The NSW Environment Protection Authority (EPA) recently released its draft Climate Change Policy (Policy) and Climate Change Action Plan 2022-25 (Action Plan) in September 2022. Once implemented, this will solidify the EPA’s role in regulating and reducing greenhouse gas emissions and support the NSW Government’s plan to reach net zero by 2050.
The Policy and Action Plan are in direct response to the significant case of Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority  NSWLEC 92, in which the EPA was found to have a statutory duty to develop specific policies to protect the environment from climate change. In particular, these developments mark the EPA’s shift to treating carbon dioxide as a pollutant, thereby requiring its strict regulation and reduction in the atmosphere.
In this article, Louise Horrocks, alongside McCullough Robertson's Planning and Environment team discuss the intentions and effect of the EPA’s latest regulatory position, and highlight the potential impact of this on businesses in regulated and heavy industries.
What does the Policy and Action Plan seek to achieve?
Looking towards the State’s goal of halving its carbon emissions by 2030 (from 2005 levels), the EPA’s CEO, Tony Chappel emphasised the major economic opportunities for NSW from advancing clean industries such as renewable energy, green hydrogen and regenerative agriculture. The Policy and Action Plan seek to contribute to a deliberate, well-organised transition to a low carbon economy in what is a quickly-shrinking time frame.
The documents provide a framework for consulting with and listening to regulated industries, particularly holders of an environmental protection licence (EPL), with the aim of quantifying, monitoring and “regulating down” emissions from these industries.
The draft Policy outlines the EPA’s key focus areas of its decarbonisation efforts, specifically working with regulated industries to:
The Policy also promises comprehensive consultation across industries, communities, young people and Indigenous Australians, to ensure the EPA is considering both the climate and stakeholders when making regulatory decisions.
The Action Plan
The EPA’s Action Plan particularises how the Policy will be implemented, and is more specific about the EPA’s vision for future regulatory action. The Action Plan represents a staged, progressive move towards placing increased requirements on EPL holders, including:
What is the impact on licence holders?
The EPA’s increasing regulation of greenhouse gas emissions for EPL holders will undoubtedly have an effect on emissions, but will also create an administrative burden and affect the operations of emissions-intensive projects throughout NSW. We have identified the following critical impacts of this Policy and Action Plan:
These measures to be taken by EPL holders to reduce emissions and to manage climate related risks, may ultimately require operational changes. However, the administrative burden on EPL holders will be exacerbated if further development consent is required prior to implementing the necessary operational changes.
This week, the EPA’s Western Australian equivalent opted for a different approach for now, announcing it would not impose limits on emissions in its environmental licensing regime in the short term. Instead, the Western Australian Government looks likely to introduce a “polluter pays” scheme, linked to the intensity and type of various pollutants emitted at each project site. The remaining States and Territories are continuing to grapple with how to regulate this challenging issue.
The draft Policy and the Action Plan represent the EPA’s most concrete and impactful method yet of regulating and reducing greenhouse gas emissions among regulated industries. While stakeholders set to be affected by these changes may make submissions on the draft Policy and Action Plan via the EPA’s website until 5pm on Thursday, 3 November, these draft documents clearly signals an increase in compliance-related work for those businesses operating with an EPL, and an impact on the long-term operations and viability of some projects.
If you are contemplating ESG themes such as sustainability or decarbonisation, or considering how your business will address the impacts of this draft Policy and Action Plan, our experienced team, alongside McCullough Robertson's Planning and Environment team are available to assist. Our multidisciplinary team at McR ESG works together to provide the legal and non-legal advice required to prepare a business-specific response to these issues, in a way that not only ensures ongoing compliance, but also uncovers unique opportunities.
For assistance, or to further discuss the EPA’s strengthened position on decarbonisation, please contact a member of the team.