What is an environmental offset?
Environmental offsets are described by the new WA Environmental Offsets Policy as follows:
‘An offsite action or actions to address significant residual environmental impacts of a development or activity.'
There are two categories of environmental offsets:
- direct offsets, which are actions designed to provide for on-ground improvement, rehabilitation and conservation of habitat and include acquisition, restoration, revegetation and rehabilitation of natural areas outside the project area; and
- indirect offsets, which are actions aimed at improving scientific or community understanding and awareness of environmental values that are affected by a development or activity. These actions may include research to improve the management and protection of existing conservation estate or contributions to State Government initiatives, policies or strategic funds.
Environmental offsets are most often applied to proposals subject to environmental impact assessment and as a condition of permits for clearing of native vegetation under the Environmental Protection Act 1986 (EP Act).
Environmental offsets are still a relatively new tool used in the area of environmental impact assessment and decision making in WA. Historically, environmental offsets were incorporated into environmental impact assessment in WA on an informal and inconsistent basis as part of the mitigation measures for certain proposals. The use of offsets as an acceptable tool was affirmed in environmental policy in WA by the Environmental Protection Authority (EPA) who prepared a draft policy in 2004 which was finalised in 2006 as a Position Statement (No. 9). Two years later the EPA published the 2008 Guidance Statement for Environmental Offsets (Biodiversity).
The new WA Policy represents a less prescriptive policy position to the policies and guidance set out in the 2006 Position Statement and the 2008 Guidance Statement. Whilst expected, it remains unclear whether or not the 2006 and 2008 EPA policies will be revoked.
Further differences between the older environmental offset policy regime and the new policy are set out below:
Relationship with Commonwealth Environmental Offsets Policy
The Australian Government already applies environment offsets under the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and has its own Offset Policy. The new WA Policy notes that as far as possible there will be minimal duplication between State and Commonwealth requirements for environmental offsets.
It is possible that where proposals are not assessed jointly by the state and the Commonwealth, a proponent’s earlier offset may not be recognised or may only be partly recognised by the later approval process (which is normally the Commonwealth approval process under the EPBC Act).
Application to town planning and mining decisions
The new WA Policy suggests that the environmental offsets may be considered for application under legislation other than the EP Act such as the Planning and Development Act 2005 and the Mining Act 1978.
Whilst this suggestion provides a glimmer of hope for proponents seeking to simplify the approval process for their development or mining proposal, it is difficult to see a circumstance where an environmental offset is required by the Department of Mines or by the Western Australian Planning Commission or a local authority, where it is not already required by the Department of Environment and Conservation or EPA.
Concept of 'like for like of better' abandoned
The concept of 'like for like' aims to ensure that the offset activity counterbalances the same type of impacted emission or ecosystem. Ecosystems should be alike with respect to environmental values, vegetation, habitat, species, ecosystems, landscape, hydrology and physical area. In short, they should serve the same ecological functions, and should also be within the same locality. This is to ensure that comparable areas/ecosystems are not systematically degraded and offsets are not diluted or concentrated within a certain geographical area or bioregion (EPA, 2006).
The concept of 'like for like or better' refers to the same principles as ‘like for like’ but aims to improve on what is required for like for like by increasing the quality or quantity of the offset activity (EPA, 2006).
Application of these concepts to environmental approval decision making presents problems because of the difficulties in defining ‘like for like’, in comparing ecological values and in finding and acquiring comparable land. Application is particularly difficult for individuals and small and under-resourced companies.¹
The concept of ‘like for like’ is also problematic where a time lag applies. For example, vegetation clearing has an immediate impact whereas recreating a natural ecosystem as an offset can take long periods of time and the outcomes are uncertain.
Consequently, these concepts have been abandoned in the new WA Policy, with the requirement being that the impact is ‘proportionate’ to the significance of the environmental value being impacted.
Environmental Offsets Register
An Offsets Register is proposed by the new WA Policy which aims to provide a public record of all offset agreements in WA in a centralised form. This includes all offsets that may have been negotiated by different agencies under different legislation.
Information in the Offsets Register would include:
- the spatial location of the offset;
- the type of offset and values being offset;
- the compensatory values of the offset;
- the timelines for implementation; and
- the agency that is responsible for monitoring the environmental offset.
What does this mean for you?
This policy does not represent a huge shift from the offset regime already in place under the EPA’s 2006/2008 policy regime. However, if the 2006/2008 regime is revoked it will enable proponents to be more creative with proposed offset measures as the test of an acceptable offset will be changed subtly from the concept of 'like for like or better' to the concept of ‘proportionate’.
If you have any queries about this article, environmental offsets or environmental approvals generally please contact partner Paul McQueen, senior associate Craig Wallace or solicitor Clare Gleeson.
¹ Hayes, N. & Morrison-Saunders, A. ‘Effectiveness of environmental offsets in environmental impact assessment: practitioner perspectives from Western Australia’ (2007) Impact Assessment and Project Appraisal, v 29(3), pp 209-218
Carbon Tax a reality
The suite of Clean Energy legislation was officially passed by the Upper House on 8 November 2011 and confirms the way that Australia will introduce a carbon price to reduce Australia’s carbon pollution and move towards a clean energy future.
The government will now engage in the process of implementing the suite of legislation and engage in consultation with affected businesses and the public on the development of regulations and administrative assistance over the coming months.
To assist companies affected by the proposed carbon tax and reporting entities, we note the following key dates for the implementation of the clean energy legislation:
|November||Regulations made for assistance to coal-fired electricity generators.|
|1 March 2012||Regulations for the Jobs and Competitiveness Program to be made.|
|Early-Mid 2012||The Clean Energy Regulator is established and first household assistance payments made in May-June 2012 to help households get ready for the carbon price.|
|1 July 2012||
Start of the carbon pricing mechanism.
If you have any queries in relation to any aspect of the Clean Energy legislation, or would like specific advice in relation to your responsibility under that legislation or the National Greenhouse and Energy Reporting Scheme, please contact partner Paul McQueen or senior associate Craig Wallace.