Australia has massively under-reported the fugitive emissions from coal mine and oil and gas projects which if corrected would have serious implications for the baselines and targets in its newly-reformed safeguard mechanism, an analysis has found.
The Institute of Energy Economics and Financial Analysis compared International Energy Agency (IEA) data on actual methane emissions, which includes both reported figures and those tracked by satellites with official Australian government figures and found that the government data is about 80 per cent lower for coal and 90 per cent for oil and gas extraction.
Put together, the under-reported methane emissions total around 28 million tonnes of CO2e, which is slightly more than six per cent of the country’s total emissions.
Around 86 per cent of emissions in the coal mining and oil and gas extraction sectors are in industrial facilities covered by the safeguard mechanism. If the same proportion of under-reported emissions were added to their existing baseline, it would mean the 2020-21 baseline should increase by around 24 million tonnes CO2e, the IEEFFA analysis showed.
Higher baseline figures would mean that industrial facilities must steepen the rate that their baselines decline if Australia is to meet its 43 per cent by 2030 emissions reduction target. “With this increased starting point, the baseline decline rate would need to be doubled from 4.9 per cent to 9.8 per cent a year for covered facilities to achieve the cumulative emissions ceiling of 1233 MtCO2e set by the Safeguard Mechanism reforms,” the IEEFFA analysis noted.
Put another way, these facilities would have to more than halve their baselines over the next seven years.
Around 18 per cent of global emissions are derived from methane, which is estimated to have contributed to around 30 per cent of the rise in global temperatures since the Industrial revolution. Methane contributes disproportionately more to global warming than CO2 – it can warm as much as 30 times over a 100-year period.
Australia last year agreed to reduce its methane emissions as part of the Global Methane Pledge, which has a 30 per cent reduction target, however the country did not sign up to a domestic reduction target.
“Our analysis also highlights the importance of developing such a plan to ensure Australia’s industry and households do not bear the brunt of the cost to compensate for the gross under-reporting of emissions by the coal, oil and gas industries,” the IEEFFA analysis noted.
IEEFFA recommends that Australia look to experience from other countries that have instituted incentive plans to motivate producers to reduce their methane emissions. For example, the US has introduced a waste emissions charge for methane from facilities that emit more than 25,000 tCO2e a year, starting from $US900 per metric tonne for emissions reported in 2024, rising to $1500 for emissions reported from 2026 onwards.