The full potential to be derived from the creation of offsets may now be realised following the release of the Commonwealth’s draft “Advanced environmental offsets” policy (Draft Policy) on 17 August 2015. 

If implemented, the Draft Policy could facilitate early implementation, strategic planning and certainty for proponents required to "offset" environmental impacts associated with their projects. Advanced offsets may soon become more of a commodity at the Commonwealth level for project proponents with the potential for future use, transfer or sale.

What does the Draft Policy propose?

The Draft Policy is to be read in conjunction with the Environment Protection and Biodiversity Conservation Act 1999 (Cth) Environmental Offsets Policy, dated October 2012 and associated guidelines. The concept of advanced offsetting is already established in Queensland, New South Wales and Victoria, however it is significant for the national regime that the Commonwealth has followed suit with the introduction of the Draft Policy.

A proponent might consider utilising advanced offsetting as described under the Draft Policy when:

  1. a future action is likely to have a significant residual impact on a protected matter and therefore the action is likely to, or may, require an offset, and the offset has not yet been implemented, or
  2. an offset has already been implemented, or is proposed to be implemented and a proponent wishes to demonstrate that this may meet the offsetting requirements for a future action.

Retrospective Application

The Draft Policy will allow proponents to use offsets “implemented after the commencement of the EPBC Act on 16 July 2000 if:

  • it can be demonstrated that a site or action was established for the purposes of advanced offsetting
  • there is sufficient baseline information to enable a clear assessment of the conservation benefit
  • such offsets are demonstrably additional to existing obligations under other planning regimes, legislation, schemes or duty of care.”

Evidence to satisfy the above should be considered when drafting agreements for advanced environmental offsets.

What will this mean for proponents?

The difficultly proponents often see is that this area of law is subject to regulatory change and causes concern over certainty of compliance with approval obligations. The introduction of the Draft Policy might mean:

  1. the magnitude of an offset required may be reduced;
  2. an offset can be secured well in advance of the action resulting in benefits associated with strategic planning and financing of a project;
  3. streamlined approval processes to assist with project implementation;
  4. greater flexibility for trade and transfer of offsets.

Although there are numerous benefits associated with advanced offsets, the Department is unable to provide certainty as to the suitability of an advanced offset proposal until the assessment stage under the EPBC Act is complete. This may result in proponents undertaking studies on habitat that ultimately is not required to be offset as part of their approval conditions. To alleviate this issue, the Department encourages early consultation.

Public comment on the Draft Policy is open until 12 October 2015. Click here to see a copy of the Commonwealth’s Draft Policy.