In brief 7 min read
The Western Australian Environmental Protection Authority (EPA) has released its finalised Greenhouse Gas Emissions Environmental Factor Guideline (GHG Guideline). The final GHG Guideline dials back some of the more controversial aspects of the initial guideline that was released (and subsequently withdrawn) in March 2019. We analyse key aspects of the GHG Guideline below.
- Consideration of GHG emissions in environmental decision-making is not new, but projects across Australia are being more closely scrutinised by decision makers and the courts in the context of the Paris Agreement.
- The GHG Guideline outlines the EPA's approach to assessing the GHG emissions of WA projects. It will be most relevant to new projects or existing projects going through an expansion phase, which are expected to have over 100,000 tonnes of scope 1 (direct) GHG emissions per year.
- Projects referred to the EPA for assessment may need to include estimates of scope 1, 2 and 3 GHG emissions (annual and total) for the life of the project. The weight that the EPA will give to those emissions (particularly scope 3 emissions) in its assessment is not expressly stated.
- Projects to which the GHG Guideline applies will need to prepare and implement a GHG Management Plan which demonstrates the proponent's contribution towards the aspiration of net zero emissions by 2050.
Environment / approvals teams will need to be mindful of the GHG Guideline in engaging with the EPA, preparing environmental impact assessment (EIA) documentation and planning for delivery of offsets where required. Proponents will need to ensure that the EPA has sufficient information regarding GHG emissions to inform its assessment report and that decision-makers have sufficient information to make lawful decisions.
Role of EPA and GHG Guideline
Under Part IV of the Environmental Protection Act 1986 (WA) (EP Act), significant proposals can be referred to the EPA. The EPA has published a number of guidelines which provide detail regarding its EIA process (although the Court of Appeal has held that the EPA is not necessarily required to strictly follow them or take them into account).
The ultimate decision as to whether a proposal may be implemented rests with the WA Minister for Environment and other relevant decision-making authorities. The EPA's report is a necessary step in the EIA process, but the EPA's recommendations are not binding on the Minister.
Initial GHG Guideline and Technical Guidance
On 7 March 2019, the EPA published a new GHG Guideline and a supporting Technical Guidance on mitigating GHG emissions.
A controversial aspect of the Initial GHG Guideline and Technical Guidance was the expectation that proponents for projects with over 100,000 tonnes of scope 1 GHG emissions would offset all residual scope 1 emissions associated with the project.
The EPA withdrew the Initial GHG Guideline and Technical Guidance and conducted a 12-week public consultation process between June and September 2019. After receiving just under 7000 submissions, the EPA released a revised draft GHG Guideline for targeted consultation in December 2019 and then the final GHG Guideline on 16 April 2020.
State Policy for Major Projects
On 28 August 2019 (one week prior to the close of the EPA's public consultation process), the WA Government released a 'Greenhouse Gas Emissions Policy for Major Projects' (Major Projects Emissions Policy). Two key aspects of the Major Projects Emissions Policy are:
- An aspiration for WA to reach net zero emissions by 2050; and
- An intention that proposals likely to result in over 100,000 tonnes of scope 1 GHG emissions per year be conditioned to require the preparation of a GHG Management Plan. This management plan would set out how the proponent will contribute towards the WA Government's aspiration of net zero emissions by 2050.
To a large extent, the revised GHG Guideline aligns with the Major Projects Emissions Policy. Key aspects of the GHG Guideline include:
- GHG Management Plan – proponents of projects to which the EPA applies the GHG Guideline will be expected to develop a GHG Management Plan that demonstrates the proponent's contribution towards the aspiration of net zero emissions by 2050. The EPA has indicated that the GHG Guideline will generally be applied to projects with scope 1 GHG emissions of more than 100,000 tonnes per year.
At a minimum, the GHG Management Plan will need to include intended reductions in scope 1 GHG emissions over the life of the project and regular interim and long-term targets for achieving incremental GHG emissions reductions. In contrast with the earlier version of the Guideline the EPA has not included an expectation that scope 1 GHG emissions will be entirely offset.
- Scope 1, 2 and 3 emissions – the EPA may request 'credible estimates' of scope 1, 2 and 3 GHG emissions and projected GHG emissions intensity for the project. The weight that will be given to these estimates in the EIA process is not detailed.
- Flexible approach – the EPA recognises that proposals must be assessed on a case-by-case basis and that a flexible approach is important to drive innovation and improvement in best-practice technologies.
- Avoid, reduce, offset – the EPA has flagged it will want to see information on measures to avoid, reduce and offset GHG emissions, which might include how emissions have been avoided through best practice design, measures to ensure continuous improvement in GHG emissions and emissions intensity reduction and offsetting of some or all residual emissions.
- International, voluntary and Safeguard Mechanism compliance offsets may be acceptable, provided they meet offset integrity principles and are based on clear, enforceable and accountable methods.
- Periodic public reporting against interim targets, with reporting ideally aligning with five year milestones under the Paris Agreement.
- 12 month and three year reviews – the GHG Guideline will be subject to a 12-month review to resolve any technical issues and a three year review to ensure it reflects the policy environment at that time. The GHG Guideline also states it will be updated if policy settings or commitments change significantly and materially.
- The Initial GHG Guideline and Technical Guidance signalled a shift in the EPA's position on GHG emissions. Although withdrawn, the concerns raised in those documents regarding the adequacy of Federal policy and WA's increasing emissions trajectory and high per capita emissions are likely to shape the EPA's assessment process.
- While the requirement to prepare and implement a GHG Management Plan for significant projects is not new, there is likely to be increased pressure on proponents to demonstrate investment in emissions reduction technologies and to offset scope 1 emissions.
- It will be important for proponents to articulate how their proposal aligns with the aspiration of net zero emissions by 2050.
- Government policy at the state level is evolving, with the WA Government's Climate Policy due for release later this year. Proponents will need to be mindful of obligations under relevant state and federal legislative frameworks where those obligations are not aligned.
- Other Australian jurisdictions, particularly NSW, are currently grappling with how to assess scope 3 emissions from resources projects.1 While the different legislative framework in WA means that the EPA's approach will differ to an extent from regulators in other jurisdictions, we expect there will be an increasing focus on scope 3 GHG emissions where those emissions are expected to be significant.
See articles on the most recent NSW Independent Planning Commission decisions and subsequent legislative reform here: https://www.allens.com.au/insights-news/insights/2019/10/nsw-government-to-prohibit-scope-3-greenhouse-gas-emissions-conditions/, https://www.allens.com.au/insights-news/insights/2019/10/latest-coal-mine-decision-concludes-scope-3-emissions-are-the-end-customers-responsibility/ and https://www.allens.com.au/insights-news/insights/2019/09/climate-change-features-again-in-latest-coal-mine-refusal/.