He says Australia's coal production will soar but carbon dioxide will decline from 2018.

Reputex's latest economic modelling indicates investment in new coal mines will continue to drive production up until 2018, with output and resultant carbon emissions forecast to rise to record levels, at which point it will begin to drop off.

"What we wanted to look at was whether or not the carbon tax would be the straw that broke the camel’s back and we found that it certainly won't," Grossman told ILN sister publication BEN Business.

"This is mainly because the new coal assets that have just been commissioned – Xstrata's Wandoan coal mine and Hancock's Alpha project, both in Queensland – will be much more energy efficient even though they are two of Australia's largest coal mines ever created.

"Ultimately the carbon price won't be a significant factor beyond 2015 as our expectations are that the price of carbon will drop when companies will be able to start purchasing offsets from the international market and the price will be partially permitted to float.”

When a lower medium-term carbon cost is coupled with the federal government's industry compensation package, RepuTex is not forecasting long-term net liabilities for most coal producers high enough to seriously impact production.

"Demand from Asia is going to be a far more significant factor in impacting production levels and we perceive that outlook as positive," Grossman said.

In fact, several major developments have proven viable investments, in spite of the fact that new mines built post-July 1, 2012 are not eligible for industry assistance via the government's coal sector jobs package.

Wandoan and Alpha better equipped

"The fact that the Wandoan and Alpha projects will be going ahead is indicative of the investment pipeline expected in the coal sector," Grossman said.

The obvious negative aspect of the scenario is the massive scale of the two operations will contribute to a steady rise in greenhouse emissions in the next six years and will ultimately impact the Queensland environment.

However, the RepuTex modelling notes the scheduled closure of ageing mines, such as Rio Tinto's Blair Athol mine, New Hope's Jeebropilly and the Isaac Plains joint venture by 2018, along with a further five significant mines – Foxleigh, Mount Owen, Moorvale, Gregory Crinum and Mt Thorley – scheduled to close by 2020, will lead to a slowdown in emissions from 2018 onwards.

RepuTex's analysis shows that older mines exhibit very high average emissions intensity while new projects are setting the standard for emissions levels, with Wandoan and Alpha projected to operate at significantly lower emissions intensity.

Another key factor will be technological advances which will help make coal mines more energy efficient and less carbon intensive.

At the operational level, factors such as fuel efficiency, better lubricants in machinery and energy efficient equipment will help reduce emissions.

This article first appeared in BEN-Global