Background
The inevitability of a revision to the Western Australian Environmental Protection Authority’s (EPA) Environmental Factor Guideline – Greenhouse Gas Emissions has been realised with the release for public comment of a revised guideline.
Since the EPA’s adoption of the current guideline, in April 2020, there has been significant and ongoing policy and regulatory developments for GHG abatement.
Under the current guideline, the EPA recommended approval for a number GHG emitting projects with a transitional pathway to net zero emissions by 2050. This has included some industry benchmarking for initial emissions avoidance and emissions intensity, together with the staged application of offset credits.
Overview of material changes
Material changes include:
- The strengthening of the factor objective from reduction of net GHG emissions to reducing GHG emissions as far as practicable;
- A more robust abatement expectation – deep and substantial reduction this decade, followed by a subsequent linear trajectory to achieving net zero by 2050 (and as early as possible);
- A bias towards renewable, or lower scope 2 emission, power supplies for projects where reasonably practicable.
- Consideration of reasonably practicable measures for limiting scope 3 emission reductions (e.g. third party agreements);
- A focus on relevant sector pathways, benchmarks and / or milestones and demonstration of peer reviewed outcomes;
- The inclusion of a best practice definition – “the most effective, best combination of technologies used and the way in which an installation is designed, built, maintained, operated and decommissioned to avoid and minimise the environmental impacts arising from emissions” (taken from the EU Industrial Emissions Directive);
- A caution against splitting up of projects to avoid exceedance of the thresholds triggering the application of the revised guideline (i.e. 100,000 tonnes of CO2-e of scope 1 or 2 emissions per annum); and
- A requirement that management plan offset proposals be accompanied by information on the likely availability of offsets (that meet integrity standards) at the time of surrender.
The EPA’s Expectation for earlier substantive reductions
The revised guideline reflects (although not prescriptively) increased international and national sentiment for adopting more ambitious short term targets (e.g. the recent Commonwealth Government announcement) and achievement of net zero earlier than 2050.
This is also reflected in Infrastructure WA’s (IWA) recently released State Infrastructure 20-year Strategy (IWA Strategy), where IWA expresses support for the State Government’s aspiration for net zero emissions by 2050 and “ideally earlier, where it is feasible to do so”.
Broader expected application of EPA’s GHG guidance
There has been a trend for some regulators to consider GHG regulation should only occur through Part IV assessment under the Environmental Protection Act 1986 (WA) (EP Act). However, the revised guideline now expressly encourages other EP Act decision-makers to also have regard for the revised guideline.
Sectoral emission reduction to be considered, but limited guidance is provided
The revised guideline, like the recently released IWA Strategy, references the State Government’s Western Australian Climate Policy and its policy actions for sectoral emissions reduction. However, the revised guideline continues to provide limited guidance around the EPA’s expectations. This is unsurprising. The IWA Strategy recently observed that:
“Limited detail is provided in the WA Climate Policy about the methodology, timing or requirements of these plans strategies”,
although the State Government (Shaping Western Australia’s low-carbon future, Developing sectoral emissions reduction strategies to transition the economy to net zero, December 2021 (Shaping WA) has announced the process and principles for developing sectoral reduction strategies.
Shaping WA, itself recognises that:
“Transitioning our economy to net zero emissions by 2050 does not require all sectors to decarbonise at the same pace. Some sectors will be able to readily reduce emissions, while others may face constraints in the short term from technical limitation, existing infrastructure or slow stock turnover”.
With sectors having differential emissions reduction pathways, the development of sector emissions reduction strategies will be critical to the environmental impact assessment (EIA) process.
Yet, such development has significant potential for delay, and IWA includes a recommendation for the acceleration of this development. Shaping WA states that “A framework to develop the sectoral emissions reductions strategies will need to consider several complex factors including:
- the significant capital required for Western Australia’s net zero transition, including enabling infrastructure and key technologies
- the share of emissions from off-grid sources and issues related to shared infrastructure
- the challenges associated with increased penetration of distributed energy resources and new approaches to maintaining system stability
- the exposure of key sectors and industries to tariffs or trade barriers
- the role of government in stimulus for new industries and economic diversification
- the importance of a skilled and agile workforce to drive the transition”.
The sectoral emissions reduction strategies will also be developed in conjunction with industry to identify, amongst other things, the “barriers to emissions reduction and possible solutions including research and development, incentives and information”.
The indicative timeframes outlined in Shaping WA are:
- the end of 2022 for the Department of Water and Environmental Regulation co-ordinated modelling, stakeholder engagement on modelling, the development of sectoral pathways and the evaluation of policy options; and
- late 2022 to the end of 2023 for the development of sectoral strategies in.
It remains to be seen how and when the EPA will be able to give active consideration to sectoral reduction, what effect this has on EIA and whether, in the interim, the EPA will support some level of research into sectoral emissions as an indirect environmental offset.
EPA uses more robust language on causation
Previously, political debate has centred on whether there is a demonstrated scientific link between climate change and particular significant events. Against this backdrop causative climate modelling continues to increase in sophistication.
Reflective of this change, the EPA has shifted its language from:
“… climate change has already caused a significant drying of the State’s south-west, which in turn places significant additional pressures on water resources, flora and fauna, marine environmental quality, and social surrounds” (current guideline)
to:
“Climate change has already driven or exacerbated many extreme events with devastating impacts for communities and ecosystems, including the catastrophic ‘Black Summer’ fires of 2019-20, repeated bleaching of the Great Barrier Reef, loss of kelp forests, and more intense heatwaves and droughts. Temperatures and sea levels Australia-wide are projected to rise faster than the global average”; and
“Some WA ecosystems, including coral reefs, kelp forests, Karri and Jarrah forests, are already at critical thresholds and further warming will result in damage and loss that is irreversible”,
This change in tone reflects increasing public and investment sentiment, which is expected to drive demand for increased information and justification by proponents (and their environmental consultants) in project disclosures, environmental review documentation and responses to public submissions.
Next steps
The revised guideline is open for public comment until 21 September 2022, and submissions can be made through the EPA’s consultation hub here.
Regardless of what form the revised guideline ultimately takes, proponents are on notice of changing assessment (and public) expectations. Given the long EIA timeframes, proponents should actively take steps towards addressing / factoring for the terms of the draft revised guideline.
This article was written by Mark Etherington, Partner, and Hilda Chan, Law Graduate.
