Successful climate change challenge to open cut coal mine

Key issues:

• NSW decision to refuse a coal mine on grounds including climate change
• Significant decision as it may start a trend of coal mines being successfully halted as a result of climate change arguments
• The Rocky Hill Coal Project decision highlights the importance of expert evidence in the consideration of a range of impacts including climate change in any assessment of the public interest.

The New South Wales Land and Environment Court has refused a development application by Gloucester Resources Limited (GRL) for the Rocky Hill Coal Project (Project) on grounds including climate change impacts of the mine. 

The decision is significant, because it may start a trend of coal mines being successfully stopped as a result of climate change arguments.  

The Rocky Hill Coal Project 

The Project is a proposed open cut coal mine, located near the town of Gloucester. GRL applied to the Minister for Planning for development consent for the Project, seeking to extract 21 million tonnes of coking coal from the mine. The Minister, through the delegate Planning and Assessment Commission, refused the application. GRL appealed to the Land and Environment Court: Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7. 

The Land and Environment Court exercises the function of the Minister as the consent authority to determine the development application, by balancing the public interest in approving or disapproving the Project and having regard to the competing economic and other benefits and the potential negative impacts the Project would have if approved. 

In performing this exercise, Justice Preston, Chief Judge of the Land and Environment Court found the Project would have significant adverse impacts on the visual amenity and rural and scenic character of the Gloucester valley, significant adverse social impacts on the community and significant impacts on the existing, approved and likely preferred uses of land in the vicinity of the Project (generally residential, agri-business, tourism and agriculture). His Honour held that, while the Project should be refused for these reasons alone, the greenhouse gas (GHG) emissions of the Project and their likely contribution to adverse impacts on the climate system, environment and people adds a further reason for refusal. 

Climate change arguments 

The climate change challenge to the Project was led by Gloucester Groundswell Inc, a local community action group joined to the proceedings, which led evidence from earth systems scientist Professor Will Steffan. 

GRL did not contest the need to reduce anthropogenic GHG emissions, but argued that this did not prevent the approval of the Project. 

In relation to the climate change arguments, his Honour found that:

• It is necessary to consider scope 1 (direct emissions from undertaking mining operations), scope 2 (indirect emissions used by GRL for the Project, including on-site electricity) and scope 3 emissions (indirect emissions not controlled by GRL, including the emissions associated with the transportation and combustion of the product coal), rejecting GRL’s arguments that the court can only consider scope 1 and scope 2 emissions.
• The Project’s GHG emissions will contribute to climate change.  
• The role of a consent authority is to determine the application before it. His Honour rejected GRL’s argument that GHG reductions in other sources would balance out the GHG emissions associated with the project, finding that GRL had given no evidence of specific proposals and that a consent authority cannot rationally approve a development on the theoretical possibility that environmental impact will be mitigated. His Honour also rejected GRL’s arguments about the possibility of abatement unrelated to the Project, finding that a consent authority is not formulating policy and cannot rely on the fact that greater emissions reductions could be achieved from other sources at lower cost by other persons or bodies.
• GRL had failed to substantiate, on its evidence, that the GHG emissions would occur regardless of whether the Project was approved or not, because new coking coal mines would otherwise be developed in countries with less stringent environmental and climate policies (the market substitution or “carbon leakage” argument). 
• The fact that the mine was producing high quality coking coal used for steel production, instead of thermal coal used for electricity generation was not a justification for the GHG emissions. His Honour found that the current and future demand for coking coal for use in steel production can be met through other coking coal projects, both existing and approved in Australia, and it is not necessary to approve the Project in order to maintain steel production worldwide. 

Can a Queensland coal project be stopped on climate change grounds? 

As yet, no coal project in Queensland has been stopped on climate change grounds. Climate change objections to the grant of mining leases for coal have previously been raised in the Land Court of Queensland, but have not been successful. 

It has been established in Queensland that: 

• The Land Court can only consider scope 1 and 2 emissions (and not scope 3 emissions) when considering the criteria in section 269(4)(j) of the Mineral Resources Act (MR Act) as to whether there will be any adverse environmental impact caused by those operations. 
• The Land Court is empowered to consider scope 3 emissions when considering the criteria in section 269(4)(k) of the MR Act as to whether public rights and interests will be prejudiced by the granting of the mining lease. 

Therefore, it remains open for the Land Court to recommend the refusal of the grant of a mining lease on the basis of climate change objections. Ultimately, the Rocky Hill Coal Project decision highlights the importance of expert evidence in the consideration of climate change impacts and any assessment of the public interest. While the Land Court of Queensland has previously made factual findings based on the expert evidence before the court that if a proposed mine did not supply the coal, another mine with potentially lower quality coal and higher GHG emissions would meet the demand, this can be contrasted with Justice Preston’s finding that GRL had not established on its evidence that this form of market substitution would occur in respect of the Project. 

For more information or discussion, please contact HopgoodGanim Lawyers’ Resources and Energy team.