A new Lock the Gate Alliance analysis reveals Australian taxpayers are paying for the construction of Whitehaven’s Winchester South Coal Mine because the diesel subsidy the company will receive is greater than the capital outlay required to build the project.
Tax reform has been on agenda at the government’s recent Economic Roundtable, and Lock the Gate is calling for an end to the Fuel Tax Credit for fossil fuel projects.
The calculations (methodology here) shows Whitehaven Coal could be paid $44 million dollars of public money each year by claiming the Fuel Tax Credit subsidy for its planned thermal and metallurgical coal mine in Central Queensland.
The project’s EIS indicates that the mine will consume 85 million litres of diesel each year and over 2.5 billion litres over the mine’s lifetime. At current FTCS rates and in 2025 dollars, this will result in the mine receiving an average of $44 million per annum in FTCS subsidy or more than $1.3 billion over the mine’s lifetime. Whitehaven’s capital expenditure cost for the development of Winchester South is $1 billion.
Winchester South is just one of several proposed new Whitehaven coal mining projects. Whitehaven already operates six coal mines that claim Fuel Tax Credits each year.
Lock the Gate Alliance National Coordinator Ellen Roberts said, “Under this scheme, Whitehaven Coal is getting its Winchester South mine fully paid for by the Australian tax payer - as its diesel subsidy exceeds the amount of capital outlay. This is a massive financial and environmental cost to the Australian taxpayer.
“Whitehaven is a controversial company with a long list of environmental offences and warnings from its existing NSW mines. Its Winchester South coal mine would be responsible for more than half a billion tonnes of carbon emissions, would clear habitat home to endangered koalas and greater gliders, and would use up to 280 million litres of local groundwater each year. This is not a company that deserves any kind of taxpayer handout.
“Subsidising diesel for fossil fuel companies is perverse in the age of the climate crisis, when increasingly dangerous weather events like droughts, heatwaves, and floods are causing havoc for Australian communities.
“We’re calling on the Albanese Government to put an end to this unacceptable handout to fossil fuel companies.”
Whitehaven’s Winchester South coal mine is a proposed new (greenfield) open-cut thermal and metallurgical coal mine in Queensland’s Bowen Basin, south west of Mackay. The project would mine up to 17 million tonnes of coal a year until 2058 and according to Whitehaven it would be responsible for 583 million tonnes of climate pollution.
ENDS
Background:
In Australia, fuel tax is charged on diesel and petrol. Diesel is currently taxed at a rate of $0.516 per litre. Under the Fuel Tax Credits Scheme (FTCS) companies are eligible to claim a refund for the Fuel Tax they pay. This scheme meets the WTO’s definition of a fossil fuel subsidy.