In the first case of its kind, the Hunter Environment Lobby (HEL) had appealed to the court against Xstrata’s 2010 approval on the grounds of climate change, the effect on groundwater systems and clearing of critically endangered vegetation communities.

In November, the Land and Environment Court indicated approval might only be granted if the mine offset its direct emissions.

But the court case was complicated when the Federal Government unveiled its carbon tax, due to come into effect in July.

Justice Nicola Pain said she wanted to hear submissions on how a NSW-imposed condition could work alongside the Federal Government’s Clean Energy Act before she made her final judgment.

This week Justice Pain decided that further conditions were “unnecessary” and “not warranted”.

In her ruling, Justice Pain said she was “satisfied that the scheme as represented in the CE Act, together with related legislation” was sufficient to ensure emissions were offset.

About four per cent of the mine’s scope 1 emissions during its lifetime are now set to be released without being offset.

Once it expands, the Ulan coalmine. a joint venture between Xstrata Coal and Mitsubishi Development, is expected to pump out about 575 million tonnes of carbon dioxide over its 20-year lifespan, according to a submission by the Environmental Defender’s Office, representing HEL.

Of this, direct emissions (scope 1 emissions) are expected to produce an average of more than 100,000 tonnes of carbon dioxide a year, sustainability consultant David Blyth told the court.

Xstrata Coal CEO chief operating officer Ian Cribb said the company was happy with the decision and would proceed with the $1 billion project, which will create 270 direct jobs during construction and 300 new jobs during operation.

The Ulan Project would also have a significant flow-on effect to the state and regional economies, including a $4.525 million voluntary planning agreement with Mid-Western Regional Council, he said.

“We will comply with the conditions set by the court. We take the environmental management of our mining operations very seriously and have transparently outlined for all relevant authorities our groundwater, ecological and greenhouse gas management strategies throughout each stage of the application process,” he said.

Mr Cribb’s said the court’s decision was appropriate because the conditions proposed would have unfairly prejudiced one mine within the industry when such issues should be driven by national or international policy.

“Moreover the matter of greenhouse gas emissions and carbon offsets has now been addressed on an Australia-wide basis through the national legislation recently passed by the Federal Government.”

Senior solicitor Natasha Hammond-Deakin from the NSW Environmental Defender’s Office said Tuesday’s decision meant Ulan could potentially pump out thousands of tonnes of emissions for free.

“Even though the bulk of the scope 1 greenhouse gas emissions from the Ulan project are the type of emissions that are regulated by the Clean Energy Act, in the years that Ulan emits below 25,000 tonnes of GHG emissions they won’t be liable to pay,” Ms Hammond-Deakin told AAP.

“And that is where we said our client’s conditions should step in to fill the gap.”

About four per cent of the mine’s scope 1 emissions during its lifetime are now set to be released without being offset.

Ms Hammond-Deakin said despite the result, the court’s initial indication that scope 1 emissions would need to be offset had still set a precedent which could be “helpful in other situations or contexts in the future”.

The Hunter Environment Lobby is considering its options as to a possible appeal, Ms Hammond-Deakin said.