INSIGHT

Climate change features again in latest coal mine refusal

By Felicity Rourke, Naomi Bergman, Rebecca Hiscock
Climate Change Energy Environment & Planning Resources

In brief 6 min read

Last week the NSW Independent Planning Commission (IPC) refused development consent for the Bylong Coal Project (Project). Although the IPC stopped short of finding the Project unacceptable on climate change grounds, the decision still attracted significant press for its commentary on this issue. We analyse the key features of the decision and its implications.

Key takeaways

  • This is the latest in a line of decisions this year in which climate change has featured heavily in the assessment of proposals for new or expanded coal mines, including the Land and Environment Court decision on the Rocky Hill Coal Project and the IPC's recent approval of the United Wambo Coal Project.
  • In its decision on the Bylong Coal Project, the IPC based its refusal on environmental impacts other than climate change, including impacts of the Project on strategic agricultural land, groundwater and Aboriginal cultural heritage. However, the IPC found the Project's contribution to global greenhouse gas (GHG) emissions was a factor that needed to be considered in its assessment, and placed weight on the Applicant's failure to propose any offset measures.
  • The IPC also stopped short of deciding whether consideration of scope 3 emissions should extend beyond NSW to the use of the coal extracted by the Project overseas, but did not expressly rule this out.
  • Taken together with the Rocky Hill and United Wambo decisions, this decision suggests it will be hard to secure approval for new coal mines in NSW without a comprehensive minimisation and offset strategy in respect of scope 1, 2 and (potentially) scope 3 emissions. Further, these recent decisions, when viewed together, suggest it may be harder to secure approval for new mine projects than expansion projects.
  • Applicants for all coal mine projects are now on notice that conditions concerning scope 3 emissions are likely to be imposed on approvals in NSW.  

The project and decision

On 18 September 2019, the IPC refused a state significant development application by KEPCO Bylong Australia Pty Ltd to develop and operate the Bylong Coal Project, a new open cut and underground thermal coal mine.

The Applicant proposed to recover approximately 124 million tonnes (Mt) of run-of-mine coal at a combined rate of up to 6.5 Mt per annum for a period of 25 years, at a greenfield site in the Bylong Valley.  

Relevant background

After the Application was lodged in July 2015, it was reviewed by the former Planning Assessment Commission in July 2017. In response to issues arising out of that review, the Applicant provided a Revised Mine Plan in July 2018 which proposed approximately 8% less surface disturbance and 2.75% less cumulative scope 1, 2 and 3 GHG emissions over the life of the mine.

The Department of Planning, Infrastructure and Environment (Department) supported the Revised Mine Plan and recommended approval of the Project subject to conditions of consent that would give effect to the amendments proposed by the Applicant.

Reasons for refusal

the perceived lack of evidence to support the feasibility of rehabilitating the site to BSAL equivalence post-mining was an important factor in the IPC's decision.

Despite the Department's recommendation for approval, the IPC refused the application. The IPC cited a number of reasons for refusal and placed significant weight on the mine's impacts on biophysical strategic agricultural land (BSAL). In particular, the perceived lack of evidence to support the feasibility of rehabilitating the site to BSAL equivalence post-mining was an important factor in the IPC's decision.

Other reasons for refusal included groundwater and land disturbance impacts, and insufficient assessment of Aboriginal cultural heritage impacts.

The IPC also found the Project's contribution to global GHG emissions was a factor that needed to be considered in its assessment, and placed weight on the Applicant's failure to propose any offset measures.

Climate change impacts

In relation to climate change impacts, the IPC accepted there is no prohibition on the approval of new sources of GHG emissions, such as new coal mines. However, the IPC drew heavily on the principles established by the NSW Land and Environment Court regarding the assessment of cumulative GHG impacts in its decision concerning the Rocky Hill project (see our earlier Insight here). The IPC placed weight on the following matters when assessing the Bylong application:

  • The Applicant did not propose any measures to address scope 3 GHG emissions and, therefore, did not minimise scope 1, 2 and 3 emissions to the greatest extent practicable, as required under the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP);
  • Contrary to the view taken by the Department, the IPC found the NSW Climate Change Policy Framework (CC Policy) to be a relevant consideration under the Mining SEPP. This policy document is an aspirational policy of the former NSW Office of Environment and Heritage, and outlines the State's long-term objectives to achieve net-zero emissions by 2050;
  • There was a reasonable level of uncertainty in the estimation of the economic benefits to NSW during the operation of the Project;
  • The Project was contrary to the principles of ecologically sustainable development, specifically the principle of intergenerational equity, in that the predicted economic benefits would accrue to the present generation but the long-term environmental, heritage and agricultural costs would be borne by the future generations. On this basis the Project was not in the public interest; and
  • There was no evidence to support the finding by the Department that refusal would not reduce global GHG emissions on the basis that the gap in supply would be filled by another coal resource locally or overseas, which may also be of inferior quality and lead to poorer environmental outcomes.

Implications

Wrong place, wrong time?

All of these factors demonstrate how important it is for applicants to stay abreast of policy changes and recent decisions in relation to other projects in the sector.

To borrow the phrase used by the court in the Rocky Hill decision, the Project also appears to have been proposed in the wrong place at the wrong time. The timing and context of this decision is important. Since the Application was lodged in 2015, Australia ratified the Paris Agreement on 10 November 2016; the CC Policy was published that same year; and there have been a number of IPC determinations where climate change has featured prominently as an issue.

All of these factors demonstrate how important it is for applicants to stay abreast of policy changes and recent decisions in relation to other projects in the sector, and ensure that current and future applications respond to those changes and the issues that are likely to be given weight by the IPC.

Minimising and offsetting GHG emissions

Applicants should ensure their proposals squarely address the minimisation of scope 1, 2 and 3 GHG emissions, including by considering offsetting measures. Applicants should also anticipate conditions of approval like those imposed on the United Wambo Project, which effectively required the applicant to ensure coal extracted from the development is only exported to countries that are a party to the Paris Agreement, or that have policies for reducing GHG emissions similar to signatory countries, in order to secure approval.

Evidence is key

Applicants should ensure they are putting forward sufficient, credible evidence to substantiate claims such as the feasibility of rehabilitating land back to BSAL equivalence, and the likelihood of end-users securing alternative, potentially inferior coal sources to fill the supply gap if the project does not proceed.

Consider all potentially relevant polices

The fact that the IPC found the CC Policy to be a relevant consideration, despite the Department taking a different view, highlights the importance of a fulsome assessment of proposals against all potentially relevant policies. Until the relevance of the CC Policy to the determination of mining proposals is tested in the court, applicants will need to treat the CC Policy as a relevant consideration in the assessment of all coal mine projects.