Submission: Climate Change Authority – Accelerating action on fossil methane emissions

6 August 2026

To: Climate Change Authority
Re: Consultation on Fossil methane: A near-term abatement opportunity
 

Thank you for the opportunity for the Institute for Energy Economics and Financial Analysis (IEEFA) to provide input to the Climate Change Authority – Consultation on Fossil Methane.

IEEFA is an independent energy finance think tank that examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

Australia ranks among the world’s largest exporters of fossil fuels, including coal and LNG. Production of these is associated with fugitive methane emissions, released via leakage, venting, and flaring in oil and gas extraction and in coal production before, during and after mining. In all, Australia emits about 30MtCO2e of this short-lived but high global warming potential gas a year.

The Safeguard Mechanism is Australia’s primary emissions reduction lever to manage large-scale emitters. Fossil fuel producers account for 86% of methane emissions managed under the Safeguard. Without improvements to the way fugitive methane is measured and managed, Australia and key states will struggle to meet their emissions reduction targets.

IEEFA’s key recommendations include:

Q1. Requirements to strengthen the management of closed mines, particularly underground mines that are placed in care and maintenance or have temporarily ceased production, as they keep on emitting and do not receive mine closure and sealing treatment.

Q2. Policy settings need to be strengthened and broadened to create strong incentives for methane emission abatement in Australia’s fossil fuel sector. This year, the federal Safeguard Mechanism will be reviewed while new coalmine regulations were introduced in NSW. However, the limited scope of these policies/reviews is expected to limit their effectiveness to drive change.

Q3. Methane abatement technologies and practices are commercially available and economically attractive. However, further development is required to commercialise lower cost and more expansive abatement activity.

Q4. The recent Safeguard reforms have been ineffective in driving new methane abatement in the fossil fuel sector. Coal and gas producers continue to prioritise growth over abatement so there is more work to do to incentivise material abatement activities.

Q5. Coal and oil and gas account for 68% of all offsetting in the Safeguard Mechanism. Offsets prevent or at least discourage onsite abatement; they are unconstrained, and as their price is low funding available for real abatement remains underutilised.

Q6. Ventilation air methane (VAM) abatement is a commercially available and technically proven technology in operation across the globe. A number of VAM abatement projects have been launched in Australia, via matched grant funding. IEEFA estimates about half of the high-emitting active mines could be amenable to VAM abatement while others have insufficient remaining mine lives to achieve returns on the capital investment required.

Q7. Further evidence of potential methane under-reporting in open-cut coalmines was published this year, validating IEEFA’s earlier findings. Improving methane measurement is a necessary step to improving both financial incentives for abatement and the efficacy of regulatory regimes intended to drive methane emissions reductions.

Q8. Practical and additional policy measures for consideration should include: scrutinising new coal and gas developments, expanded regulation and creating urgency through pricing signals.

Q9. Specific targets should be set for methane and carbon dioxide emissions reduction to drive change. Current targets bundle methane and carbon dioxide emissions together, and is driving change on neither. 

Kind regards,

Andrew Gorringe, Energy Finance Analyst – Australian Coal, IEEFA
Joshua Runciman, Lead Analyst – Australian Gas, IEEFA