And unless quick action is taken, it could prevent the country from reaching its emission reduction targets.
The new report analysed methane being released from coal mines, finding the amount is twice the official estimates.
Australia’s new government has pledged to cut emissions faster than its predecessor, but it has not ruled out supporting new coal mines.
Reducing emissions from methane – a potent greenhouse gas – is a renewed focus for world leaders.
The US, the EU and Indonesia – the world’s biggest coal exporter – were among more than 100 countries that last year promised a 30% cut in methane emissions by 2030.
Australia ranks second for coal exports and is among the world’s top methane emitters, but it did not sign on to the pledge.
Methane has more than 80 times the heating power of carbon dioxide over a 20-year period. It is estimated to be responsible for almost a third of the globe’s warming since pre-industrial times.
In 2019, Australia’s coal mines emitted 898,000 tonnes of methane, according to the federal industry department.
But the new report by UK think-tank Ember has found current methods of calculating those emissions are wrong – in the worst case by a factor of 10.
Previous estimates have been based on how much coal is produced rather than measuring how much gas leaked from mines, the report said.
Recent research using satellites have given a more accurate picture of pollution and have been adopted by the International Energy Agency (IEA).
The IEA has estimated Australian coal mines emitted 1.8 million tonnes of methane in 2021, double the latest officially reported figures, the report said.
“Methane leaking from Australian coal mines has almost double the climate impact every year than all of Australia’s cars,” said Dr Sabina Assan, the report’s author.
“At the current level, methane leaking from coal mines will put Australia’s modest 2030 climate targets well out of reach.”
The country has a 2030 goal of a 43% emissions cut, still short of allies like the UK and US.
The good news is that it is possible to tackle coal mine methane emissions quickly, says the report, which was commissioned by a climate change lobby group.
“[It] really is the low-hanging fruit in the fight against climate change,” Dr Assan said.
The first step, it says, is to stop any new coal projects – dozens of which are currently being considered across Australia.
Retiring Australia’s “gassiest” mines early will also drastically help, as will banning “venting” – the release of gas build-ups in underground coal mines into the air – and finding sustainable uses or storage for methane.
Existing technologies – if applied to all underground mines – have the potential to cut Australia’s methane emissions by about 45%, the report said.
Prime Minister Anthony Albanese’s government has not commented on the report, but it previously said it will not leave “emissions intensive” industries – like mining – at a disadvantage to their global competitors.
It has also promised it will support new coal mines if they make commercial sense, and that it will not force coal-fired power stations to shut early.