NSW Government excludes scope 3 emissions from mining assessment

The NSW Planning Minister, Rob Stokes introduced a Bill on Thursday 24 October 2019 which will create a set of measures aimed at preventing the regulation of downstream scope 3 greenhouse gas emissions (Scope 3 emissions) in relation to obtaining modifications or new approvals for mining, petroleum production or extractive industries in NSW. The Environment Planning and Assessment Amendment (Territorial Limits) Bill 2019 will, if enacted, remove the express requirement for proponents to carry out an assessment of the quantity or impact of Scope 3 emissions arising from the combustion of coal either domestically or overseas.

The new legislation has been introduced following a number of recent decisions by the NSW Land and Environment Court (LEC) and also the NSW Independent Planning Commission (IPC) that either refused new greenfield coal mining projects or approved expansions subject to extraterritorial conditions seeking to regulate which countries the coal was exported to. The recent decisions include:

• a groundbreaking decision of the Chief Justice of the Land and Environment Court (the Rocky Hill decision) which rejected a new open cut coal mine producing coking coal close to the town of Gloucester. Although the Chief Justice ultimately rejected the coal mine because of visual and other social impacts, the case provided an opportunity for the judiciary to comment on the climate change impacts of a new coal mine in the context of the Paris Agreement and the global carbon budget and explore the concepts of both intra-generational and inter-generational equity;
• the IPC's rejection of the proposed Bylong Valley coal mine in September 2019 where the IPC adopted the reasoning of the Chief Justice in respect of assessing Scope 3 emissions; and
• the imposition of an unprecedented export restriction condition on an open-cut coal mine project, United Wambo, by the IPC requiring coal to be exported to countries that were signatories to the Paris Agreement within the United Nations Framework Convention on Climate Change or countries who are signed off by the Secretary of the Department of Planning, Industry and Environment as having similar policies.

These decisions have been heavily scrutinised by both the Government and the Mining Industry with the United Wambo approval also drawing criticism from the NGOs. As anticipated, the Government has taken action to fill the legislative void in respect of how Scope 3 emissions are to be assessed.

The new legislation introduces changes, that, according to John Barilaro (Deputy Premier and Minister for Resources), "will help restore NSW law and policy to the situation that existed prior to the Rocky Hill decision and will provide the mining sector [and investors across the state] with greater certainty", while "driving investment opportunities and job creation".

In summary, the Bill makes the following key changes:

• amends the State Environment Planning Policy (Mining, Petroleum Production and Extractive Industries) (SEPP) to remove references in clause 14 to "downstream GHG emissions" thereby only requiring assessment of the GHG emissions "of the development". This means that in relation to coal use, there is no longer an explicit requirement to consider either domestic or international scope 3 emissions associated with the combustion of coal (though the Bill does not go as far as to exclude the ability to consider such matters and if it is intended that downstream emissions are not a "relevant consideration" for the IPC to consider in weighing up the environmental impacts of the project this should be made clear). The previous SEPP references to "downstream emissions" were an integral part of the regulatory framework that enabled the Chief Justice of the Land and Environment Court to consider the impacts of scope 3 emissions that would be generated from the Rocky Hill coal mine; and
• amends the Environment Planning and Assessment Act 1979 to prohibit any approval conditions that relate to impacts outside Australia or relate to activities carried out outside Australia. This effectively strips the IPC of the power to impose conditions that purport to have extraterritorial effect.

According to Minister Stokes, the Bill, "sends a clear message to all consent authorities about the limits of the NSW planning system" and "provides certainty to all players in the planning system about how extraterritorial impacts can be dealt with in NSW planning approvals".

The new legislation has been introduced amidst vehement opposition by environmental groups, such as the Nature Conservation Council and Lock the Gate, who condemn the NSW Government for effectively prohibiting planning authorities from considering the full extent of the effects that coal mining projects will have on the climate. Despite the opposition, the new legislation, if enacted, will likely ease the approval of mining projects in NSW although the impacts from GHG emissions are only one of a multitude of environmental and social impacts that will need to be considered by proponents of such projects.

At the time of the Rocky Hill decision, we had indicated that we considered that it was prudent for government to take steps through legislative or policy changes to clarify the treatment of Scope 3 emissions. The NSW Government has, by introduction of the Bill, demonstrated that such a course of action was necessary but as noted above, the drafting may need some minor adjustments to reflect the legislative intention. Although to date, Queensland Courts have accepted Scope 3 arguments rejected in Rocky Hill such as market substitution, unless there are changes to relevant legislation in Queensland, it would still be open under this Queensland legislation for different judges to make inconsistent findings in this regard.

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