Key facts
- Coal companies could receive an additional $6.2 billion in taxpayer refunds for diesel fuel.
- This potential subsidy is contingent on the approval of new coal mine developments.
- The fuel tax credit scheme is forecast to cost the Australian budget $47 billion over the next four years.
- More than $1 billion annually currently goes to coalmine operators.
- Glencore and Yancoal's Hunter Valley operations expansion could receive $1.7 billion in rebates.
- Nearly 320 Labor branches support capping rebates at $50 million per company.
Coal companies in Australia could receive an additional $6.2 billion in taxpayer refunds for diesel fuel if the Albanese government approves new mine developments. An analysis by activist group Lock the Gate found that approving just half of the proposed mine developments could lead to these substantial subsidies.
The findings come as the government faces internal pressure before the upcoming Labor party national conference to reduce the fuel tax credit scheme, which refunds excise on petrol and diesel to industries including multinational miners, farmers, and others. Treasury has forecast the scheme will cost the budget $47 billion over the next four years, with over $1 billion annually going to coalmine operators.
Energy & Resource Insights estimated that based on outlined diesel consumption for 22 proposed coal mining developments, companies could receive $6.2 billion in rebates. The expansion of Glencore and Yancoal's Hunter Valley operations alone could yield $1.7 billion. Lock the Gate's acting national coordinator, Georgina Woods, stated that the scheme rewards coal companies for using diesel, reducing incentives to adopt cleaner vehicles and effectively subsidizing coal mining expansion.
Woods argued that the funds would be better allocated to address the costs of climate change, which are increasing disaster expenses across Australia. Mining vehicles account for about 35% of Australia's diesel consumption, with 15% used specifically at coalmines. The fuel tax credit scheme applies to companies using fuel in vehicles on private roads or in machinery.
Supporters of the scheme, including the Minerals Council of Australia, contend it prevents businesses from paying a tax they do not owe and is crucial for the competitiveness of industries like mining, agriculture, and tourism. However, critics argue that most fuel excise revenue is general budget revenue and that the refunds encourage fossil fuel use, undermining policies aimed at emission reductions.
Recent investigations revealed BHP received an estimated $622 million in fuel tax credits in FY25, despite internal documents acknowledging its diesel truck purchases were misaligned with decarbonization goals. A push by the Labor Environment Action Network (Lean), supported by nearly 320 Labor branches and Labor MP Jerome Laxale, seeks to cap rebates at $50 million per company, excluding farmers and small businesses. Resources Minister Madeleine King, however, has stated the government is not considering any changes to the existing regime.