The South Australian Government has passed an important legislative reform for the regulation and licensing of hydrogen production and renewable energy facilities, expected to make it a ‘first mover’ among Australian State and Territory jurisdictions in 2024.
On 16 November 2023, South Australia’s Parliament passed the Hydrogen and Renewable Energy Bill 2023 (SA) (Bill). The Bill will commence as the Hydrogen and Renewable Energy Act 2023 (HRE Act), once regulations have been finalised, likely this year.
We reported on the release of a consultation draft of the Bill in May 2023. The key objects of the Bill include to introduce a new environmental approval, land acquisition and regulatory regime for hydrogen and renewable energy projects in South Australia.
The passing of the HRE Act also came shortly after the announcement of South Australia’s first large-scale clean hydrogen production precinct for export and domestic markets at Port Bonython, as part of the South Australian Government’s aspirational ‘first-mover’ strategy to enter the global hydrogen market.
The HRE Act was passed with some important amendments from the draft Bill. Below we summarise outcomes of public consultation on the Bill and the key amendments in the HRE Act as passed.
Public consultation on the Bill
More than 130 submissions were received on the Bill during the consultation period, which concluded on 25 June 2023.
In September 2023, the South Australian Government released a Consultation Report on the draft Bill (Report).[1] The Report summarised key themes of submissions received during consultation, which included:
- improving pastoral land access processes, including prescribed consultation, agreement-making and dispute resolution mechanisms for land access;
- increased collaboration between Government and Traditional Owners on decision making for issuing of licences;
- removing the role of the Planning, Development and Infrastructure Act 2016 (PDI Act) for the assessment and approval of hydrogen and renewable energy projects to ensure a true ‘single window to government’ process under the HRE Act; and
- ensuring a balance between environmental protection and a rapidly growing hydrogen and renewable energy sector, such as by excluding certain protected areas from the release areas that can be accessed and developed for projects.
The Bill, which incorporated amendments following submissions received during the public consultation, passed South Australia’s House of Assembly on 19 October 2023 and the Legislative Council on 16 November 2023.[2]
Projects to be regulated by the HRE Act
The HRE Act will regulate projects that involve:
- ‘generating hydrogen’ – being operations undertaking operations for the creation of hydrogen (and any compound of hydrogen necessary for its processing, storage or transport) by processes such as the electrolysis of water or the reformation of natural gas, and includes operations for the storage of hydrogen; or
- ‘renewable energy resources’ – being any of light or heat from the sun, wind or air flow, wind generated waves, tides or ocean currents.
Other forms of hydrogen generation or renewable energy resources may be prescribed by regulations in due course.
The HRE Act applies to ‘regulated activities’ when undertaken within South Australia or its coastal waters, including:
- generating hydrogen for a commercial purpose;
- exploring for a renewable energy resource;
- exploiting a renewable energy resource;
- an ‘infrastructure activity’, including construction, operation and decommissioning of renewable energy infrastructure or facilities for generating hydrogen; and
- an ‘associated infrastructure activity’, which covers a wide range of infrastructure associated with generating hydrogen or renewable energy projects (see below).
Key amendments in the HRE Act
The key amendments made to the consultation draft in the HRE Act as passed are set out below.
A copy of the amended Bill as introduced into the South Australian House of Assembly is available here.
Government of South Australia, South Australian Legislation, Hydrogen and Renewable Energy Bill 2023 – As introduced in House of Assembly, 14 September 2023.
The HRE Act provides additional powers to streamline exploration and investigations as to the feasibility of renewable energy projects.
The Minister administering the HRE Act, or any person authorised by the Minister, may enter and undertake various activities on land for the purposes of exploring for renewable energy resources.[3]
A new permit, known as a ‘renewable energy feasibility permit’ has been introduced, and will authorise its holder to undertake, within the permit area, a ‘feasibility activity’ specified in the permit.
A ‘feasibility activity’ covers the full range of construction, operation, maintenance and decommissioning of infrastructure to assess the feasibility of generating renewable energy from a renewable energy resource.[4]
Hydrogen and Renewable Energy Act 2023, Part 2 Division 1.
Hydrogen and Renewable Energy Act 2023, s 9.
The HRE Act will be closely co-ordinated with the Petroleum and Geothermal Energy Act 2000 (SA) (soon to be re-named as the Energy Resources Act), to regulate the storage and transport of hydrogen.
