The NSW government announced its coal industry outlook for 2026-2050 on Thursday, saying it will no longer consider new coal mines but applications to extend existing mines will be assessed.
NSW produces the second most amount of coal of any state behind Queensland, according to Geosciences Australia.
Emissions requirements will be a condition of any project expansions, the government says, but its own Net Zero Commission says any move to expand coal production is at odds with environmental goals.
In December, the commission found any increase in coal mining activity would leave the state at odds with the Climate Change Act and the Paris Agreement.
The position sets firm expectations on producers and the communities that rely on coal mining, Minister for Natural Resources Courtney Houssos said.
Regional communities who rely on mining for employment and trading partners who want commitments met can all gain confidence from the plan, the government says.
However, Greens MPs and environmental groups say it fails the climate test.
"This policy still allows coal production to grow, and that's completely incompatible with a safe climate," Greens coal spokeswoman Cate Faehrmann said.
The government has failed to impose any environmental restrictions on the nine expansions approved since the government took office in 2023, the Lock the Gate Alliance said.
"The NSW government is using semantics to mask the truth that coal project approvals will continue as business as usual," head of research Georgina Woods said.
Only three of NSW's 37 operating coal mines have enforceable emissions limits, the Net Zero Commission found.
Stopping new coal mines was a welcome step but the continued acceptance of expansions was exposing residents to more climate harm, the Australian Conservation Foundation said.
"It's time to wind up all coal projects in NSW starting today and prepare for a renewable-powered net zero emissions future," campaigner Freja Leonard said.
The minerals sector welcomed support for mine expansions but NSW Minerals Council chief executive Stephen Galilee said blocking new mines placed a limit on future economic opportunities for the state.
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