Australia: Finalised Environmental Factor Guideline – Greenhouse Gas Emissions Released

Following a public consultation period, the Environmental Protection Authority (EPA) has finalised its greenhouse gas assessment guidance and has yesterday published the revised Environmental Factor Guideline - Greenhouse Gas Emissions (EFG GHG).

The purpose of the EFG GHG is to communicate how GHG emissions are considered by the EPA in the Western Australian environmental impact assessment (EIA) process. The EFG GHG was first published in April 2020. As part of the current review, a Draft Environmental Factor Guideline - Greenhouse Gas Emissions (draft EFG GHG) was published for public consultation on July 27, 2022. Our blog post summarised the changes between the draft EFG GHG and the earliest version of the Guidelines. The review addresses a range of issues raised in the public submissions.

Key changes

Key changes since the draft EFG GHG include:

• Proponents must demonstrate in a Greenhouse Gas Management Plan (GHG MP) how the scope 1, 2 and 3 emissions from project operation beyond 2050 are consistent with a global low-carbon transition to net zero by 2050 scenario.
• Proponents must provide an 'if not, why not' justification if they cannot practicably meet the minimum expectations for deep, substantial and sustained emissions reductions this decade, and achievement of net zero emissions no later than 2050 along a minimum linear trajectory from 2030. The EPA emphasises that reductions beyond these should also be made as far as practicable and that WA emissions should reach net zero well before 2050.
• Proponents should now consider whether carbon offsets conserve, preserve, protect, enhance, and manage the WA environment.
• Clarification has been provided that scope 1 emissions are those which are part of a proposal being considered by the EPA, as opposed to at a 'facility' level. Scope 2 emissions are those from the independent consumption of an energy product by the proposal. The EPA has acknowledged that scope 2 emissions from a proposal are also the scope 1 emissions from an independent energy proposal. However, scope 2 emissions are relevant to the consideration of a proposal because the proponent has control over its choice of independent energy quantity and source. The EPA has also clarified that scope 3 emissions should be considered in the context of those scope 3 emissions (both upstream and downstream) that occur as a consequence of the activities of a proposal. The EPA has stated that in most cases it expects there will be alignment of emissions categories under the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER) 'facilities' and Environmental Protection Act 1986 (WA) (EP Act) 'proposals'. If there is a difference, the EPA expects NGER facilities reporting information to be utilised to provide information fit for purpose for EP Act assessments.
• Whether there are other legal and policy instruments that can require reductions in GHG emissions from a proposal to meet the EPA's objectives is now an express relevant consideration.
• The EPA will have due regard to offset integrity standards in the Commonwealth Carbon Credits (Carbon Farming Initiative) Act 2011.
• The EPA will consider practicable mechanisms to reduce the overlap and duplication between proposals considered under Part IV of the EP Act and relevant Commonwealth legal and policy instruments. However, the EPA has not gone so far as saying it will defer to the Commonwealth regime or not assess and regulate GHG emissions associated with facilities subject to the Safeguard Mechanism.
• The Guideline now applies to nitrogen trifluoride (NF₃) emissions.
• Proponents should now utilise the new template Greenhouse Gas Environmental Management Plan, which will be periodically updated.
• Changes to the information that proponents are expected to provide for EIA:
  • The information required for maximum and expected life of proposal estimates of scope 1, scope 2, and scope 3 GHG emissions (annual and total) has been clarified. The EPA expects credible estimates based on maximum nameplate/nominal capacity, annual average operational design capacity, actual expected operational throughput (if significantly different from the nameplate or design capacity), and history of actual emission (for proposals already in the operations phase).
  • Scope 1 emissions estimates must include emissions associated with the clearing of vegetation, and where relevant, loss of sequestration potential.
  • Scope 2 emissions estimates must be accompanied by a summary of relevant emissions reduction regulation, and scope 3 emissions estimates must include a summary of emission locations and whether they are (or are reasonably likely to be) subject to similar emissions reduction regulation as scope 1 or 2 emissions.
  • Proponents must provide best practice benchmarking of GHG emissions and energy intensity performance metrics with comparable facilities both domestically and internationally, as well as against sector pathways, benchmarks and/or milestones.
  • Proponents should provide expert reviews to demonstrate how best practice measures have been adopted. The EPA usually requires independent expert review of best practice measures regarding the practicability and availability of offsets at the time of proposed future surrender, and demonstrating how best practice measures have been adopted.

The EFG GHG is next set to be reviewed in 5 years.

The EFG GHG confirms that, at least in the near term, the EPA will continue to assess GHG emissions under Part IV of the EP Act. We expect there will be a number of practical matters for proponents to reconcile with the Safeguard Mechanism reforms, which are yet to be finalised. Our blog post on the Safeguard Mechanism Bill passing Parliament summarises the current status of those reforms, which we will continue to closely watch and report on.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.