Queensland Natural Resources and Mines minister Anthony Lynham announced on April 18 that the government has banned underground coal gasification (UCG) in the state, arguing the environmental risks outweigh the economic benefits.
He said the ban, which would apply immediately as government policy, would be legislated by the end of the year.
Underground coal gasification involves converting coal to a synthesised gas by burning it underground. The syngas is processed on the surface to create products such as aviation fuels and synthetic diesel.
There have been three UCG pilot projects in Queensland: Carbon Energy near Dalby, Cougar Energy near Kingaroy and Linc Energy at Chinchilla. Cougar Energy's trial was shut down in 2010 after benzene was detected in nearby water bores. Carbon Energy is currently decommissioning and rehabilitating its site.
Lynham said noone had made a success of UCG and the potential revenue was not worth the environmental risk. The three trial sites would now be decommissioned.
"We have looked at the evidence from the pilot-operation of UCG and we've considered the compatibility of the current technologies with Queensland's environment and our economic needs," he said.
"The potential risks to Queensland's environment and our valuable agricultural industries far outweigh any potential economic benefits.
"As a government, we support our resources sector for the jobs and economic growth it generates, but UCG activity simply doesn't stack up for further use in Queensland."
Lynham said although the pilot program was a failure and the industry was not operating in the state anymore, there was still value in banning it by law. "This will give certainty to the resources industry, so they know very clearly where the government stands, and to the community.”
Environment minister Steven Miles said he had seen firsthand how much Hopeland residents had suffered due to the effects of UCG and that he was taking strong steps to address issues that had arisen during the UCG pilots.
“What we have in Hopeland, near Chinchilla, is the biggest pollution event probably in Queensland's history,” Miles said. “Certainly the biggest pollution investigation and prosecution caused — it is alleged by the Environment Department — by the activities of Linc Energy at their underground coal gasification site."
Lock the Gate Alliance activist Drew Hutton said the ban was a very important step given UCG had been proven to be dangerous and polluting.
"I told the state government these technologies should be banned six years ago. It's a no-brainer that burning coal underground and shale oil are a bad idea," he said.
Hutton said the government now had to ensure the land was properly rehabilitated and made safe.
“The Hopeland community have had underground coal gasification, which has poured poisonous gases across their land for a long period of time,” he said. “They've got potentially their soils and their water threatened and they're devastated. This is some of the best agricultural country in Queensland, so they are just stressed out there.”
Meanwhile on April 15, Linc Energy was placed into administration. In a statement to the Australian Securities Exchange (ASX), the company said that after receiving legal and financial advice and considering its commercial prospects the board had decided it was in the best interests of the company to make the move.
It came one month after the company was committed to stand trial in the District Court on five charges relating to breaches of Queensland's environmental laws at its UCG site. The state's environment department accused the company of wilfully causing serious harm at its trial site.
"The investigation of Linc Energy is the largest and most expensive case ever handled by the state's environment regulator, the Department of Environment and Heritage Protection," Miles said. "The Palaszczuk government has already provided $15.8 million in special funding to deal with this important case.
Hutton said Linc Energy could face up to $56 million in fines if found guilty. But he said the penalty might never be paid, as going into administration was a common legal manoeuvre to dodge fines and costly clean-ups.
Opposition environment spokesperson Steve Bennett said he was disappointed in the government's decision, despite conceding all three companies had been fined previously and had a history of not complying with environmental regulations.
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