Commonwealth Nature Repair market given the green light, expands the EPBC water trigger

The Nature Repair Act 2023 (Cth) came into effect on 15 December 2023. The new law delivers one of the key commitments of the Government’s Nature Positive Plan and represents a significant step towards meeting the goal of protecting 30 per cent of Australia’s land and seas by 2030.

Snapshot

• The Nature Repair Act 2023 introduces a market of tradeable biodiversity certificates to encourage investment in nature repair and protection projects, but notably, these biodiversity certificates cannot be used to fulfil offset conditions of state or federal environmental approvals.
• The ‘water trigger’ in the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) has been expanded to capture all unconventional gas projects.
• HSF’s Environment, Planning and Communities team have previously written about the Nature Repair Market. We look at what’s new below.

Water Trigger

The nature repair laws have brought about a significant change to the EPBC Act water trigger, bringing forward changes that were expected to be made when the EPBC Act reforms were finalised.

The Nature Repair (Consequential Amendments) Act 2023 (Cth) has expanded the water trigger beyond coal seam gas and large-scale mining. The water trigger will now apply to other types of unconventional gas projects, including shale gas and tight gas.

Since 2013, coal seam gas development and large coal mining projects have required approval under the EPBC Act because of the impact these developments have, or are likely to have, on water resources.

From 15 December 2023, the water trigger has been expanded to unconventional gas development which covers the extraction, recovery or intentional release of gas (whether by drilling, hydraulic fracturing or other means) from coal seams or beds, layers of shale rock, tight gas reservoirs, or any other sources prescribed by regulation.

Unconventional gas projects that are already in production or that already have an authorisation (either an approval decision or a decision that the action is not a controlled action) will not require approval under the EPBC Act.

Projects that involve unconventional gas development that have been determined by the Minister to be a controlled action and which are currently undergoing assessment may need to be assessed for impacts on water resources. The Minister will decide within 90 business days whether the water trigger (as amended) is a controlling provision for the project and, if so, whether a different approach should be used for assessment of the impacts of the action. The proponent will be notified if the water trigger applies.

All new unconventional gas projects will need to be referred under the EPBC Act.

Nature repair market framework

The Nature Repair Act 2023 (Cth) establishes the framework for a voluntary national nature repair market. The laws have been heralded as a world first biodiversity market, aimed at facilitating private investment in nature repair and restoration.

The nature repair market is poised to capitalise on ESG motivated investment, driven by nature-related financial disclosures.

The nature repair market will operate in a similar manner to the existing carbon market. Specific rules, methodology determinations and biodiversity assessment instruments are still under development, but will be subject to public consultation during 2024.

Offsets

Despite widespread expectation that the nature repair market would allow at least some level of environmental offsetting, last-minute changes introduced by the Senate will prevent biodiversity certificates being used for an environmental offsetting purpose.

Whether biodiversity credits may have a role to play in environmental offsetting in the future remains to be seen. The EPBC Act reform is looking closely at the design and use of environmental offsets and is developing a National Environmental Standard for Restoration Actions and Restoration Contributions. Going forward, there will be a much greater focus on ensuring ‘like for like’ benefits with respect to any offsetting or restoration action.

Where to from here?

The Nature Repair Act only lays the groundwork for the nature repair market. A further set of operational rules and methodology determinations will need to be drafted before the market becomes functional.

The government has previously set a targeted commencement date of the market for the second half of 2024, so we expect to learn more about the nature repair market in the new year.

Written by Kathryn Pacey, Partner, Jasmine Wood, Senior Associate, Samuel Colwell, Paralegal, and Georgina Fulford, Vacation Clerk.