The first significant plank of the federal government's Nature Positive Plan has been unveiled. The Nature Repair Market Bill 2023 was introduced by Minister Plibersek into the Commonwealth Parliament on 29 March 2023.

This HSF Note offers an overview of the proposed biodiversity market, and how it is intended to operate to arrest species decline in Australia, restore habitat, and facilitate nature neutrality or nature positivity goals of business.

Snapshot

  • The proposed Nature Repair Market will involve landholders protecting, restoring or repairing habitats. Eligible landholders who propose eligible biodiversity projects will receive biodiversity credits, which they can sell, including to businesses wanting to promote their biodiversity/nature credentials.
  • Australia's Nature Repair Market will be a key instrument used to meet its internationally agreed target of restoring, conserving and managing 30 per cent of terrestrial, inland water and coastal and marine areas by 2030.
  • The bill has been sent to a Parliamentary Committee for review, and the government might confront opposition on technical aspects (who and what are eligible) and arising from the integration of a range of proposed and recommended environmental reforms given this bill has been introduced before: bringing amendments to the EPBC Act to debate; developing national environmental standards; and implementing recommended changes to the carbon market program.

The hope of restoration and biodiversity markets

When introducing the Nature Repair Market Bill, the Minister for Environment conceded that a new way to achieve biodiversity conservation is required. Our current regulatory toolkit and policy program was overseeing species and habitat decline making Australia 'the extinction capital of the world'.

The government's bill would create market instruments to arrest species and biodiversity decline and restore habitats.

The bill proposes the creation of 'biodiversity projects', defined as any project on privately held property, including local government land and First Nations Peoples' lands, that is 'designed to enhance or protect biodiversity in native species (whether the effect on biodiversity occurs within or outside the area)'. It could include revegetation works, protecting existing habitat, or removing invasive species, among other eligible projects.

The bill then proposes to attach a bespoke biodiversity certificate to each project. That certificate can be traded and monitored in a Nature Repair Market for a set duration.

The Nature Repair Market process

The bill sets out the following process for involvement in the Nature Repair Market:

  1. Methodology determinations will be decided by the Minister for the Environment, subject to community consultation and input from the Nature Repair Market Committee.
  2. An eligible person applies to the Clean Energy Regulator to register a biodiversity project, either following an existing methodology determination or proposing a new methodology determination.
  3. The Clean Energy Regulator decides whether to approve the biodiversity project and sets the life of the project, including the period of time of active management of the project and a period of time for which a biodiversity certificate applies to the project: the so-called 'permanence period'.
  4. A biodiversity certificate is issued for the registered biodiversity project and recorded on the Biodiversity Market Register, and can then be traded.
  5. The recipient of a biodiversity certificate must report on the biodiversity project for the duration of the permanence period, where after the biodiversity certificate lapses irrespective of who is the holder of the certificate.

Debate still likely on the details

The bill is long, but it is merely a framework law, with details to be resolved at a later stage, including on eligibility requirements. The bill foreshadows methodologies, standards and assessment processes to be determined by the Minister often on a project-by-project basis, with direction from a group of experts: the Nature Repair Market Committee to be created under this legislation. Reporting requirements on landholders who receive biodiversity certificates also remain unsettled.

  • Our review of the bill and submissions to a consultation draft of the bill highlighted points of potential tension for the government as it navigates its bill through Parliament:
  • How the nature repair market will intersect with state-based regimes.
  • How and when biodiversity certificates will be granted alongside carbon credits, including how the project description and methodology determinations in each regime will interface.
  • Whether, and to what degree will, land rehabilitation projects will be eligible for the grant of biodiversity certificates when they go beyond prescribed requirements. The bill does not allow for certificates to be allocated to parts of projects, and it requires all projects to have additional biodiversity outcomes.
  • Any circumstances when biodiversity certificates might expire prematurely or abruptly.
  • Whether the bill should explicitly state minimum outcomes and enshrine greater transparency than is presently proposed.
  • Whether projects should be required to protect native species, or simply the biodiversity that supports them.
  • When will the government release its proposed amendments to and standards under the EPBC Act, which are expected to constrain habitat removal by projects. These amendments and standards are also part of the government's Nature Positive Plan.

The Parliamentary Committee is scheduled to report on 1 August 2023, with submissions due by 1 June 2023.

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