On 8 September 2022, the NSW Environment Protection Authority (NSW EPA) released its draft Climate Change Policy (Draft Policy) and Action Plan (Draft Action Plan) for public consultation. The release of the Draft Policy and Draft Action Plan is a direct response to the landmark case brought by the Bushfire Survivors for Climate Change against the NSW EPA [1] last year where the Land and Environment Court held that the NSW EPA had a duty under the Protection of the Environment Administration Act 1991 (NSW) (POEA Act) “to develop environmental quality objectives, guidelines and policies to ensure environment protection from climate change”.
The release comes at a time where governments across Australia are taking increasing policy and regulatory action on climate change. The Draft Policy and Draft Action Plan are intended to build upon and support the existing framework, strategies and policies that have been implemented by the NSW Government to reach its target of a 50% reduction in greenhouse gas emissions (GHG emissions) by 2030 and net zero emissions by 2050.
The Draft Policy and Draft Action Plan signal a clear intention for the NSW EPA to play a more active role than was previously the case in the regulation of GHG emissions.
If adopted, holders of environment protection licences (EPL) will be subject to additional administrative processes to demonstrate how they are contributing to the NSW Government’s climate change objective. Such processes include: mandatory surveys, the preparation and implementation of climate change mitigation and adaption plans (CCMAPs) and the updating of pollution incident response management plans to specifically consider climate-related risks.
Draft Policy
The Draft Policy sets out the broader role the NSW EPA intends to play in the environmental regulation of climate change, including how it will specifically regulate, within its regulatory remit, the causes and consequences of climate change.
The Draft Policy identifies its primary purposes as being to address the NSW EPA’s statutory:
- objectives to protect, restore and enhance the quality of the environment in NSW, and to reduce the risks to human health and prevent the degradation of the environment pursuant to section 6(1) of the POEA Act; and
- duty to develop environmental quality objectives, guidelines and policies to ensure environment protection from climate change pursuant to section 9(1)(a) of the POEA Act.
Draft Action Plan
The Draft Action Plan provides more specific details for the regulated community about the actions the NSW EPA intends to take (or continue to take) to address each of the three key pillars (inform and plan, mitigate and adapt). It sets out how the NSW EPA will deliver on the objectives of the Draft Policy, the specific actions that the NSW EPA will take to implement the staged approach and signals the increased regulatory action that will be taken over the medium to longer term to assist the NSW Government’s climate change commitments.
The NSW EPA has intentionally adopted a staged approach to implementing its actions over the next three years and beyond to ensure that continuing and new actions are planned and implemented in a manner that is “deliberate, systematic, well-informed and properly paced”.
Some of the key actions to note are set out in the table below. The timeframe for delivering each action varies but is in the order of 12-24 months to ongoing.
Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority [2021] NSWLEC 92.
Pillar 1: Inform & Plan
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Pillar 2: Mitigate
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Pillar 3: Adapt
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NSW EPA will require and support licensees to develop and implement plans to reduce emissions and minimise their exposure to climate risks. |
The NSW EPA will be reviewing the leak detection and repair programs of NSW EPA-licensed onshore-gas operators to consider how they can be extended to encompass other components of the gas reticulation system like wellheads. |
The NSW EPA will prepare climate change adaptation guides that will assist EPL holders in preparing their CCMAPs. |
EPL holders will be required to complete a mandatory survey that sets out how they are contributing to the NSW Government’s climate change objective. The information collected will be used to determine where and when the NSW EPA will focus its regulatory efforts (e.g. to ascertain which licensed sector has the most capacity to minimise emissions). |
The NSW EPA will continue to directly regulate the emissions of particulates, NOx, VOCs and CO caused by environment protection licensees. |
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Proponents of activities the NSW EPA regulates will be required to identify how they will contribute to the NSW Government’s net zero targets. Proponents will be required to provide and commit to implementing CCMAPs for their proposed operations and for any significant variations that they seek to make to their existing developments. In the licence context, the CCMAP will be targeted towards the operational and performance phase of the project. |
The NSW EPA will partner with the Office of Energy and Climate Change (Treasury Cluster) and Department of Planning and Environment (Environment and Heritage) to create emission reduction targets and related pathways for industry sectors that are licensed by the NSW EPA to help achieve the State’s broader net zero targets. They will not apply to individual EPL holders but will apply to the entire industry sector, although there is the possibility of using licence limits and requirements, where appropriate, to achieve these sector emission reduction targets. |
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Licensees will be required to progressively update their pollution incident response management plans (PIRMPs) to specifically consider climate-related risks as well as the chronic impacts of climate change. |
The NSW EPA will prepare climate change mitigation guides that will assist EPL holders in preparing their CCMAPs. |
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The NSW EPA will progressively introduce GHG emission limits and other licence conditions on environment protection licences that may include: monitoring and/or emission estimation conditions; performance requirements; reporting conditions; and pollution reduction studies and programs. The NSW EPA may also require licensees to benchmark their current or proposed GHG mitigation controls against the best practice for the sector. |
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How will the Draft Policy and Draft Action Plan align with other NSW and Commonwealth Government activities?
