NSW legislates short and long term targets to achieve net zero emissions by 2050

NSW takes action on climate change with legislated 2030 and 2035 targets to achieve net zero emissions by 2050. A new Net Zero Commission will be established by mid-2024 to oversee the State’s progress.

Snapshot

• On 11 December 2023, the Climate Change (Net Zero Future) Act 2023 commenced. The Act legislates NSW’s targets to reduce greenhouse gas emissions (GHG) by 50% by 2030, 70% by 2035, to achieve net zero GHG emissions by 2050, and allows regulations to prescribe interim GHG emissions targets.
• An independent body known as the Net Zero Commission (Commission), consisting of commissioners and NSW’s Chief Scientist, will be established by mid-2024 to monitor, review and report on NSW’s progress towards the targets.
• Following an inquiry and report by a Parliamentary Committee, the Bill was amended to provide for interim emissions targets; give greater consideration to the interests, knowledge and amenity of regional areas and local communities; and require the Premier to ensure NSW achieves the 2050 net zero target.

Background

Compared to the Bill introduced in the Legislative Council on 12 October 2023 (see our previous blog post for further information), the Act legislates more ambitious targets and principles in light of a report by the Planning and Environment Portfolio Committee (Committee). During debate on the Bill, stakeholders submitted that the Act should:

• front-load emissions reduction efforts through interim targets;
• incorporate NSW’s existing target to reduce emissions by 70% on 2005 levels by 2035;
• place a duty on decision-makers such as Ministers to ensure that the targets are met;
• allow the Commission’s advice to be directly operationalised or considered in critical planning; and
• place greater emphasis on environmental outcomes rather than fiscal responsibility.

We outline key changes to the Act in light of the Committee’s report and key takeaways for business, industry and proponents of projects in NSW below.

Key changes

Targets for reducing GHG emissions

In response to the Committee’s report, the Bill was amended and the final provisions in the Act:

• require NSW to reduce GHG emissions by 70% by 2035 compared to 2005 levels, in addition to the 2030 and 2050 targets (together, the primary targets);
• allow interim targets to be prescribed in regulations for 2040 and 2045 – each interim target must be greater than the immediately preceding primary target; and
• require the Premier and the Minister to ensure the State achieves the 2050 net zero target.

Guiding principles for climate change action

In addition to the guiding principles within the original text of the Bill (outlined in our previous blog post), the Act provides that action to address climate change should:

• consider the impact on rural, regional, and remote communities in NSW;
• take into account the knowledge of rural, regional and remote communities in NSW;
• account for the need to support local communities, including Aboriginal communities, who may be affected by the action, including by considering the impact on the amenity of local communities;
• account for equity and social justice impacts on socially disadvantaged groups and economically vulnerable regions;
• account for the need to reduce the risk climate change poses to the survival of all species; and
• account for the impact of climate change on animals.

The Act is expected to encourage government policies that facilitate investment in renewable energy technology. Clean energy-related businesses and industry, and proponents of major renewable energy developments, in NSW should consider how their activities align with the Act’s guiding principles and proactively seek to operate consistently with the principles.

The Act’s emphasis on the impact of action to address climate change on regional communities arises simultaneously with similar considerations within NSW’s recently released Draft Energy Policy Framework, which includes guidelines for the assessment of major wind, solar and transmission projects (you can read more about that framework in another of our blog posts). These impacts should be considered by proponents of major clean energy and transmission projects, particularly where projects are located in regional NSW.

The Net Zero Commission

In addition to the functions proposed within the original text of the Bill (outlined in our previous blog post), the Act enables the Commission to provide advice and make recommendations to the Secretary of a Department and to the Independent Planning Commission (IPC) upon providing notice to the Minister.

The Second Reading Speech of the Act indicates that the Commission is tasked with listening to workers, residents and businesses impacted by economic challenges and new renewable energy developments as NSW decarbonises.

The Commission’s annual and ad hoc advice to the Minister, Department Secretaries or the IPC is likely to be informed by consultation. Businesses, industry and proponents of major projects and other forms of development in NSW should actively engage with the Commission to contribute to potential decisions that may impact their activities.

The Net Zero Emissions and Clean Economy Board, which currently advises the NSW Government on the implementation of the State’s Net Zero Plan, will be replaced by the Commission by mid-2024.

Key takeaways

The Act commenced on the 11 December 2023.

Businesses, industry, and proponents of major projects and other forms of development in NSW should:

• anticipate NSW Government policies that facilitate investment in renewable energy technology and inform decisions on climate change in NSW;
• consider the Act’s guiding principles in their operations, future planning and when seeking to undertake major projects; and
• actively engage with the Commission to inform its advice to the NSW Government and IPC.

If you would like to learn more about how the newly legislated targets and principles may impact your business or projects, please contact our team.

By Peter Briggs, Partner, Tom Dougherty, Senior Associate, and Andrew Mahler, Solicitor. With thanks to Amy Duong, Vacation Clerk.