For example, a gas storage licence or a pipeline licence may now be granted under the Petroleum and Geothermal Energy Act 2000 (SA) to the holder of a hydrogen generation licence under the HRE Act.[5]
A range of other regulatory reforms are being made in accordance with the Petroleum and Geothermal Energy (Energy Resources) Amendment Act 2023 (SA), which partly came into operation on 14 December 2023 and is expected to be fully operational later in 2024.
Hydrogen and Renewable Energy Act 2023, s 16.
The HRE Act now includes an additional licence category, namely the Associated infrastructure licence, which authorises the undertaking of an ‘associated infrastructure activity’.[6]
An ‘associated infrastructure activity’ includes a range of infrastructure typically associated with the production of hydrogen or renewable energy, including hydrogen power plants, ports, wharves or jetties associated with the import of export of hydrogen or renewable energy, desalination plants for the primary purpose of supplying water used in generating hydrogen.
Hydrogen and Renewable Energy Act 2023, s 23.
The HRE Act applies to projects proposed on pastoral land, State waters and prescribed Crown land (designated land) and to freehold land.
Similar to the Mining Act 1971, the HRE Act provides rights to prescribed ‘owners of land’, which include native title holders and the holders of pastoral leases, resources tenements and aquaculture leases or licences. [7]
Before authorised operations under a renewable energy licence or associated infrastructure licence can commence, a licensee must enter into an access agreement with prescribed owners. Access agreements must address certain matters, including the licence area, the infrastructure to be constructed under the licence and the compensation arrangements for owners.
Hydrogen and Renewable Energy Act 2023, Part 4, Division 3, Subdivision 6.
The holders of renewable energy licences, certain associated infrastructure licences and special enterprise licences must give at least 42 days’ prior notice to each owner of land within the licence area, before entering that area,[8] unless an access agreement already provides access.
Similar notice requirements also apply prior to commencing authorised operations that affect the areas of a resources tenement.[9]
A person who has received a notice has rights to object to the access.[10] Where an objection has been given, the Minister may require the parties to mediate. Alternatively, either party may apply to the Environment, Resources and Development Court (ERD Court) to resolve a dispute.[11]
Hydrogen and Renewable Energy Act 2023, s 76.
Hydrogen and Renewable Energy Act 2023, s 77.
Hydrogen and Renewable Energy Act 2023, s 78.
Hydrogen and Renewable Energy Act 2023, s 78(5)-(8).
In addition to the general compensation provisions that existed in the draft Bill,[12] the HRE Act includes a specific compensation mechanism for persons whose rights have been ‘materially diminished in consequence of authorised operations’.[13]
The amount of compensation will be determined by agreement, or by the ERD Court. Authorised operations will not materially diminish the rights of a person if the operations were undertaken pursuant to the relevant licence or authorisation.
Hydrogen and Renewable Energy Act 2023, s 79.
Hydrogen and Renewable Energy Act 2023, s 79A.
Public consultation on the Bill emphasised the need for proper scrutiny on environmental assessment of hydrogen and renewable energy projects via an environmental impact report, statement of environmental objectives and scoping report, which are the key environmental assessment documents under the HRE Act.
The HRE Act addresses this by introducing broad referral requirements for these documents to various ‘prescribed bodies’, including the Ministers administering the Aquaculture Act 2001, the Fisheries Management Act 2007, the Livestock Act 1997 and a range of other bodies to be prescribed by regulations. This will operate in a similar way to referrals for impact assessed development under the Planning, Development and Infrastructure Act 2016.[14]
Hydrogen and Renewable Energy Act 2023, s 73.
Next steps for the HRE Act
Once the HRE Act commences, it will become Australia’s first State legislative framework that will co-ordinate the regulation and licensing of the hydrogen production and renewable energy industries.
The HRE Act should assist with streamlining State environmental and regulatory approvals for a wide range of hydrogen production and renewable energy projects in South Australia, by providing a single regulatory instrument, which will replace the current patchwork of legislation that currently regulates the environmental assessment, licensing and land access for these projects in South Australia.
Please contact us if you wish to discuss the impact of the HRE Act or the Energy Resources Act on your hydrogen production or renewable energy project in South Australia.
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