Five Takeaways from the UN Climate Change Conference (COP26)

Australia’s new Federal Government was elected in May 2022 with a strong mandate to take action on climate change and commit to emission reduction targets in line with the Paris Agreement.

With an ambitious climate change reform agenda that has synergies with an equally ambitious environmental reform agenda, it is clear that the new Government is seeking to restore public and business confidence in the Federal environmental protection regime. What are the implications of this momentum toward increased trust and transparency for business, major projects and human rights?

A common theme in both the State of the Environment Report 2021 (SoE Report), released in July 2022, and the Final Report of the Independent Review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) (Samuel Review), released in October 2020, is the significant decline in the state of the environment.

The Samuel Review also focuses heavily on building community trust in a broken system:

“The recommended reforms seek to build community trust that the national environmental laws deliver effective protections and regulate businesses efficiently. The recommendations of the Review provide a path to effective environmental protection and biodiversity conservation, efficient regulation of business and confidence that the Act is working as intended to achieve national important environmental outcomes.”

Samuel Review, Foreword

In order to halt the decline of the environment, mend a broken system and build trust, the Federal Government has made three key commitments:

  1. A formal response to the Samuel Review by the end of 2022. The Samuel Review was commissioned under the former Federal Government and recommended significant reforms to the EPBC Act.
  2. The implementation of National Environmental Standards (NES). The introduction of NES was recommended in the Samuel Review, with a heavy focus on consultation in developing the standards. The NES will identify specific targets around what Australians value from an environmental perspective and what the law needs to protect. It is proposed that the NES would be used by the Federal Minister for the Environment and Water as a decision-making tool and in the development of policies, plans and programs, the objective being increased consistency and improved decision-making that is responsive to community concerns.
  3. The establishment of a Federal Environmental Protection Agency (EPA). This will include a compliance and assurance division and an environmental data, information and analysis division.

Implications for business and major projects

The Samuel Review also highlighted that business did not trust that the EPBC Act was delivering for the environment. The NES are an attempt to stem the flow of that lack of trust by providing clear and legally enforceable outcomes that guide decision-making, including for the future assessment and determination of EPBC Act approvals.

There are nine proposed NES, with four identified as priorities:

  1. Matters of national environmental significance (MNES).
  2. Indigenous engagement and participation in decision-making.
  3. Compliance and enforcement.
  4. Data and information.

The Government has committed to developing NES through consultation. The Samuel Review recommends consultation with states and territories but cautions that ‘the process cannot be one of negotiated agreement to accommodate existing rules or development aspirations. To do so would result in a patchwork of protections or rules set at the lowest bar’. We consider that consultation and submissions of states, territories and Indigenous groups could be made public to enhance the transparency of the development of NES, and that the outcome of consultation should not be a setting of standards ‘at the lowest bar’.

With a focus on improvements to the conservation and management of MNES, an example of where NES may have a role to play in the EPBC Act approval decision-making process is through increased scrutiny and assessment of the cumulative impacts of an action on MNES. This increased scrutiny will be supported by the preparation of a proposed national plan to monitor and evaluate the outcomes of actions and decisions on each MNES, the objective of which is to instigate a more co-ordinated, transparent and evidence-based decision-making process for cumulative impacts. It will track all cumulative impacts to the relevant MNES in order to understand the cumulative impacts at the relevant scale (e.g. national, state-side, regional plan areas or project site). With the increasing importance of ESG drivers in investment decisions, regulatory transparency in the Environmental Impact Assessment process and access to information on cumulative impacts of actions will be crucial.

There is also an emphasis on the minimisation of harm to MNES, including employing all reasonable measures to avoid and then mitigate significant impacts and, lastly, to apply appropriate offsets. This requirement, coupled with the increased scrutiny on the integrity of offsets, is generally likely to mean that offsets will be conditioned as a last resort and substantial justification will need to be provided by proponents for their use.

Further, there is a significant emphasis on a more holistic approach to environmental regulation, including through enforcement and compliance. The creation of a new EPA (within the scope of the available constitutional powers) will inevitably result in the increase of regulatory action to ensure compliance and consistency of implementation of approval conditions. A new EPA could play an important role in addressing concerns of corruption and integrity in Australian mining, increasing trust in mining approvals. It could also fill a gap in the EPBC Act by checking the compliance records of proponents and verifying the integrity of Environmental Impact Assessments during the approvals process.

