NSW's addiction to coal royalties shows no sign of easing, after a surge in coal prices lifted expected royalties for the state by $839 million over four years.
In a budget that offered no hint of how the Berejiklian government would make good on its pledge to cut NSW's emissions to net-zero by 2050, the Treasury forecast royalties – most of which come from coal – will jump to $1.56 billion for the 2016-17 year from $1.19 billion a year earlier.
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Limits imposed by the Chinese government on domestic coal in 2016 prompted "substantial coal price rises", which may have "a significant influence on future prices", the government says.
The unanticipated boost amounts to $301 million for the fiscal year about to end, with a further $538 million in extra royalties tipped for the years to 2019-20, compared with last year's predictions.
Royalties will peak at $1.67 billion in the 2017-18 year before beginning to retreat along with coal prices.
NSW Minerals Council chief executive Stephen Galilee hailed the royalties boost as helping to "fund key infrastructure and services that the people of NSW expect and deserve". In 2016 coal exports edged higher from a year earlier to 161 million tonnes.
Queensland's budget, released last week, scored a similar boost, with Cyclone Debbie's disruption of exports cited as a contributing factor in global price gains that are expected to be short-lived.
Tim Buckley, from the Institute for Energy Economics and Financial Analysis, said NSW coal exports were about 80 per cent thermal – burnt in power stations – which was facing a "challenging" future.
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"It's as good as it gets," he said. Thermal coal's future is "dark" as nations such as India find solar energy increasingly competitive, curbing demand the coal industry has been banking on.
Justin Field, the NSW Greens Treasury spokesman, said the government should plan for coal's inevitable decline as nations get more serious about climate change.
"Coal royalties should be used to create a transition fund for communities currently reliant on the coal industry, such as investing in renewable energy projects and sustainable agriculture," he said.
NSW officials sought to promote the budget's environmental credentials, such as $119 million set aside to promote the take-up of renewable energy, energy efficiency and market regulation. Those funds are part of a previously announced $1.4 billion outlay over five years.
The NSW Nature Conservation Council said the government was not putting the state on track to a sustainable future, despite having a bumper $4.5 billion surplus to tap.
"If the government will not invest in the environment when it is flush with money, what hope is there when the cycle turns?" Kate Smolski, the council's chief executive said.
While the government allocated an extra $800,000 for koala conservation, the funds would make little difference to improve the fate of the animal, as the government is loosening land-clearing laws, she says.
"The government is using money from the Climate Change Fund to subsidise the increased tree clearing that is going to result from its weaker land-clearing and conservation laws," Ms Smolski said. "This is a disgrace."
Work on the 2050 carbon neutral goal, including a $500 million strategic plan, will be "finalised in the near future", a spokesman for Environment Minister Gabrielle Upton said.