On 16 April 2020, the Environmental Protection Authority (EPA) in Western Australia published its new Environmental Factor Guideline for Greenhouse Gas Emissions (GHG Guideline),[1] which reflects its approach to considering greenhouse gas emissions (GHG emissions) in environmental impact assessments (EIA) and provision of advice to the Minister for Environment on significant proposals in WA.

The Environmental Defenders Office actively participated in the process of developing the EPA’s GHG Guideline, through legal advice and assistance to clients, community education activities such as fact sheets and public seminars, formal submissions and meetings with the EPA.  

EDO published a brief analysis of the new GHG Guideline immediately after it was released. We here provide a more detailed analysis of the key legal issues and developments associated with the new GHG Guideline.

BACKGROUND

The GHG Guideline is the second version of the EPA’s new policy for GHG emissions and outlines the information the EPA will require and consider in its EIA and advice. The first version of the new Environmental Factor Guideline and associated technical guidance documents for GHG emissions was published in March 2019 (March GHG Guideline), but were subsequently withdrawn following a significant media and political campaign against the EPA by the fossil fuel industry. On 9 December 2019, following 12 weeks of public consultation, the EPA published a draft of a revised version of the GHG Guideline (draft December GHG Guideline) and conducted a final round of consultation on that draft with the Stakeholder Reference Group before publishing this latest version.

The GHG Guideline is not legally binding, but aims to provide transparency, clarity and consistency for proponents and the public in the EIA process under Part IV of the Environmental Protection Act 1986 (WA) (EP Act). The EPA has published environmental factor guidelines for all environmental factors it addresses in EIA (which include land, sea, air, water and people). Prior to the development of the new GHG Guideline which specifically addresses GHG emissions, the EPA assessed GHG emissions of proposals for almost two decades by applying its Environmental Factor Guideline for Air Quality.[2]

KEY LEGAL ISSUES

As the GHG Guideline is a policy instrument and not legally binding, it retains a significant level of flexibility in how it might be applied by the EPA in assessments of, and advice on, individual proposals.

The EPA is a statutory authority under the EP Act and the terms of the EP Act provide the fundamental basis and context for the application of the GHG Guideline. The primary object of the EP Act is to protect the environment of the State (s 4A), and the objective of the EPA is to protect the environment and prevent, control and abate pollution and environmental harm (s 15). The EPA’s environmental focus is reflected in its statutory functions and powers (ss 16, 17) and has been confirmed in key WA cases (Coastal Waters Alliance of Western Australia Inc v Environmental Protection Authority (1996) 90 LGERA 136; Wilderness Society of WA (Inc) v Minister for Environment [2013] WASC 307; Conservation Council of WA Inc v Dawson [2019] WASCA 102).

EDO notes that only when individual proposals are subject to assessment in accordance with the new GHG Guideline will it become clear whether the EPA is appropriately discharging its statutory obligations under the EP Act. Some potential legal issues with the EPA’s application of the GHG Guideline are outlined below.

Significance of the Scope Categorisation

GHG emissions associated with a proposal are often characterised as being split into three “scopes”. This categorisation of emissions was established as a commercial means to account for and report a particular entity’s emissions[3] and was not designed for environmental impact assessment purposes.

The March GHG Guideline stipulated that a minimum requirement for information provided by proponents in EIA would be estimates of scope 1 and 2 GHG emissions, and that the EPA would have regard to scope 3 emissions where there is a “sufficiently clear link” to the proposal’s activities. The GHG Guideline now provides that proponents may be requested to provide “credible estimates of scope 1, scope 2 and scope 3 GHG emissions (annual and total) over the life of a proposal”.[4]

The EPA may be intending to use these scope categories as a straightforward way for proponents to provide information on GHG emissions in the format in which they ordinarily collect that information for existing emissions accounting requirements such as the National Greenhouse and Energy Reporting Act 2007 (Cth). Given that the emissions categorised as “scope 3” do not have a different environmental impact to those categorised as “scope 1” or “scope 2”, it is EDO’s view that a true EIA will necessarily consider all these emissions as both an annual and lifetime total for each proposal. Accordingly, any automatic, arbitrary and inflexible exclusion of a particular “scope” of GHG emissions from consideration during EIA would likely raise community and legal concern.

Climate Change – Global and Local Perspective

A significant criticism of the March GHG Guideline was that climate change is a global problem that should be addressed at a global and national level, rather than by subnational processes such as those conducted by the EPA. Further, it has been argued that the EPA’s “jurisdiction” is limited to WA and that it is barred from considering anything beyond those territorial boundaries. The draft December GHG Guideline reflected this approach, stating that the geographic scope of the EPA’s obligations is the State of Western Australia and its environment and that the EPA has no responsibility for assessment of activities conducted outside the State, for example in Commonwealth offshore waters.

