The NSW Department of Planning has warned the outcome of the court case would have “significant implications” for coal mining developments.
“The in principle decision to impose a condition requiring a single mining proposal to offset scope 1 greenhouse gas emissions has significant implications for future mining proposals in New South Wales,” the department said.
“It may also affect other new proposals where scope 1 greenhouse gas emissions will be produced.”
In November Xstrata was told by the NSW Land and Environment Court it would have to pay to offset some of its Ulan mine’s greenhouse gas emissions as a condition of operation under a provisional court decision, despite receiving government approval to double production and extend the mine’s life to 2031.
Justice Nicola Pain said approval should "in principle" be granted to the project, "subject to conditions", which are now to be discussed in Sydney today before they are finalised.
The Court’s provisional judgement was made after an action by environmental group Hunter Environment Lobby that argued that the Ulan mine would create scope 1, 2, and 3 emissions.
Scope 1 emissions include fugitive methane emissions, scope 2 emissions come from the mine operations themselves and scope 3 emissions are generated by the overall economy when generating power using coal. By the end of the case, HEL sought conditions for Ulan to offset scope 1 and 2 emissions.
It claimed Ulan would emit 28.7 million tonnes per annum of carbon dioxide equivalents, which would release 575Mt of carbon dioxide equivalents into the atmosphere over the mine life.
As a result of these arguments Justice Pain has set a condition for Ulan to mitigate and offset the additional scope 1 emissions that would be generated under the expansion of the mine.
Ulan has estimated it would cost $2.2 million a year to offset these additional emissions.
The Ulan expansion to 20Mtpa would create an additional 295 full-time jobs, more than 880 indirect jobs, and $A11.9 billion in direct increased economic activity over its extended mine life, according to Xstrata.
In her provisional judgement, Justice Pain found that it was not discriminatory for Ulan to pay to offset greenhouse gases and that the court had the power to impose conditions on major resource and infrastructure projects prescribed by NSW’s now defunct Part 3A planning procedure.
Former Labor Party planning minister Tony Kelly approved the expansion a year ago under Part 3A.
''That this is the first such condition imposed on a coalmine in NSW is not necessarily discriminatory,'' she is reported as saying in the Sydney Morning Herald.
''It is simply the first occasion that has occurred.
''As other operating coalmines seek approval to modify or extend their operations, or new coalmines are opened, it would be open to the consent authority, which may be the minister, to impose a similar condition.''
Xstrata is expected to appeal the provisional decision. Former Xstrata spokesperson James Rickards is quoted as saying: "Discussions are yet to be conducted, as guided by the court, as we look towards trying to resolve the matter definitely and progress the Ulan operation."