
Most new coal mines would not be able to achieve the emissions intensity benchmark for new facilities which would require:
• an open cut coal deposit which enables a dragline and shovel mining method to be adopted – which shifts a
proportion of Scope 1 emissions to Scope 2 emissions
• the lowest strip ratio, and
• very low fugitive emissions or a high in-situ methane gas content suitable for capturing and flaring.
We recommend the best practice benchmark for new facilities is based on a ‘best one-third’ of production rather than a
‘best 10 per cent’ of production approach to recognise the uncontrollable geological factors which impact coal mines’ emissions intensities, while still being consistent with incentivising new facilities to adopt the latest technology for emissions control.
We thank you for consideration of our feedback and would welcome the opportunity to further discuss our submission.
Yours sincerely

Michael van Maanen
Executive General Manager – Corporate, Government & Community Affairs

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