Under the EP Act, as outlined above, the focus of the EPA is on impacts on the WA environment and the nature of climate change necessitates both a global and local perspective in EIA. Former Chief Justice of the High Court of Australia, The Hon. Robert French AC, addressed this issue at a seminar on 13 June 2019, stating:

A black-letter lawyer might ask: does this exceed the functions of the EPA in relation to the protection of the environment of the State? One short answer is no, because what happens to the global atmosphere, happens to us and we share its environmental consequences in various ways with the rest of the global community.

This GHG Guideline does not assert that there is a strict limit on the EPA’s consideration of activities outside WA’s territorial boundaries (see also Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 14.).  Instead it states “generally, the geographic scope of the EPA’s obligations is the State of Western Australia and its environment”.[5] EDO will continue to advise clients and engage with the EPA on this issue.

Government Policies and Scientific Evidence

The GHG Guideline provides some background on government policy and regulation of GHG emissions at the state and Commonwealth level, as well as internationally established frameworks such as the Paris Agreement. Previously, the March GHG Guideline and draft December GHG Guideline referred to these instruments (in particular, the WA Government’s Greenhouse Gas Emissions Policy for Major Projects and its aspiration for net zero emissions by 2050 and requirements for Greenhouse Gas Management Plans) in a way which could be interpreted as forming the basis for the EPA’s assessment of whether a proposal’s GHG emissions would be considered environmentally acceptable.

Government policies and other strategic documents and processes are not necessarily directed to a science- and evidence-based environmental outcome, but rather involve weighing of other social, economic and political considerations. Government policy as to what is an acceptable environmental impact (for example, short-term increases in emissions to support growth in the LNG sector, or a target for emissions reduction of 26- 28% which has been found to be consistent with warming scenarios of 2-3°C[6]) cannot override the EPA’s statutory responsibilities and environmental focus under the EP Act.

Further, the EP Act provides specifically that the EPA must be independent from government (ss 7(5), 8). In combination with the environmental focus outlined above, it is clear that the EPA’s functions must be discharged independently of government policy on GHG emissions.

The GHG Guideline has removed most references to the WA Government GHG Policy (outside of providing background information) and has generally replaced them with references to the Paris Agreement and scientific findings of the Intergovernmental Panel on Climate Change (IPCC).  The GHG Guideline now includes more detailed references to the IPCC’s ‘Special Report on Global Warming of 1.5°C’, which contains up-to-date scientific findings on the environmental impacts of climate change associated with various global warming scenarios.

This provides a basis for EIA that will ensure the EPA maintains its independence, retains an environmental focus and adopts a science-based approach to GHG emissions.

KEY DEVELOPMENTS 

In comparison with the March GHG Guideline and the draft December GHG Guideline, the GHG Guideline has been revised in certain significant ways. Some key developments are highlighted below.

Stronger Environmental Objective

Where the EPA finds a proposal is inconsistent with its objective for a particular environmental factor, it may recommend against government approval. The GHG Guideline contains a revised environmental objective, being “to reduce net greenhouse gas emissions in order to minimise the risk of environmental harm associated with climate change”.[7] This replaces the weaker objective in the March GHG Guideline “to mitigate greenhouse gas emissions and consequently minimise the risk of contributing to climate change”.[8]

The new environmental objective is directed to ensuring that proposals reduce (rather than merely mitigate) GHG emissions. Further, the environmental objective confirms that all GHG emissions increase the risk of environmental harm associated with climate change, which implies that proposals must reduce emissions or, at a minimum, achieve net zero emissions, in order to be consistent with the GHG Guideline.

The updated environmental objective also provides clarity to proponents and the community that WA’s increasing emissions profile is not environmentally acceptable. It is clear from the decision in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 and recent scientific reports such as the IPCC’s ‘Special Report on Global Warming of 1.5°C’ that all GHG emissions contribute to climate change and urgent reduction of emissions (including ensuring global net zero emissions by 2050) is the only way to minimise the risk of environmental harm associated with climate change impacts. New GHG emissions in this context must therefore be considered environmentally unacceptable.

Estimates of All GHG Emissions (Scope 1, 2 and 3)

The GHG Guideline states that the EPA may request the proponent to provide credible estimates of scope 1, 2 and 3 GHG emissions (annual and total) over the life of a proposal. The March GHG Guideline limited EIA information to estimates of scope 1 and 2 (direct) emissions, and information on scope 3 (indirect) emissions only where these are not “trivial or negligible” and have a “sufficiently clear link” to the proposal. This update is a significant improvement for both environmental outcomes as well as certainty and clarity for proponents as to what information will be required in EIA.

The GHG Guideline also includes several references to reductions in emissions “over the life of the proposal”, reflecting a more comprehensive view of the emissions of proposals compared to consideration on an annual basis.

