Proponents of the Hunter Valley Operations (HVO) coal mine, tax haven-based multinational Glencore, have withdrawn the project from the Australian Government’s environmental approvals process.

This is great news for climate and biodiversity! If approved, the project would be responsible for 1.2 billion tonnes of emissions, the equivalent of running all of Australia’s coal-fired power stations for nine years.

Here’s a chart putting the HVO withdrawal in context. As you can see, it’s a good start, but there is a long way to go.

But what’s behind Glencore and Yancoal’s change of heart?

Given the Australian Environment Minister Plibersek’s recent approval of three mines with similarly enormous emissions, it seems unlikely the proponents are worried that the project won’t get the federal go-ahead.

It’s unclear exactly what is going on, but it’s worth digging deeper to try and find out.

The HVO project needs both NSW and Federal Government approval.

In NSW, the HVO expansion is assessed by the Department of Planning Environment and Infrastructure (DPEI), that will make a recommendation to the Independent Planning Commission (IPC). The Environmental Protection Authority (EPA) also gets involved, providing their own assessment to assist DPEI and the IPC in their determination of the Project.

NSW Climate Minister Penny Sharp and Planning Minister Paul Scully have recently instructed the NSW Planning Department and Independent Planning Commission to “have regard to” NSW climate policies, noting that “NSW is not on track to meet its 2030 and 2035 targets without further action by the Government and private sector.” Could it be that the NSW Government and public service are starting to take their own climate policies seriously?

The ministers’ letters don’t mention the HVO project specifically, but DPEI posted them on the project’s planning portal site, and cite them in their latest letter to Glencore which has some pretty tough questions. This suggests that the Department is taking the ministers’ instructions into account in assessing HVO.

The NSW EPA hasn’t exactly given a glowing review of the HVO proposal, highlighting that the expansion would be the largest in the state’s history if approved and would be responsible for 3.5% of all carbon emissions in NSW when it hits peak production in 2040 (don’t forget Australia has committed to reducing emissions by 43% by 2030).

The EPA also points out that the HVO project relies way too heavily on carbon offsets rather than actual emissions reductions to say that it won’t have an impact on the climate.

[The] EPA expects proponents to avoid and minimise scope one and two emissions, and only use offsets as a last resort for residual emissions that cannot be avoided or minimised. The EPA prefers proponents to reduce their reliance on carbon offsets generated outside of NSW as, under current frameworks, offsets generated outside of NSW cannot be counted in the NSW emissions inventory.

The Project relies on offsets, with no detail on where the offsets will be generated.

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Without changes to avoid or mitigate some of the forecast GHG emissions, this proposal may contribute to other parts of the NSW economy having to reduce emissions faster for NSW to remain on track to meet the legislated Net Zero Emissions target in 2050.

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Additionally, mining beyond 2040 should be restricted due to the significant fugitive emissions that will be generated from the deep coal reserves.

This doesn’t appear to sit well with Glencore and Yancoal who have responded to the NSW EPA’s comments, pointing to the fact that the Federal Government has no problem with fossil fuel projects using unlimited offsets. In fact, the companies effectively accuse the EPA of sabotaging Australia’s carbon market!

The NSW EPA’s approach [shows]… limited consideration of the Commonwealth Government’s Safeguard Mechanism (SGM) as the principal national carbon regulation directly linked to Australia’s obligations under the Paris Agreement. The EPA’s focus on gross emissions demonstrates limited acknowledgement of HVO’s net emissions as a covered facility with obligations under the SGM.

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[The EPA is also at] high risk of undermining the national carbon offset market by stating a preference that carbon offsets used in relation to mitigate emissions from HVO should be sourced from NSW, which risks distorting the offset market and is inconsistent with the SGM.

It won’t be a great look for either the NSW or Federal Government if HVO is approved, considering the EPA’s advice.

What is not clear is if the NSW Government is the potential problem and the Federal Government loves offsets and coal mines, why it is the federal approval process that Glencore and Yancoal have withdrawn from. The application for approval in NSW has not been withdrawn.

It must be a relief for the Australian Government which is already looking pro-coal and anti-climate. If the NSW Government didn’t approve the project, the last thing Ministers Plibersek and Chris Bowen need is to have to take the side of multinational coal miners (again) in a fight with the NSW Government.

Cursory analysis of the situation suggests that this withdrawal is probably a strategic retreat to avoid the project being refused at the state level, which would then pave the way for a smooth federal approval at a later date.

As Lock the Gate have indicated it’s likely that Glencore and Yancoal will amend their project so as to minimise some of the most egregious aspects of the project meaning that it gets sign off in NSW and avoids creating awkward conflicting position between the state and federal government.

In the meantime…get your popcorn coal mine watchers and let’s see how this plays out.