We consider that a key focus of the proposed reforms should also be on the streamlining and harmonisation of environmental assessment and approvals at both a federal and state level. While assessment bilateral agreements are commonplace with states and territories, approval bilateral agreements are not. With the development of NES, approval bilateral agreements will facilitate consistency, enable contextualised and localised decision-making and prevent duplication of conditions.

Implications for Indigenous rights and human rights

The Samuel Review highlighted the failings of the EPBC Act to fulfil the rights of Indigenous Australians in decision-making and to value and incorporate Indigenous knowledge and environmental management practices which have sustained Australian ecosystems for millennia. The SoE Report reinforces this observation and concludes that Indigenous knowledge and participation in the management of the environment and the effects of climate change would lead to improved environmental and human rights outcomes.

The NES, and other EPBC Act reforms proposed by the Samuel Review, will go a significant way towards facilitating Indigenous Australians’ participation and engagement in decision-making processes, bolstering cultural heritage protections and integrating Indigenous knowledge alongside Western science in environmental and climate change policy. In particular, the Samuel Review stipulates that the principle of free, prior and informed consent (FPIC) is central to the proposed NES for Indigenous engagement and participation in decision-making. FPIC is key to the realisation of the rights of Indigenous peoples to self-determination under international human rights law.

While the Federal Government has not yet committed to implementing all Samuel Review recommendations, the Federal Minister for the Environment and Water The Hon Tanya Plibersek MP has committed to co-designing standalone Federal cultural heritage legislation and incorporating Indigenous knowledge in environmental conservation.

In July 2022, the United Nations General Assembly recognised the right to a clean, healthy and sustainable environment as a universal right, which must be recognised, protected, respected and fulfilled. Many states had already incorporated similar rights into domestic law through their constitution or a bill of human rights. In the absence of a Federal bill of human rights, reforming the EPBC Act to include FPIC principles may assist in fulfilling not only the right to self-determination for Australia’s First Nations people, but with facilitating more sensitive environmental approaches and the right of all Australians to a clean, healthy and sustainable environment.

A clear focus on climate change

Signalling the high priority that the new Federal Government is giving to climate change, the Climate Change Bill 2022 was included in its first tranche of bills. Through the implementation of an annual climate change statement and the provision of advice from the Climate Change Authority on Australia’s Nationally Determined Contributions (NDC), there is a focus on certainty through target setting and transparency.

Key reforms include:

  • emissions reduction targets of 43% on 2005 levels by 2030 and net zero by 2050 (targets);
  • the relevant Minister must publish an annual climate change statement (statement) detailing progress toward the targets, international developments, climate change policy and effectiveness of Commonwealth climate change policies with respect to the targets;
  • the Climate Change Authority must provide and publish its advice relating to the statement and, if requested by the Minister, must provide advice on new or updated NDC; and
  • the Minister must prepare a written response and, if relevant, reasons for not accepting the advice.

The Climate Change (Consequential Amendments) Bill 2022 seeks to align the functions and objects of various Commonwealth entities and agencies with the targets and NDC. As at the date of publication, both Bills have passed in the lower house and are currently before the Senate Environment and Communications Legislation Committee for inquiry.

In establishing a legislative platform for climate change management and emissions reduction in Australia, there is renewed focus on the integrity of Australian Carbon Credit Units (ACCUs). The Federal Minister for Climate Change and Energy The Hon Chris Bowen MP announced in July 2022 that an independent panel will examine the issue, including whether the scheme’s governance arrangements are appropriate and whether its methods for ACCU generation meet offsets integrity standards.

Looking ahead

Given the infancy of the new Federal Government’s reform agenda, there are likely to be many twists and turns in implementation. For example, the introduction by the Australian Greens party of a ‘climate trigger’ bill which would, if adopted, require assessment of the climate impacts of emissions-intensive projects prior to final approval under the EPBC Act.

Given the complexities of the existing federal environmental legal framework, a holistic rather than piecemeal reform agenda is critical to ensure that the appropriate balance is struck between protecting the environment and facilitating development that has merit. This is particularly important in order to support Australia’s transition to a low carbon economy given that significant development will be required, such as renewable energy and low emissions technology infrastructure (e.g. offshore wind farms, solar farms, hydrogen facilities and carbon capture and storage development).

Whatever the final structure of the legislative reforms, it is clear that a key objective of the new Federal Government is to rebuild public and business trust. Looking ahead, we are likely to see a strengthening of environmental and climate change regulation, an increase in consistency with the introduction of NES, increased involvement of Indigenous Australians in the development of environmental law and standards at a federal level, and broader enforcement and compliance action taken within the constitutional limits of a new Federal EPA.

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