In our first article in this series, we looked at the First Pillar of the EPA’s Climate Change Policy and Action Plan. In this article, we look at the second pillar, actions to ‘Mitigate’ in delivering on the objectives of the Policy to reduce greenhouse gas emissions (GHG) in line with the NSW Government’s net zero targets.
Pillar 2: MITIGATE
The second pillar recognises the EPA’s commitment to taking action to reduce the rate of climate change. Broadly, the 10 actions of Pillar 2 relate to actions that are designed to limit or prevent GHG emissions and that remove GHG gases from the atmosphere.
Six of the Pillar 2 actions are actions that the EPA and NSW Government are already undertaking in some manner and include:
- developing and implementing programs to reduce GHG emissions from the waste sector, including achieving the target of net zero emissions from organic waste from landfills by 2030 embodied in the EPA’s Waste Delivery Plan;
- supporting the whole of government approach to streamlining project approval processes in renewable energy zones (REZs);
- developing and implementing tailored behavioural change programs to encourage and enable greenhouse gas emission reductions;
- ensuring methane emissions from EPA-licensed onshore-gas operators are minimised by reviewing existing leak detection and repair (LDAR) programs and developing actions to improve the EPAs regulatory approach. The Action Plan contemplates potentially:
- extending the program to cover other components of the gas reticulation system (e.g. including wellheads)
- increasing the inspection frequency (e.g. from six-monthly to three-monthly)
- using new monitoring methods such as satellite imagery and drones, to enable leak detection to be performed more frequently and at less expense.
- Regulating short-lived climate pollutants from EPL holder (including black carbon, methane, tropospheric ozone and hydrofluorocarbons).
Four of the Pillar 2 actions are new actions to be implemented over the next three years. The actions that will have the most immediate impact on EPL holders and are:
- Action 16; developing GHG emission reduction targets and pathways for key regulated industry sectors. These targets will exist alongside the NSW Government emission reduction targets and provide targets for industries which will make emission reduction progress at different rates for different sectors. The purpose of industry-specific reduction targets is to assist in honing the EPA’s regulatory efforts and as the targets will apply to an industry collectively, they will not be enforceable against specific EPL holders. Rather, they will provide a “tailored and transparent” signal for each industry sector. The EPA also indicates that it might consider targets for an emission source, such as stationary energy (excluding electricity generation), that is relevant to many sectors as a means of focusing its regulatory efforts. The industry-specific advisory groups [include a hyperlink to the first article here] will play a role in guiding the setting of these reduction targets.
- Action 17; preparing or adopting climate change mitigation guidance for key regulated industry sectors, which specify performance outcomes required by the EPA. Again, the industry-specific advisory groups will play a role in the development of these guidance documents.
- Action 18; placing GHG emissions limits and other climate change related conditions on licences for key regulated industry sectors. The related conditions are expected to include conditions relating to monitoring, reporting and emissions estimation; performance requirements that would require implementation of performance in operations designed to reduce GHG emissions (such as use of low emissions equipment); and pollution reduction studies and programs. Any limits per conditions will be informed by industry-specific reduction targets (Action 16). Emissions conditions could take the form of load limits or emission intensity limits and could be met, at least in part, using offsets.
- Action 19; encouraging and supporting regulated industry to innovate in the face of climate change.
What this means for business and EPL holders
- As noted in our first article in this series, EPL holders should look out for the formation of the industry-sector advisory groups. These groups will play a significant role in developing and guiding the implementation of the Action Plan and will represent a powerful voice for regulated industries.
- Within the next 12 months, EPL holders should have an idea of the industry-specific reduction targets that will guide future regulation of their operations as they relate to GHG emissions. Once these targets are known, EPL holders will need to plan for the impacts those targets are likely to have on their operations.
- Within the next 24 months, EPL holders in key regulated industries should expect climate related licence conditions to be imposed on new and existing licences, including emissions limits informed by industry-specific reduction targets. Engagement with the EPA on reasonable amendments to EPLs will be important in mitigating legal and operational risk to business.
EPL holders should plan early and provision to properly implement the above actions.
We can assist EPL holders, and other affected parties such as landowners and developers, in understanding the legal risks and opportunities arising from the implementation of the Policy and Action Plan.
Other articles in this series:
Pillar 1: Actions to Inform and Plan
A copy of the Climate Change Policy and Climate Change Action Plan are available here.
Clyde & Co remains committed to mapping and understanding climate change risk alongside a growing network of cross-sector experts and collaborators, to help our clients navigate the rapidly evolving risk landscape they face. If you would like to discuss the issues raised and how this may impact your business, please contact one of our authors. For more thought leadership articles on the climate change related topics, visit our Resilience Hub and our Climate Change Risk webpage.