NSW EPA to limit GHG emissions under new Climate Change Policy and Action Plan

The NSW Environment Protection Authority (EPA) has released its Climate Change Policy and Climate Change Action Plan 2023-2026, targeting its existing environmental licensing regime to reduce industry greenhouse gas (GHG) emissions. Draft versions of the Policy and Action Plan were released for public comment in late 2022 and the final versions are generally consistent with what was proposed in the drafts.

The EPA has chosen to focus its efforts on environment protection licensees (licensees) as significant contributors to GHG emissions within the EPA’s remit. The documents build on existing NSW climate change frameworks, including the NSW Climate Change Policy Framework and the Net Zero Plan.

The Policy and Action Plan are firsts for the NSW EPA and follow the 2021 NSW Land and Environment Court’s ruling in Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority [2021] NSWLEC 92 where the Court held that the NSW EPA has a legal duty to protect the community and environment from harm resulting from climate change.

NSW EPA’s Climate Change Approach

The Action Plan is structured around three key pillars: (1) inform and plan; (2) mitigate; and (3) adapt and provides specific actions that the EPA will implement over a three-year period (2023-2026). Taking a staged approach, the EPA says, will allow Environment Protection Licence (EPL) holders to adjust to new information and obligations arising out of the Action Plan, without being overburdened by compliance costs.

A summary of the EPA’s intended actions is set out below under the relevant pillars.

Key Points for EPL Holders

There are three key aspects of the Action Plan especially relevant to EPL holders:

• Climate change mitigation and adaptation plans (CCMAPs) (see Action 5);
• Non-enforceable sector specific emission reduction targets (see Action 16); and
• New licence GHG emission limits and requirements (see Action 18).

Action 5: Require and support the regulated community to develop and implement plans to minimise emissions and exposure to climate risks

Action 5 also includes Actions 5(a) through 5(d) which set out the intermediate steps the EPA intends to follow to engage industry sectors and EPL holders to prepare and implement CCMAPs guidance, including mandatory surveys to understand the current climate change actions of EPL holders and how they are contributing to the NSW Government’s existing climate change objectives.

The EPA will gradually require EPL holders to 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). EPL holders 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 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.

Additionally, the EPA will partner with the NSW Department of Planning and Environment to ensure climate change mitigation and adaptation is adequately considered (including how projects may contribute towards the NSW Government’s net zero targets) as part of all planning proposals for activities regulated by the EPA, and to develop appropriate climate change conditions for planning approvals.

The EPA anticipates achieving Action 5 within 12 months, ie. 2023-2024.

Action 16: Develop a series of GHG emission reduction targets and related pathways for key industry sectors licensed by the EPA, to help guide the regulatory effort

The EPA will develop non-enforceable evidence-based sector targets for GHG emissions reduction 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.

Although the NSW Government has set overarching net zero targets for 2030, 2035 and 2050 for NSW, the Action Plan acknowledges that it is not intended nor feasible for all sectors of the NSW economy to reduce their GHG emissions at the same rate. The sector targets will not be enforceable as they will apply to the industry sector as a whole rather than an individual EPL holder. The EPA intends to focus initial efforts for sector targets in high-emitting sectors where there are no other significant NSW or Commonwealth Government emission reduction strategies already in place.

The EPA anticipates achieving Action 16 within 12 months, ie. 2023-2024.

Action 18: Progressively place GHG emission limits and other requirements on EPLs for key industry sectors

The EPA will progressively introduce feasible, evidence-based GHG emission limits and other requirements on EPLs, such as monitoring and/or emissions estimation conditions, reporting condition, pollution reduction studies and programs, and other performance requirements. These other requirements will be informed by any sector emission reduction targets adopted by the EPA as per Action 16. The EPA intends to develop these requirements in consultation with industry and EPL holders, and will ensure any GHG emissions limits complement (rather than duplicate) existing NSW Government and Commonwealth Government actions including the NSW Net Zero Plan and the Safeguard Mechanism. EPL holders will not be required to report the same information twice.

GHG emission limits could be set as either emission intensity limits or load limits. Load limits could potentially be based on the emission projections included in a project’s environmental impact assessment. Where an EPL holder cannot meet an emission limit, the EPA will consider allowing the use of offsets to maintain compliance, although this is not guaranteed.

The EPA anticipates achieving Action 18 within 12 to 24 months, being 2024-2025.