But after an environmental group expressed shock on Sunday when documents released under freedom of information showed Liddell had the special exemption until its closure in 2022, it was AGL that revealed its other Muswellbrook power station had the same exemption to pollute.

Both coal-fired power stations are allowed to pour 1400mg/m3 of nitrous oxides – affecting respiratory function and a particular risk to asthmatics – while power stations of similar size and age are limited to 800mg/m3. International best practice sets nitrous oxide pollution levels from coal-fired power stations as low as 100mg/m3. 

In its statement on Sunday AGL said it was not alone in being granted the nitrous oxide exemption and other NSW coal-fired power stations operated with the same higher limit.

It issued the statement a day before announcing it had rejected Alinta’s $250 million offer to buy Liddell and was committed to its 2022 closure plan.

The exemption allowing Liddell and Bayswater to pump significantly higher levels of nitrous oxide emissions into the Hunter atmosphere was already in place when it bought the power stations from the NSW Government in 2014, AGL said.

The NSW Environment Protection Authority did not respond to any questions about exemptions granted by it to Bayswater or other NSW power stations on nitrous oxide pollution, including how long any exemptions had been in place.

In a statement on Monday it confused the issue further by saying Liddell’s environment protection licence included an emission limit for nitrous oxides of 1500mg/m3 “which is lower than the original regulation limit of 2500mg/m3”.

It said AGL was “meeting its operational requirements” and was “in the process of lowering its emissions through a pollution reduction program”. It considered “reasonable and feasible” nitrous oxide control options when determining “appropriate emission limits”, the EPA said. 

But Environmental Justice Australia, which sought emissions documents on Liddell under freedom of information, said it was clear the state’s environmental regulator would not act to bring NSW power station pollution in line with the US, Japan and Europe using technology that had been readily available for two decades.

It slammed the EPA and AGL after the EPA in 2017 required the company to submit a report on pollution controls to achieve international best practice. The Aurecon report outlined measures that could reduce nitrous oxide pollution from Liddell by 85 per cent. But the cost of the measures was redacted out of the report released by the EPA after the environment group’s freedom of information application.

The Liddell exemption is a compelling reason why the Federal Government should stop trying to keep the power station open, said Environmental Justice Australia researcher Dr James Whelan.

Dr Whelan described the Liddell exemption as a “shocking revelation” that confirmed the NSW Government’s “laissez faire approach to air pollution control”.

“Liddell is licensed to emit toxic pollution at levels that would see other power stations subject to serious enforcement actions,” Dr Whelan said.

Exposure to oxides of nitrogen irritates eyes, nose, throat and lungs and leads to coughing, shortness of breath, tiredness and nausea. Even low levels of exposure are linked to asthma, reduced lung function and allergies. Coal-fired power stations produce 49 per cent of Australia’s nitrogen oxide emissions.

AGL said Liddell complied with licence conditions set by the Environment Protection Authority.

“AGL has announced the intention to close Liddell in 2022 when it will be more than 50 years old, and replace its capacity with modern, cleaner more reliable electricity generation,” a spokesperson said.

Liddell power station emits 33.5 million kilograms of sulfur dioxide, 18.6 million kg of oxides of nitrogen and 183,000 kg of fine particle pollution (PM2.5) into the Hunter atmosphere each year, according to AGL figures.