Diesel emissions from Australia’s mining sector are rising sharply despite government forecasts of a steady decline, as miners burn more fuel chasing dwindling returns, according to new research from the Institute for Energy Economics and Financial Analysis (IEEFA).
The federal government projects that diesel emissions from mining will fall at a rate of 4.5 per cent annually — from a baseline of 21.7 million tonnes (Mt) of carbon dioxide equivalent in 2023 to 12.6Mt in 2035.
However, IEEFA’s new briefing note, Cutting Australian mining’s diesel emissions, finds that actual emissions are rising by about 6 per cent per year.
The report’s author, Andrew Gorringe, Energy Finance Analyst, Australian Coal at IEEFA, said the divergence between forecast and reality stems from increased diesel use in open-cut mining and a lack of meaningful decarbonisation incentives.
“Australia’s climate targets require deep emissions cuts across all sectors of the economy,” Mr Gorringe said.
“For the resources sector to contribute, this means capturing more of the fugitive methane emissions from coal and gas production, but also importantly, achieving meaningful reductions in miners’ diesel fuel use – across all forms of mining.”
Mining currently consumes around 9.6 billion litres of diesel each year, producing 22Mt of CO2e emissions.
Coal mining accounts for 48 per cent of this total, while iron ore represents 26 per cent, combining for roughly three-quarters of the industry’s diesel footprint.
IEEFA highlights several factors that undermine the government’s emissions projections, particularly in the coal sector.
These include a shift toward more diesel-intensive open-cut operations, where higher strip ratios (now about 20:1 in Australia) have lifted diesel intensity by 50 per cent since FY2010-11.
The report also cites limited incentives under the Safeguard Mechanism, declining mine profitability, lengthy approval processes, and the diesel fuel tax rebate scheme (which provides an estimated $5 billion to the sector annually, including $1.5 billion to coal mining) as major barriers to change.
“Historical data trends don’t bear this out,” Gorringe said.
“Diesel emissions in mining have doubled since 2011, while coal production grew by only 18 per cent.
“Furthermore, the proportion of coal produced from open-cut mines operating heavy surface equipment grew by 30 per cent in that period.
“Emissions per tonne increased by 50 per cent.
“Considering the energy transition, diesel intensity in mining is increasingly moving in the opposite direction.”
The analysis found that the 52.6-cent-per-litre fuel tax rebate effectively covers the purchase cost of mining companies’ off-road vehicles and equipment across their lifespan.
A single mining haul truck costs almost $10 million, and companies like BHP and Rio Tinto operate about 1,500 such vehicles nationally.
“Without policy change, diesel emissions could increase by 30 per cent to 40 per cent (8-10MtCO2e) by 2035, making sector emissions targets challenging to achieve,” Gorringe says.
“Put simply, Australia gets the worst of both worlds: higher diesel emissions from mines, and a heavily eroded tax base as excise receipts fall and fuel tax credit spending on mining climbs.
“Armed with strong policies, governments could position themselves as agents of change.
“Instead, inconsistent policies and incentives to retain diesel prevail.”
The IEEFA report warns that unless those incentives shift, the mining industry risks becoming a growing source of emissions at a time when national policies rely on the opposite.
