In the Bylong case the NSW Court of Appeal recently confirmed that the minimisation of greenhouse gas emissions, including indirect emissions of burning the coal in another country, is a relevant matter for consideration, and failure to address it is a valid basis for refusal.

Mining proposals assessed under the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 must address the greenhouse gas emissions and impacts on groundwater of the proposal and ensure they are minimised to the greatest extent possible.

The NSW Court of Appeal recently rejected a challenge to the validity of a decision of the NSW Independent Planning Commission (IPC), and confirmed that minimisation of Scope 3 emissions (offsite emissions) must be addressed in an application under the Mining SEPP.

This case adds to the growing list of Australian cases confirming that greenhouse gas emissions, climate impact, and groundwater impact are fundamental considerations in application assessment. It also confirms that scope 3 emissions – generated indirectly and off site by, for example, the use of the coal by a third party in another country - are relevant considerations and must be satisfactorily addressed in the application.

Application refused by IPC

The (IPC) refused an application for the Bylong Valley thermal coal mine on the grounds that the proposal failed to minimise greenhouse gas emissions and adverse groundwater impacts to the greatest extent possible.

In determining the development application, the IPC considered in detail 18 factors, of which half was found to have reached an acceptable standard.

KEPCO Bylong Australia Pty Ltd (KEPCO) challenged the validity of the decision on the grounds that the IPC had misconstrued clause 14 of State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP).

In KEPCO Bylong Australia Pty Ltd v Bylong Valley Protection Alliance Inc [2021] NSWCA 216 (Bylong case), the Court of Appeal held that the decision of the IPC is valid.

Mining SEPP

Under clause 14 of the Mining SEPP the consent authority must consider whether consent should be issued subject to conditions aimed at ensuring that the proposed development is undertaken in an environmentally responsible manner.

KEPCO alleged that the IPC erred by considering whether KEPCO had minimised greenhouse gas emissions and adverse impacts on groundwater. Instead, it claimed that under clause 14(1) of the Mining SEPP, the IPC was required to consider whether conditions can be imposed which had that effect.

At first instance, Justice Pain of the Land and Environment Court dismissed the proceedings.

Findings of the Court of Appeal

The Court of Appeal found that the IPC had not misconstrued clause 14(1) of the Mining SEPP as there is no separate obligation that requires the IPC to formulate conditions that would ensure the development is undertaken in an environmentally responsible manner.

The proposal before the IPC included KEPCO’s proposed conditions of consent. KEPCO proposed to minimise Scope 1 and 2 greenhouse gas emissions but did not include a proposal that addressed the minimisation of scope 3 greenhouse gas emissions.

Scope 3 emissions are often referred to as downstream or off site emissions - caused by transporting or using the coal product, even if that occurs in another country.

The Court of Appeal found that due to the absence of a proposal to minimise scope 3 emissions, it was open to the IPC to conclude that if consent was granted, it would not ensure the development would be carried out in such a way as to minimise scope 3 emissions to the greatest extent possible.

The fact that the IPC had considered the measures to offset greenhouse gas emissions and conditions proposed (or in this case not proposed) to minimise greenhouse gas emissions means that the IPC had carried out its duty under clause 14(1)(c) of the Mining SEPP.

Similarly, in relation to the groundwater issue, the Court of Appeal found that clause 14(1)(a) did not require the IPC to formulate conditions to minimise the adverse impact on groundwater resources if the proposal failed to include measures that addressed that issue.

The IPC was also required to have regard to “any applicable State or national policies, programs or guidelines concerning greenhouse gas emissions” under clause 14(2) of the Mining SEPP. KEPCO claimed that this duty requires the IPC to consider only documents where the subject is not the topic of greenhouse gas emissions but rather the task of assessing greenhouse gas emissions.

The Court of Appeal rejected KEPCO’s arguments. It found that the word ‘applicable’ in this context should be given a wider meaning and the documents need only to be ‘concerning’ greenhouse gas emissions. Such documents are relevant in a consent authority’s assessment of the greenhouse gas emissions of the development.

Impacts of this decision

The decision makes it clear that for projects assessed under the Mining SEPP there is a positive requirement on the applicant to demonstrate ways in which the project will minimise greenhouse gas emissions, including scope 3 emissions, and adverse groundwater impacts to the greatest extent possible. It is not enough to leave that to be dealt with in a condition to be formulated by the consent authority.

Although not refused on the basis of climate change, this decision adds to a body of law developing in Australia that puts greenhouse gas emissions at the front and centre of decision making for certain projects.