The NSW Minerals Council has strongly rejected a proposed expansion of load-based licensing to include coal mining for the first time, after a NSW Environment Protection Authority report found all man-made particulate emissions in the Upper Hunter areas needed to be reduced by 50 per cent to meet the new standard.

But in a submission to the EPA review of load-based licensing, environment group Lock the Gate said the government had to achieve the 50 per cent reduction “even if this means a reduction in the scale of coal mining”.

The group supports including coal mining in the scheme established in 1999. Under load-based licensing companies pay part of their licence fees based on the load of pollutants their activities release to the environment.

“We support expanding and strengthening the scheme by applying it to coal mining and making sure the fees paid for particulate and other air and water pollution reflect the damage it does in the broader community,” Lock the Gate said.

In a report released in October the EPA outlined expanding the scheme and including PM2.5 fine particle pollution for the first time, after Commonwealth and state environment ministers set a PM2.5 standard in December, 2015.

Predictive modelling for the EPA showed the new PM2.5 standard was “unlikely to be attained in Singleton and Muswellbrook into the future as coal production in the Hunter Valley is expected to continue to increase”.

“The modelling also shows that all man-made particulate emissions (including from wood-burning domestic heaters) need to be reduced by 50 per cent to meet the new standard.”

The EPA is considering charging “relatively higher pollutant fees for PM2.5” in areas like Muswellbrook and Singleton where the new air quality standards may not be met.

In its submission the NSW Minerals Council said the modelling relied on projected coal production figures released in a 2009 report.

Applying load-based licensing to mining would be “ineffective, complex and inefficient, which could be reasons why there is no precedent of any similarly-designed scheme being applied to mining operations”, the Minerals Council said.

The council did not identify Muswellbrook and Singleton in its response, or dispute the EPA’s conclusion that there were “regions where air quality standards will be challenging to meet”.

But it would be “inequitable if the burden for addressing cumulative impacts falls disproportionately on one source”, the Minerals Council said.

“While there are measures targeting other sources, mining risks being placed with a disproportionately large share of the financial burden.”

In its review of the load-based licensing scheme the EPA said only 40 per cent of existing license-holders in the scheme said it provided them with incentive to improve environmental performance.

“Many licensees said fees were too low to provide an adequate incentive for further pollutant reductions, when compared with the cost of upgrades needed to reduce emissions,” the EPA review said.

In its submission Lock the Gate said air quality data showed that coal mining was “responsible for the majority of dangerous air pollution in NSW”.

Lock the Gate said roughly half the pollution was created by five mines – Ravensworth, Liddell, Bulga, Mount Owen and Mount Arthur mines near Muswellbrook and Singleton.

The analysis is included in Lock the Gate’s submission to the NSW Government’s Clean Air Consultation Paper, which closes for submissions on Friday.

Coal mining contributes more than half of the state’s particulate pollution and Hunter Valley towns and cities suffer the worst effects,” Lock the Gate spokesperson Georgina Woods said.

“The government’s own research shows every year, particulate pollution is thought to cause 520 deaths in Sydney. It’s clear that clearing the skies will save lives”.

Lock the Gate said an accelerated increase in PM10 pollution in the past 10 years corresponded with an intensification of open-cut coal mining in the Hunter.

“Since 1992 PM10 pollution has increased 48 per cent, but three quarters of this rise has occurred in the past 12 years,” Lock the Gate said.

 The EPA is also considering applying load-based licensing to mining-related water quality pollution.

The EPA said data showed there were “significant emissions of some pollutants that are not captured by the load-based licensing scheme”.

Mining for coal was responsible for a “significant proportion” of NSW pollutant emissions including PM10 pollutants (75 per cent), chromium to water (75 per cent), selenium to water (71 per cent), arsenic to water (61 per cent), PM2.5 to air (51 per cent), and lead to water (23 per cent), the EPA said.

The EPA found metals discharged to water from coal mining facilities was “not insignificant”.

In the Hunter in 2013-14 the coal industry reported 23.6 per cent of metals emissions to water and the electricity generation industry accounted for 76.4 per cent.

“These are significant sources of metals not currently captured under the load-based licensing scheme,” the EPA said.