Why Wouldn't You?

At the UNECE Group of Experts on Coal Mine Methane and Just Transition, meeting in Geneva in April of this year, Jodi Lee, a strategic projects lead at Kestrel Coal, offered a small, disarming admission for someone working on what sounds like a forward-leaning climate project. "I wouldn't say I'm particularly liberal," he said. "I am your typical introvert, engineer, technical person." People often call the mining industry conservative, he added — and he understands why: "it is a very safety-driven industry."

It's a useful corrective, because Regenerative Thermal Oxidation, the technology at the centre of Kestrel's methane project, isn't new, unproven or ideological. It's decades old, mature at industrial scale, and has been abating coal mine ventilation air specifically since 2007. What makes Kestrel cautious isn't the technology. It's whether the company's own numbers, at its own mine, will say yes.

None of what follows is a technical curiosity. Methane is responsible for roughly 30 per cent of the warming the planet has experienced since pre-industrial times, and the UN Environment Programme's 2021 Global Methane Assessment found that cutting it is "the strongest lever we have to slow climate change over the next 25 years" — deep, fast methane cuts this decade are what keep the Paris Agreement's 1.5°C goal within reach at all. Coal mine ventilation air is one of the largest, most concentrated, most collectible sources of that methane anywhere in the world. Nothing that follows changes that. It only explains why the caution exists — not why it should stand.

Even one of the suppliers building the answer to that scepticism describes it in surprisingly candid terms. RTO equipment for VAM mitigation is made by only a handful of established manufacturers worldwide — Anguil, Biothermica, Dürr CTS and Eisenmann Environment, all with multi-year commercial VAM experience — and any of the four could plausibly have won the demonstration project now under construction in New South Wales, half-funded by the state government. That contract happened to go to Anguil — and Rich Grzanka, Anguil's head of sales, was careful in a Methane Brief interview earlier this year to note that the word "demonstration" is doing more political work than technical work. "We believe it's a proven technology," he said, "but for the miners in Australia, they want to see one running in their area." Several miners, he added, are waiting on that confirmation before committing — a milestone he expects by the end of 2026 or early 2027.

How deep that scepticism runs is a matter of public record, not just industry gossip. A submission to a 2025 NSW parliamentary inquiry into fossil fuel emissions states plainly: "As highlighted by CSIRO, there is uncertainty regarding the stable operation of RTOs with VAM in the 0.2%-0.4% range." CSIRO's own RTO-based abatement unit, VAMMIT, tops out around 0.3% methane, which is precisely why the agency built a separate catalytic technology, CataVAM, to reach lower concentrations at all. But that figure describes CSIRO's own prototype specifically, not the wider category of commercial RTO equipment. A separate submission to the same inquiry, from Peak Carbon — the company the government's own grant record names as Kestrel's partner on the project — puts mature commercial RTO technology's floor lower, at 0.2% methane, while noting the real-world limitation sits elsewhere: an estimated quarter of Australian mines have gas concentrations too low even for that more capable threshold. International suppliers — Anguil, Biothermica, Eisenmann Environment among them — claim to guarantee performance lower still, in some cases down to 0.1%. None of this is a myth being debunked. It is a genuine, still-open gap between a domestic prototype, mature international commercial equipment, and the roughly quarter of Australian mines neither may yet reach — not a small thing for a mine to sit inside of when deciding whether to commit tens of millions of dollars.

A Feasibility Study, Not a Refusal

The timing pressure is real, and Kestrel's own published decarbonisation strategy explains why. In 2024 the mine moved into what it calls the 500 series — a newly accessed underground mining district, "significantly higher in methane than the previous worked areas" — and expects to be mining it for ten years. Managing the resulting emissions, the company says, is the job of two proposed projects: a Coal Mine Waste Gas Power Station and the VAM abatement plant now under feasibility study, overseen in part by Helen McCarthy, Kestrel's carbon principal.

