The Commonwealth Government's new Environment Protection and
Biodiversity Conservation Act 1999 (EPBC Act)
Environmental Offsets Policy has been released, with a greater
focus on direct offsets.
The Policy replaces the draft 2007 policy statement Use of
Environmental Offsets under the EPBC Act.
What are environmental offsets under the EPBC Act?
The EPBC Act is designed to protect matters of national
environmental significance and other protected matters. If a
proposed action is likely to have a significant impact upon a
protected matter then it must be referred for assessment under the
Environmental offsets are measures to compensate for the adverse
impacts of an action on the environment that cannot be adequately
reduced through avoidance or mitigation. Avoidance and mitigation
measures are still the primary strategies for managing the
potential impact of a proposed action. The focus of an offset is to
compensate for any residual significant impact after avoidance and
mitigation steps have been taken.
Most State and Territories have their own environmental offsets
policies that may be triggered for a project in addition to the
EPBC Act Environmental Offsets Policy. The Environmental Offsets
Policy recognises these State and Territory policies, and provides
that these offsets can count towards an offset under the EPBC Act
to the extent it compensates for the residual impact to the
relevant protected matter.
Scope of the Environmental Offsets Policy
The Policy relates to all protected matters under the EPBC Act
including adversely impacted heritage values, and applies to
offsetting requirements in terrestrial and aquatic (including
The Policy has five key aims:
to ensure the efficient, effective, timely, transparent,
proportionate, scientifically robust and reasonable use of offsets
under the EPBC Act;
to provide proponents, the community and other stakeholders
with greater certainty and guidance on how offsets are determined
and when they may be considered under the EPBC Act;
to deliver improved environmental outcomes by consistently
applying the Policy;
to outline the appropriate nature and scale of offsets and how
they are determined; and
to provide guidance on acceptable delivery mechanisms for
Greater emphasis on direct offsets – and new advanced
According to the Policy, direct offsets must be a minimum of 90%
of the total offset requirement. The remaining offset requirement
(up to a maximum of 10%) may be made up by "other compensatory
measures" to complete the 100% offset requirement. Deviation
from the 90% direct offset requirement will only be considered in
While this reinforces the move to direct offsets, the concept of
"advanced offsets" has been introduced. These are a
supply of offsets for potential future use, transfer or sale,
established before any impact is undertaken. While an advanced
offset can reduce an overall future offset requirement, it does not
influence whether or not an action referred under the EPBC Act will
be determined as acceptable.
Other features of the Environmental Offsets Policy
The Policy requires that the "conservation gain" for
the impacted protected matter, which is delivered by the offset, is
to be new or additional to what is already required by a duty of
care or to any environmental planning laws at any level of
As with the previous policy, a risk-based approach incorporating
the precautionary principle is taken when determining whether
offsets are a suitable option and whether they can compensate for
the residual impacts on a case-by-case basis.
A new Offsets assessment guide helps both the Government and the
proponent to gauge the suitability of any offset proposal, and the
amount of any offset required.
The best legal mechanisms for protecting land are intended to be
permanent, however, at a minimum, offsets should be secured for at
least the duration of the impact.
When does the new Environmental Offsets Policy apply?
The Policy applies to any new referrals and variations to
approval conditions from 2 October 2012 and to any projects
currently under assessment for which a proposed decision has not
yet been made.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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This legal update is an overview of existing eligible project activities and new project types proposed to be developed.
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