Greenhouse Gas Management Plans

The GHG Guideline indicates a requirement for proponents to develop a Greenhouse Gas Management Plan (GHG Management Plan) as part of the EIA process that “demonstrates their contribution towards the aspiration of net zero emissions by 2050”.[9] This is an improvement compared to the March GHG Guideline as it provides a clear and direct indication that proponents must address how their proposal will contribute to net zero emissions.

The GHG Guideline requires GHG Management Plans to outline regular interim and long-term targets that “reflect an incremental reduction in scope 1 emissions over the life of the proposal”.[10] EDO hopes that the EPA will apply this requirement in a way that requires proponents to actively reduce GHG emissions on an ongoing basis (which can be usefully measured as discussed below).

Periodic Public Reporting

The GHG Guideline states that the EPA supports the requirement for proponents to periodically publicly report against their interim targets as outlined in their GHG Management Plan. Further, it states that the EPA will consider undertaking its own periodic statewide reporting to provide advice on GHG emissions and the progress of mitigation measures developed and implemented by major proposals within WA. This represents a major improvement to the reporting requirements in the March GHG Guideline, which merely stated that the EPA would consider reporting measures to enhance transparency and public accountability for major emitters.

The requirements for periodic public reporting will increase the level of transparency associated with GHG emissions and hopefully put pressure on proponents to deliver on their promises in order to maintain a social licence to operate in WA.

Evidence of Mitigation Measures and Additional Abatement and Offsets

The March GHG Guideline and the draft December GHG Guideline required proponents to provide mere “assurances” that their proposed technologies and procedures are capable of achieving stated GHG reductions and are verifiable, and that proposed mitigation measures (e.g., carbon sequestration or offsets) are effective and verifiable. The GHG Guideline now requires proponents to provide “evidence” of these matters. This is a significant improvement to the standards required of proponents in their EIA documentation, ensuring a greater level of certainty as to likely environmental impacts of proposals and how GHG emissions will be reduced.

The GHG Guideline also includes an additional requirement for proponents to provide information on the “feasibility and availability of any additional abatement and offsets”.[11] This will hopefully ensure that proponents are reducing GHG emissions as far as possible (not just as far as commercially convenient), while also potentially encompassing carbon abatement and offset measures to make proposals “net negative”. It therefore has the capacity to contribute significantly to the emissions reduction task.

Removal of Explicit Requirement for Offsetting Residual (Net) Direct Emissions

Unlike the March GHG Guideline, the GHG Guideline does not state that proponents may be required to offset any residual (net) direct emissions associated with the proposal, which was the subject of substantial controversy. Instead, the GHG Guideline states that the EPA may request information on “a GHG emission offset package to offset some or all residual emissions”.[12]

While this could be seen as a weakening of the March GHG Guideline, in the context of the stronger environmental objective in the GHG Guideline (to reduce net GHG emissions) it is difficult to see how the EPA would not require proponents to offset any residual (net) emissions to the extent that they cannot otherwise be avoided or minimised, in order to reduce GHG emissions or achieve net zero emissions.

Removal of Detail on EPA’s Consideration of Scope 3 GHG Emissions

As discussed above, the GHG Guideline contains no detail about how the EPA will consider scope 3 GHG emissions in EIA, despite the March GHG Guideline confirming that the EPA will consider scope 3 GHG emissions where there is a “sufficiently clear link” to the proponent’s activities and the emissions are not likely to be “trivial or negligible” compared with scope 1 and 2 emissions.

While the new GHG Guideline no longer contains this detail, it is apparent that scope 3 emissions will be considered by the EPA in EIA given that proponents will be required to provide credible estimates of these emissions.

Other Developments

Acknowledgement of emissions growth in WA

Similar to the draft December GHG Guideline, the GHG Guideline acknowledges that “generally, emissions growth in WA is expected to continue in the short to medium term”.[13] The March GHG Guideline did not include any statements to this effect. The GHG Guideline provides no citation for the source of this expectation, which appears to be based on projections as to GHG emissions from existing, already approved, projects.

In EDO’s view, the GHG emissions projections for WA make the emissions reduction task all the more imperative and urgent. The fact that WA’s emissions are already forecast to increase means that in order for proposals to be consistent with the environmental objective of reducing GHG emissions, the EPA must recommend that all new proposals at least achieve net zero GHG emissions (and thereby not further add to the problem of emissions growth) or actively reduce GHG emissions by achieving a net negative emissions profile.

It was designed with the following objectives in mind:

  • To help companies prepare a GHG inventory that represents a true and fair account of their emissions through the use of standardized approaches and principles
  • To simplify and reduce the costs of compiling a GHG inventory
  • To provide business with information that can be used to build an effective strategy to manage and reduce GHG emissions
  • To increase consistency and transparency in GHG accounting and reporting among various companies and GHG programs