Submission: NSW Parliamentary Inquiry into Fossil Fuels

22 August 2025
 

To: Parliament of NSW Joint Standing Committee on Net Zero Future
Re: NSW Parliamentary Inquiry into Fossil Fuels
 

Thank you for the opportunity for IEEFA to provide comments on the NSW Parliamentary Inquiry into Fossil Fuels being conducted by the NSW Joint Standing Committee on Net Zero Future. 

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.

In summary:

A. Consequences for NSW climate targets

• If fossil fuel methane emissions remain at 2022 levels, they would equal 69% of NSW’s 2035 target emissions; adjusted for underreporting, this rises to 78%.
• Methane is not projected to fall nationally, unlike carbon dioxide (CO2), undermining NSW’s legislated targets.

B. Methane reporting and measurement

• (i) Underreporting risk is significant: open-cut coalmines may emit two to three more times more methane than reported. Open-cut coalmines switching to Method 2 could worsen underestimation.
• (ii) A twenty-year global warming potential better reflects methane’s short-term warming impact and strengthens abatement incentives.
• (iii) Verification: United Nations Environment Programme flyovers found emissions three to eight times higher than reported at one mine and offer a complementary technology to combine with satellite and remote sensing technology for methane emission verification purposes.

C. Emission modelling

• NSW modelling could account for potential methane emissions underreporting by modelling scenarios 30-100% higher than reported emissions in the open-cut coal sector. 

D. Abatement feasibility

• Coal:
  • Reducing production is an effective way to reduce methane emissions in the resources sector.
  • Pre-drainage trials at open-cut mines show technical and commercial feasibility.
  • Ventilation air methane (VAM) abatement is mature technology, widely used overseas.
  • Post-closure methane capture is proven in the US and Germany.
• Oil & Gas:
  • Existing technologies could abate up to 90% of emissions, often at negative cost.
  • Options include leak detection/repair, replacing high-loss equipment, vapour recovery, and electrification.

F. Policy recommendations

• Make methane abatement plans mandatory for new or expanded fossil fuel projects at the approvals stage.
• Consider implementing a NSW state-based methane/transition fund tax or emissions scheme. Revenue could support further abatement and decarbonisation efforts.
• International examples (such as Germany) show carbon pricing effectively drives methane abatement.

Kind regards,

Anne-Louise Knight, Lead Research Analyst, Australian Coal