As of that April conversation, Kestrel was running a Front End Engineering and Design (FEED) study on a full-scale VAM plant. The project — publicly disclosed in Kestrel's Australian Industry Participation filing and the federal grants register — is backed by AUD 37.2 million from the Powering the Regions Fund, delivered in partnership with Peak Carbon. McCarthy helped secure that funding. Kestrel's informal target at the time was to be operating by 2028, largely dependent on how quickly the RTO equipment itself becomes available.

The FEED study is working through both safety requirements and that same capital-cost question. What the company did not yet have, in Lee's own words, was an answer to the number that actually decides the outcome. "We are still going through an exercise of understanding what the capital cost of establishing a full-scale plant at an Australian coal mine is," he said. "We don't have the answer to that yet." Public estimates exist — one recent industry analysis puts RTO capital costs as low as roughly AUD 9 to 15 per tonne of CO₂e over a decade — but a number that applies to the technology in general isn't the same as a number that applies to one mine's geology, gas profile and site conditions. As of April, Kestrel didn't have the latter.

Until that number exists, Kestrel is doing exactly what Lee described as any reasonable business would do: comparing it to the alternative. Most of the safety and engineering questions around VAM, he noted, are already solved — which was precisely his point. "Why would you go through all that effort for something that's not economic?" Australia's carbon price currently sits around AUD 36 to 39 per tonne — the cost of simply buying credits to cover emissions above the mine's baseline. For a VAM plant to be worth building, it has to beat that price. If it doesn't, Lee was candid that the company is, in his words, better off doing business as usual and buying credits instead.

There is no villain in it, no denial, no indifference. There is a spreadsheet, and it hasn't yet said yes.

The Baseline Mechanic Almost No One Explains

Here is the part of the story that rarely makes it into the policy debate. Under Australia's Safeguard Mechanism, a facility is set an emissions baseline. Go above it, and the operator must buy credits to cover the difference. Go below it, and the operator generates Safeguard Mechanism Credits (SMCs) to sell. VAM abatement only becomes a material revenue stream — as opposed to simply a smaller bill — for a mine sitting near or below that baseline already.

Kestrel, by Lee's own account, sits well above its baseline — and the further above baseline a mine sits, he explained, the less quantity of credits will be generated for the same abatement, if any at all. "You're up high, you generate less," as he put it, contrasting Kestrel's position with a mine sitting near or below baseline, which would capture far more. Installing a VAM plant would still abate real emissions and avoid real cost for Kestrel — but the credit-generating upside a better-positioned mine would enjoy largely isn't there. It echoes, at a structural level, the same additionality logic that governs forest carbon projects — the closer a project sits to a threshold already being crossed anyway, the less a credit scheme rewards it for crossing that threshold further.

Why the Third-Party Model Doesn't Reach Every Mine

There is a financing structure now emerging in Australia for exactly this kind of project — described to The Methane Brief by Grzanka in the same interview. A third party designs, installs and operates the RTO plant, then charges the mine a fixed annual fee over roughly a decade, structured like an annuity: no upfront capital, no engineering burden, just a predictable annual cost in exchange for a 98 per cent cut in methane emissions and the carbon liability that comes with it. "There are people out there that are beginning to perceive that," Grzanka said. "And we could expand that quite a bit." It's a genuinely new option, not yet an established market practice, and not unique to any one supplier relationship — his own language suggests early days, not proven precedent. Lee was direct that even a model like this doesn't solve Kestrel's specific problem. "Because we're so high, there's no revenue or income stream for the third party," he said, contrasting Kestrel with a mine closer to baseline, which "could be a revenue source for a build-own-operate or a leased arrangement." A leased or turnkey arrangement, in his words, "doesn't work in our case." The abatement is still worth doing, in his account, simply because it removes the ongoing cost of buying credits — but it has to clear that bar on its own, without outside capital sharing the risk.

So the Forest Credit Market Stays Hot

None of this makes forest credits a villain either. They are simply the cheaper, better-understood option with no execution risk, sitting next to a technology that works but hasn't yet proven itself as an investment at this particular mine — and until Australian mines, like Kestrel's, assess their own numbers, that is where rational capital goes. The result is a market that looks, from the outside, like reluctance, and reads from the inside as an unfinished business case.