The NSW EPA has noted its commitment to ensuring that it will regulate GHG emissions in a way that takes into account the performance, reporting and other obligations set by the Commonwealth Government (including the Safeguard Mechanism administered by the Clean Energy Regulator, which itself is currently slated for reform: see our earlier client alert here). Specifically, any emission limits or other licence requirements that will be imposed by the NSW EPA, will complement actions that are already being taken by the NSW Government and the Commonwealth Government.
Key considerations and how to get involved
The Draft Policy and Draft Action Plan signal a clear intention for the NSW EPA to play a more active role than was previously the case in the regulation of GHG emissions from existing scheduled activities that are subject to EPLs or new scheduled activities requiring an EPL. A key consideration for the NSW EPA will be to balance the potential for unfairness to arise between the regulatory controls imposed on existing licenced activities already subject to EPLs on the one hand, and newly proposed activities that are to be licenced in the future.
Existing licensees should also appreciate that, under section 58 of the Protection of the Environment Operations Act 1997 (NSW), the NSW EPA has power to unilaterally vary an EPL on its own initiative and without that EPL holder making an application to vary the EPL. Whether the NSW EPA will seek to exercise such a power for the purposes of giving effect to its reform agenda outlined in the Draft Policy and Draft Action Plan remains to be seen.
It will be important for the regulated community to ensure that they carefully consider the implications of the Draft Action Plan for the ongoing implementation of a new activity or the implementation of a new activity that is currently proposed to be carried out / subject to assessment under the Environmental Planning and Assessment Act 1979 (NSW).
Key questions that the regulated community may wish to consider include:
- What types of additional information and data on emissions performance may be required to be provided as part of the annual reporting to the NSW EPA in the future? What processes and systems are already in place (for existing activities) or are proposed to be in place (for new activities) to collect and administer such information and data?
- What systems may be needed for your business to ensure that you are keeping up to date with the latest thinking and best practices in emissions mitigation and adaptation / resilience to the effects of climate change?
- Are you operating in a sector where emissions are hard-to-abate? If so, what specific areas will you require the NSW EPA to consider in formulating its approach to regulation of emissions from your activity?
- Whether you have already been taking, on a voluntary basis, significant and ambitious steps to reduce emissions and adapt to climate change and, if so, what recognition will be afforded to those actions already undertaken (i.e. ensuring first movers are not disadvantaged relative to competitors as a result of having already taken steps which are now being required to be taken by others)?
- Will you have the necessary resources and processes in place to be able to address the additional regulatory oversight of emissions that the NSW EPA proposes to undertake, including the preparation of CCMAPs?
- If you have a project that is proposed to be undertaken / currently subject to assessment, to what extent does the project reflect best practices for emissions avoidance and reduction? Has consideration been given to the use of offsets where avoidance and reduction of emissions is proving to be difficult?
- To what extent does your PIRMP address climate-related risks?
- What impacts will the additional regulation have on regulatory / compliance costs moving forward?
Stakeholders have until Thursday 3 November 2022 at 5pm to make a submission in respect of the Draft Policy and Draft Action Plan. Submissions can be made through the NSW EPA website or by emailing climatechange.review@epa.nsw.gov.au.