Will a new energy policy for Queensland help or hinder mining in the Bowen Basin?

Matthew Anderson, Director, Research and Consulting Commodity Insights

In the aftermath of the recent state election in Queensland, the Liberal National Party (LNP), led by David Crisafulli, is poised to give the state's energy policy the attention it warrants. This focus will prioritise cost management, energy reliability, and maintaining coal as a central energy source. This marks a significant departure from the previous Labor government's ambitious commitment to achieve the renewable energy targets of 70% by 2032 and 80% by 2035.

Instead, the LNP is anticipated to concentrate on developing smaller hydro projects and will ensure the ongoing use of coal as the foundation of the state's energy infrastructure. While the LNP's strategy offers short-term benefits in terms of affordability and energy stability, it may also create conflict with Australia's overarching goals for renewable energy and emissions reduction.

Reducing emissions in Queensland's mining sector hinges on addressing the energy sources required for electrification. Diesel consumption, which can account for 30-80% of Scope 1 emissions at a mine, is being reduced through the increasing adoption of electric vehicles and other electrified equipment, such as electric shovels.

This shift is driven by the need to meet Scope 1 and Scope 2 emissions targets set by lawmakers. However, a critical concern remains regarding the reliability and sustainability of electricity sources that will support this transition.

Energy plays a vital role across the mining value chain, powering equipment and processes such as wash plants. As the industry transforms to reduce diesel usage, numerous mining operations are grappling with the challenge of securing sufficient and consistent electricity supply. Feasible generation policies are pivotal, not only for compliance but also for ensuring the long-term productivity and sustainability of mining operations throughout Queensland.

Queensland’s installed power generation capacity

As of June 2024, Queensland has an installed renewable generation capacity of approximately 7.6GW (wind farm, hydro, biomass, solar farm), not including distributed rooftop photovoltaic systems, which are estimated to contribute about 5.9GW across one million homes and small businesses throughout the state. Notably, the lack of rooftop solar data in government reports indicates that this form of power generation ranks second to coal-fired generation capacity in Queensland.

The state of the renewable energy pipeline

At present, Queensland boasts more than 55 large-scale renewable energy project initiatives, encompassing solar farms, wind farms, and hydroelectric projects at different stages of development—both planned and under construction. Together, these projects represent approximately 75GW of prospective power generation capacity, which is three times the capacity of Queensland’s current power generation fleet.

Maintaining stable power for productive mining

The energy intensity of a coal mine varies greatly depending on factors such as mining methods, location, and processing needs. To address this, many mining companies are adopting renewable energy solutions, including on-site solar farms and battery storage systems, or engaging in ‘green’ power purchase agreements with energy providers. This transition highlights a broader shift toward a holistic approach, with mining operations actively adapting to the changing energy landscape and aligning their strategies with sustainability objectives.

With the integration of increased electrification, remote operations, and autonomous fleets, maintaining a stable and reliable energy grid is essential to support mining productivity and reliability.

Power supply deficits causing grid imbalances and load shedding (controlled outages) at mine sites will significantly affect operational effectiveness, especially as operators contend with rising labour and energy costs and the highest royalty rates globally.

The 75GW pipeline represents an ambitious aim for a state with a history of underinvestment in power generation and electricity grid infrastructure. However, this notional growth is primarily intended to address the variable and intermittent nature of renewable energy, as sunlight is not constant, and Queensland frequently experiences low wind periods.

This means that to achieve the same reliability as the coal-fired generation fleet (i.e., 60%) - the size of the wind generation fleets needs to be ~18GW (7 times larger than the 2.6GW currently installed) and to deliver the same output as the coal generation fleet, the installed capacity of wind needs to be ~39GW (15 times larger than today).

Notwithstanding the environmental and economic cost of building wind and solar, these challenges raise concerns about energy reliability, which may worsen as coal-fired generation is phased out, potentially affecting mining efficiency and production levels.

Queensland energy policies that focus on reliability and cost management are poised to benefit the Bowen Basin's mining sector in the short term by providing stability and affordability. However, long-term success requires greater certainty through feasible policies that recognise mining’s dual role in driving economic growth and supporting the transition to net zero.

A stable electricity grid, reliable power generation and consistent load management are essential to ensure mining electrification efforts remain productive, enabling the Bowen Basin to sustain its vital contribution to Queensland’s economy and sustainability goals.

With the integration of increased electrification, remote operations, and autonomous fleets, maintaining a stable and reliable energy grid is essential to support mining productivity and reliability.