NSW EPA releases for consultation its first ever plan for climate change action

A year after the NSW Land and Environment Court’s decision in the Bushfire Survivors Case, where the Court held that the NSW EPA has a legal duty to protect the community and environment from harm resulting from climate change the NSW EPA (EPA) has released its draft Climate Change Policy and Climate Change Action Plan 2022-2025, targeting its existing environmental licensing regime to reduce industry greenhouse gas (GHG) emissions. The EPA has chosen to focus its efforts on environment protection licensees as significant contributors to GHG within the EPA’s remit. The draft documents build on existing NSW climate change frameworks, including the NSW Climate Change Policy Framework and the Net Zero Plan. The EPA is yet to detail how or when it will implement its proposals.

The NSW EPA’s proposed approach

The draft Action Plan is structured around three key pillars: (1) inform and plan; (2) mitigate; and (3) adapt and provides for specific actions that the EPA will implement over a three-year period. Taking a staged approach, the EPA says, will allow the Action Plan to be “deliberate, systematic and well-informed” while similarly allowing licensees to adjust to new information and obligations arising out of the Action Plan, without being overburdened with compliance costs.

The three centrepieces of the draft Action Plan are:

1. Proposed climate change mitigation and adaptation plans (CCMAPs);
2. Non-enforceable sector specific emission reduction targets; and
3. New licence greenhouse gas (GHG) emission limits and requirements.

According to the draft Action Plan, the EPA will gradually require Environment Protection Licence (EPL) holders prepare and implement CCMAPs and report on the progress and effectiveness of these plans over time. CCMAPs and progress reports must be published on licensees’ corporate websites, similar to existing requirements to publish pollution incident response management plans (PIRMP). Licensees will further be required to consider how the effects of climate change may increase their risk of pollution incidents, with PIRMPs to be updated to factor the changing risk level.

The EPA will develop sector targets for GHG emissions in conjunction with the NSW Treasury’s Office of Energy and Climate Change and the Department of Planning and Environment. Sector targets will orient the EPA’s regulatory approaches as well as assist the EPA in designing pathways for licensees to meet targets set. The EPA will also consider setting targets for emission sources, relevant to sectors.

CCMAPs and sector targets will inform both a licensee’s EPL conditions and a new approach to planning decisions that include appropriate climate change conditions for development approvals. Although non-enforceable, targets will be reflected in EPLs as GHG emission limits, which could be set as either emission intensity limits or load limits. Where a licensee is unable to meet an imposed GHG emissions limit, the EPA will consider allowing the use of offsets to remain compliant. Other proposed changes to EPL conditions will cover performance requirements, such as a general rule requiring that all new large non-diesel machinery at NSW coal mines meet US EPA Tier 4 emissions standard by 2023. This will be particularly relevant to portions of the resources industry. We understand that emission limits and imposed licence requirements will consider and complement actions taken by the Commonwealth Government under the Safeguard Mechanism. The EPA is further proposing licence conditions be amended so that licensees are required to undertake mitigation and adaptation activities identified in CCMAPs.

Prior to CCMAPS being rolled out, the EPA intends to engage licensees through mandatory surveys to understand current climate change actions licensees are taking and how licensees are contributing to the NSW Government’s existing climate change objectives. The EPA will develop certain guidance documents in collaboration with relevant government agencies to assist licensees with the CCMAPs process and requirements, as well as other tools for licensees to assess their exposure to climate risks with the intent of facilitating sector adaptation and resilience.