Climate change impacts cited in rejection of Gloucester coal mine proposal by NSW Court

Considerable legal and industry chatter quickly followed the Chief Judge of the NSW Land and Environment Court’s decision in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 to reject a proposal for a new coal mine in Gloucester (the Project). Although the decision clearly states that the appeal would have been dismissed for various other less controversial planning and environmental reasons, it is the Chief Judge’s assessment of environmental impacts of greenhouse gas emissions (GHG) which is, quite fairly, drawing all the attention.

Gloucester Resources Limited’s (GRL) appeal to the Court against the rejection of its Project by the Planning Assessment Commission (Commission)¹ was never expected to make the front page for its contribution to growing international jurisprudence on climate change law. The Commission did not even cite climate change or GHG impacts as a specific reason for refusal.

Background 

GRL sought development consent for an open cut coal mine approximately 5km from the centre of Gloucester. It proposed to produce 21 million tonnes of coking coal over a period of 16 years. Of the site area of approximately 832ha, about 500ha was proposed to be disturbed throughout the life of the Project.

The Project was recommended for refusal by the Department of Planning and Environment and the Commission refused consent on 14 December 2017. There were three grounds for refusal given by the Commission, being:

• The creation and operation of an open cut coal mine in this proposed location, within the RU1 and E3 zones of the Gloucester Local Environmental Plan 2010, is in direct contravention of each zone’s objectives;
• The residual visual impact of the mine would be significant throughout all stages of the Project; and
• The Project is not in the public interest.

GRL filed an appeal against the Commission’s decision and the Court subsequently ordered that community action group Gloucester Groundswell could be joined as a party to the proceedings.

The climate change argument

Gloucester Groundswell submitted to the Court that GHG emissions from the Project would adversely impact upon measures to limit anthropological climate change and that the Project should be refused on that basis. Their position was argued as follows:

• The Project would cause, directly and indirectly, emissions of GHGs which includes scope 1, 2 and 3 emissions²;
• That the emissions of GHGs negatively impact the environment by trapping outgoing heat from the earth’s surface and retaining it in the lower atmosphere and at the surface;
• That the world has, through the United Nations Framework Convention on Climate Change in 1992 and in 2015 Paris Agreement agreed to hold the increase in global temperatures to well below 2 degrees; and
• As a consequence of the above there is a remaining carbon budget which cannot include the development of new fossil fuel reserves (coal, oil and gas) if the world is to limit the impact of climate change.

GRL’s response 

GRL ‘s response to these arguments were:

• No international agreement or federal or state law states that there should be no new coal mines;
• Scope 3 emissions should not be included in the total calculation of the Project’s GHG contribution;
• That there are other methods of reducing GHG emissions rather than a blanket prohibition on fossil fuel projects;
• Action to reduce emissions should be done in the way which generates the least amount of economic and social harm;
• The Project is necessary to produce coking coal for the production of steel due to the lack of viable alternatives; and
• New fossil fuel projects with higher environmental standards (such as the Project) and higher quality fossil fuels should be approved rather than projects in countries with less extensive environmental standards and lower grades of fossil fuels.

The Court’s decision 

The Court refused GRL’s appeal on the basis that the Project would have significant adverse impacts on the visual amenity, rural and scenic character of the valley and social impacts on the community.

In relation to climate change impacts, his Honour found that “the GHG emissions of the Project and their likely contribution to adverse impacts on the climate system, environment and people adds a further reason for refusal”. The Court upheld Gloucester Groundswell’s submissions in determining that:

• In order to achieve Australia’s commitments to the Paris Agreement there is a finite amount of CO2 remaining that can be polluted (the carbon budget);
• That the Project will contribute GHG emissions which should be calculated by its direct and indirect GHG emissions which includes scope 1, 2 and 3 emissions;
• The Project’s contribution to GHG emissions creates a casual link between the Project’s emissions and climate change; and
• That there was no specific proposal to offset the Project’s emissions.

His Honour neatly summed up his reasons at the end of the judgment as follows:

“In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time. Wrong place because an open cut coal mine in this scenic and cultural landscape, proximate to many people’s homes and farms, will cause significant planning, amenity, visual and social impacts. Wrong time because the GHG emissions of the coal mine and its coal product will increase global total concentrations of GHGs at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions. These dire consequences should be avoided. The Project should be refused.”

