Outgoing Premier Dominic Perrottet has reportedly called the New South Wales election “a genuine battle of ideas” after Sydneysider and Labor leader Chris Minns was elected as the state’s next Premier.
The notion of a ‘battle of ideas’ is perhaps already brewing within the newly elected NSW Labor Government camp. The government’s approach to tackling climate change is considered by some to be at odds with a touted plan to stave off power supply shortages by acquiring the state’s biggest coal-fired power plant Eraring from Origin Energy (ASX:ORG).
At one end, Labor went to the NSW election on a mandate it will legislate the state’s carbon emissions reduction targets and establish a Net Zero Commission. Under Premier-elect Minns, Labor says the commission will develop a plan to net zero by 2050, monitor and review the plan and trajectory, including impacts on jobs and industry, as well as energy prices.
The commission will have the power to make recommendations to the government on how to meet carbon emissions targets; support diversification of local economies, job creation, and job protection; ensure mining communities receive a fair share from royalties; and set targets for the government’s own energy use.
However, while the newly elected Labor government says its bill reflects the gravity and urgency of the climate crisis, Minns captured the attention of many earlier in March when he suggested he might consider acquiring the Eraring coal-fired power plant to stave off a supply shortfall of power in New South Wales.
Located in the seat of Upper Hunter, a coal mining region in the state’s Hunter Valley, the seemingly supportive move of coal-fired power and coal mining appears to be at odds with Labor’s commitment to meet carbon emissions targets.
As Minns flagged the possibility of buying up the black coal plant from owner Origin Energy and postponing the planned closure date of August 2025, the move could however prove financially beneficial for New South Wales, at least for the short-term, despite wider support for coal mining waning amid the transition to decarbonisation.
Last week, the Australia Institute, which is one of the country’s most influential public policy think tanks, said New South Wales could have doubled its coal revenue this financial year, had it adopted the Queensland royalty system. Queensland in 2022 introduced higher royalty rates in a bracket system, which led to a significantly higher percentage paid on coal that attracted premium prices.
Royalties are taxes paid back to governments in exchange for the right to extract a range of resources including coal and others. Coal mining companies now pay up to 40% when prices are higher, which has led to greater financial returns for Queensland.
“Business and industry deserve certainty on climate targets. Legislating our targets provides that certainty”
While Australia Institute Research Director Rod Campbell believes the coal mining industry is on its way out, he suggests New South Wales “should be getting as much money out of it as possible” for the state rather than multi-national coal mining companies.
However, prior to being elected, Minns was clear with Labor’s commitment, saying: “Business and industry deserve certainty on climate targets. Legislating our targets provides that certainty.”
In 2021, some 164 million tonnes of coal was exported from New South Wales, which had a maximum royalty rate of 8.2% per cent for open cut mines, 7.2% for underground, and 6.2% for deep underground coal mines.
While coal is mined in every Australian state, the largest black coal resources occur in Queensland and New South Wales. About 70% of coal mined in Australia is exported, mostly to eastern Asia, and of the balance the majority is used in power generation.
In 2019, coal was responsible for 30% (or 164 million tonnes) of Australia’s greenhouse gas emissions, not counting methane and export coal, and as a fuel it was responsible for 41% (160 million tonnes) of carbon dioxide emissions in Australia in 2020.
Write to Adam Orlando at Mining.com.au
Images: NSW Labor Government & iStock
