Coal

The New South Wales Government has announced that consultation has opened for the current coal cap, set to expire on 1 July 2024, and called on industry leaders to have their say on the future of coal in New South Wales. 

In the lead up to the 2023-24 State Budget, the government is writing to relevant parties inviting feedback on the future of the cap.

The State Government is considering all options at the conclusion of the cap, including modernising the coal royalty system to ensure it remains fit for purpose.

In particular, the government is inviting input to help it:

  • Review the impacts of the Coal Market Price Emergency directions on the coal industry and electricity market
  • Understand the likely impact on domestic coal and electricity prices from 1 July 2024 when the directions are due to expire
  • Consider whether potential alternative policy options are necessary to minimise the impacts on electricity bills once the directions expire
  • Understand the effects of a possible new coal royalty rate system, or adjusting existing royalty rates, to respond to market conditions

The emergency directions introduced in December 2022 capped the price of coal sold to domestic power stations at $125 per tonne for 18 months.

It was implemented following Russia’s invasion of Ukraine when the price of coal surged beyond $500 per tonne.

The New South Wales Government is inviting key stakeholders, including in the state’s coal sector, to participate in the consultations. These stakeholders include 16 coal mining companies, four power station operators, two unions and key trading partners.

The consultation will include face-to-face meetings as well as written submissions. The information received will be used to help inform the government’s priorities in the second half of the year.

The current system will remain unchanged until the expiration of the coal cap.

New South Wales Treasurer, Daniel Mookhey, said that the government has begun the critical work of engaging all stakeholders to navigate a future beyond the temporary coal cap.

“In the lead up to the budget, we are focused on helping families with the cost of living, funding essential services and repairing the budget position,” Mr Mookhey said. 

“The New South Wales Government will consider all options to keep downward pressure on electricity bills as we approach the end of the coal price cap on 1 July 2024.”

New South Wales Minister for Finance and Minister for Natural Resources, Courtney Houssos, said that the government will be engaging closely with the mining industry as it considers how to best provide relief to families and households from increasing electricity prices.

“We are committed to a clean energy future, but we understand the important role coal plays today in our energy mix and for our state’s economy,” Ms Houssos said. 

“We will form a considered view on these issues and are committed to ensuring the ongoing stability of the New South Wales mining sector.”

New South Wales Minister for Energy, Penny Sharpe, said that the New South Wales Government understands the need for longer-term solutions to support households and small businesses with cost-of-living pressures – particularly electricity prices.

“The coal cap has shielded New South Wales households and small businesses from the worst flow-on effects of last year’s coal price surge. We are now working to identify the most efficient, equitable way to maintain downward pressure on electricity prices.

“The State Government will seek feedback from all stakeholders – coal suppliers, power stations and key trading partners – as we navigate a future beyond the cap.”

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