Our thoughts

The NSW Land and Environment Court has come along way in this area in the seven short years since it first considered the GHG impacts of a large coal mine near Mudgee in Hunter Environment Lobby Inc v Minister for Planning [2011] NSWLEC 221. In that case the EDO (acting for the Hunter Environment Lobby) did not seek refusal of the project on the basis of the GHG emissions or even press that all scope 1, 2 and 3 emissions should be offset. The Court initially determined that a condition should be imposed which would have required the mine to offset any scope 1 emissions above those predicted by the mine in its total GHG emissions budget for the project. Although ultimately the Court did not actually impose the condition requiring offsets after the Gillard Government passed the Clean Energy Act 2011 (Cth)³, commonly referred to as the carbon tax, in the intervening period.⁴

In our view, the Chief Judge was correct in assessing the proposed GHG emissions (both direct scope 1 and indirect scope 2 emissions) of the Project as a relevant matter for consideration under the Environmental Planning and Assessment Act 1979 (NSW). This is consistent with the decision in Hunter Environment Lobby Inc v Minister for Planning [2011] NSWLEC 221.

Whilst there are also grounds for calculating scope 3 emissions in assessing the cumulative GHG emissions resulting from proposed development, care must be taken with the assessment and weight to be given to scope 3 emissions. Proponents are unlikely to have any control over the efficiency of these emissions and there is the potential for double assessment as one project’s scope 3 emissions are another project’s scope 1 emissions. In addition, the 2015 Paris Agreement does not attribute these scope 3 emissions to Australia, but rather to the country in which the emissions actually occur.

The difficult question for consent authorities and proponents is the weight to be given to these emissions, particularly in the absence of government policy or other legislation dealing with GHG offsets.

There are particular aspects of the decision which may be problematic for the assessment and determination of future projects. Firstly, the Court rejected that the quantitative amount of GHG emissions from a particular development relative to global output is the relevant assessment. Rather the Court acknowledged that because “climate change is caused by cumulative emissions from myriad of individual sources, each proportionately relative to the global total of GHG emissions, and will be solved by abatement of the GHG emissions from these myriad of individual sources”.

In other words, climate change mitigation must be addressed at the local level. The question then beggars how a consent authority is to determine the acceptability of a project’s GHG contribution to the remaining carbon budget? It cannot be enough merely to establish a causal link between the proposed development and climate change due to the proposed development’s contribution of GHGs because an overwhelming majority of development contributes GHG emissions. This necessarily imports a qualitative assessment.

Consequently, the decision provides little guidance to either proponents or consent authorities on what level of GHG emissions contributing to the remaining carbon budget is acceptable. It also appears from the Court’s decision that it will consider the necessity of the proposed development and whether an offset scheme is proposed, when assessing the merits of a proposed fossil fuel development.

Whilst we are uncertain as to exactly how the reasoning of the Chief Judge on the impact of GHG emissions will be applied in the assessment and determination of other projects, there can be no doubt that this decision will increase the risks and costs associated with fossil fuel development in NSW and that current and future proponents will need to seriously consider the decision at the project planning stage.

Going forward

The Court’s decision is not limited to coal mines and should be interpreted as applying all major fossil fuel projects in NSW. Proponents and investors for major fossil fuel projects (at least in NSW) must now consider at the planning phase whether the project’s contribution both directly and indirectly to GHG emissions can be justified as it is almost certain to be raised in the assessment process. Scope 3 emissions will be required to be assessed and considered.

The impacts of climate change are becoming clearer to the public everyday and social appetite for change is at an all time high. The ever changing modern environmental landscape is challenging for proponents, investors and government decision makers and it is here to stay.

This article was written by Jane Hewitt, Partner, Danielle Le Breton​, Special Counsel and David Gunter, Graduate-at-Law.

¹Now known as the Independent Planning Commission.
²Scope 1 emissions are direct emissions that occur from sources that are owned or controlled by the proponent. Scope 2 and 3 emissions are indirect emissions. Scope 2 emissions are generated by the purchase of energy products to operate the development. Scope 3 emissions are emissions that result as a consequence of the development, for example, the emissions resulting from the use of the extracted coal, including its transportation to market and use within steel and/or electricity production.
³The Clean Energy Act 2011 (Cth) was subsequently repealed with effect from 1 July 2014 by the carbon tax repeal legislation.
⁴See Hunter Environment Lobby Inc v Minister for Planning (No 2) [2012] NSWLEC 40