The Other Side of "Safer"

But cheaper and easier isn't the same as safe. The forest credit market that mines like Kestrel default to has spent the past two years absorbing one integrity failure after another. Verra's own review of Zimbabwe's Kariba REDD+ project — once one of Africa's largest forest-protection schemes — found that roughly 15.2 million of its 26.8 million issued credits, some 57 percent, had been generated against a deforestation baseline that never reflected the real risk to the forest. In the United States, prosecutors indicted the founder of C-Quest Capital, accusing him of falsifying data across cookstove projects in Africa and Asia to secure carbon credits and more than USD 100 million in investment. And in February 2026, Koko Networks — one of Kenya's largest clean-cooking credit generators — collapsed into administration within days, after the Kenyan government withheld the export authorisation its entire business model depended on, cutting off more than a million households from clean cooking fuel overnight. Verra itself posted a USD 19.4 million loss in 2024 while trying to rebuild confidence in the standard.

None of this is the Australian market specifically, and on the narrow point of integrity, Kestrel has a fair defence: Australian Carbon Credit Units sit inside a compliance scheme, not the unregulated voluntary market where the Kariba and C-Quest scandals happened. Every ACCU project is issued an audit schedule at registration — a minimum of three scheduled audits across a seven-to-25-year crediting period, with forestry-specific methods also subject to five-yearly regeneration checks — and the Clean Energy Regulator publishes, every year, the number of ACCUs surrendered by each facility and the method under which they were created. Unlike some voluntary carbon standards, there is no vintage-matching requirement to exploit: BHP's own sustainability disclosures state plainly that it applies "no vintage restriction" to its ACCU purchases "because the additionality of projects is rigorously assessed." A 2022 government-commissioned review, the Climate Change Authority's own 2023 assessment, and a 2023-24 Australian National Audit Office performance audit have each found the scheme's administration sound. On the question of whether the credit is real and not fraudulent, that is a legitimate distinction, and Australia's system compares well against the market where the worst scandals occurred.

But integrity was never quite the right question. Even a perfectly audited, perfectly credible forest credit still answers a different physical question than destroying methane at the source does — and the gap between those two questions is what the current system quietly papers over. A tonne of methane run through an RTO unit is destroyed once, immediately, permanently: no reversal risk, no exposure to a future fire or a change of land management decades on. A tonne of forest-sequestered carbon, however well verified, is stored gradually and remains reversible for the life of the project — by fire, drought, disease or a change of land use, a risk serious enough that large parts of the Amazon are now approaching a threshold beyond which they could flip from absorbing carbon to emitting it. Layer onto that the accounting question this newsletter raised last week: methane's real near-term warming power runs at roughly 82 times CO2 over 20 years, not the 30 times its GWP100 credits are priced against. A mine can satisfy a methane liability, already undercounted by that convention, with a slow-accumulating, reversible credit from an entirely different sector of the economy — not because the two are equivalent, but because both happen to convert to the same unit on a ledger.

Asked whether removing that methane could eventually help position Kestrel's coal for steel customers chasing lower-carbon supply chains, Lee didn't overclaim it. He wasn't sure what would qualify as "green steel." But decarbonisation, he said, is becoming more important to Kestrel's owners and customers, who are increasingly asking about the full carbon footprint of what they buy. Asked directly whether buying forest credits amounts to real decarbonisation, his answer was plainer still: it satisfies a legislative requirement.

The Gap Australian Policy Hasn't Closed

That distinction — between satisfying a requirement and actually cutting emissions — is close to the exact question Australia's Climate Change Authority is now asking the sector directly, in the consultation this newsletter covered last week. The technology at the centre of it has worked in Australia before, since 2007. What hasn't yet been worked out is the financing architecture that would make it the obvious choice for a mine like Kestrel, rather than the harder one.

The Authority's advice reaches the Minister in November. Until then, Kestrel's FEED study — and the honest, unfinished arithmetic behind it — is as good a place as any to watch how that gap might close.