In one of the first instances of a legal challenge to a project approval based on Australia's ratification of the Paris Climate Change Agreement, the NSW Land and Environment Court has had to consider whether the environmental assessment of a project needs to consider, and if so to what extent, policies for emission reduction targets.

In the recent Land and Environment Court proceedings Wollar Progress Association Incorporated v Wilpinjong Coal Pty Ltd [2018] NSWLE 92, the local community group Wollar Progress Association Incorporated, represented by the Environmental Defenders Office NSW, tested whether aspirational climate change policy impacts the assessment of coal mining planning approvals in NSW.

The Court's decision highlights that without legislation implementing aspirational climate change policy objectives, such policies will not practically affect the development assessment process.

Background to the judicial review

The NSW Planning and Assessment Commission (PAC), with delegated approval from the Minister for Planning, approved an extension in scope and time to the open-cut coal mine operating near Wollar in the Hunter Valley. An existing 2006 consent, approved the removal of certain vegetation and the extraction of coal until 2027. In 2017, PAC granted Wilpinjong Coal a further consent for the expansion of operations until 2033.

The expanded mine will supply domestic users under existing contracts at AGL Macquarie Bayswater and Liddell Power stations until 2026, and produce high ash thermal export coal in its final seven years. Wollar was concerned about the downstream impacts of the emissions generated from end users of this coal in NSW.

Wollar commenced judicial review proceedings in the NSW Land and Environment Court seeking a declaration that the consent was invalid, an order quashing the decision of the Minister for Planning to grant the consent and an order restraining Wilpinjong Coal from acting on the consent.

Mining SEPP and relevant policy documents

Wollar submitted that the PAC failed to consider the matters required by clause 14(2) of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP). This clause required the PAC, in assessing the development application, to consider issuing conditions of consent that ensure that greenhouse gas emissions are minimised to the greatest extent practicable. In doing so, the PAC was required to consider an assessment of the greenhouse gas emissions of the development (including downstream emissions such as from the burning of extracted coal), "having regard to any applicable State or national policies, programs or guidelines concerning greenhouse gas emissions".

Wilpinjong Coal sought to address the requirement of the Mining SEPP by providing expert advice quantifying the emissions profile of the Project and the economic cost of those emissions. Wilpinjong Coal's environmental assessment estimated that the expanded mine would emit 0.2% of Australia's greenhouse gases over its life and priced the additional cost of carbon emissions for the Project at $6.6 million. The reporting of upstream and downstream (or scope 3) emissions included transportation and end users of the coal, but did not consider other less easily quantified contributions.

Wollar argued that Wilpinjong Coal's and the PAC's assessment should have also had regard to certain State or national policies:

  • Under the Paris Agreement, ratified by Australia on 10 November 2016, Australia has adopted 2005 emissions as a baseline and a target reduction of 26-28% by 2030; and
  • In the NSW Climate Change Policy Framework, the NSW Government has promoted a "long term aspirational objective of net zero-emissions by 2050".

Wilpinjong Coal submitted that while these documents might be generally described as policies, they were not "applicable" policies within the meaning of clause 14(2) in that they were not capable of being applied to the task of the consent authority, namely considering an assessment of GHG emissions. The relevant policies for the purpose of clause 14(2) had to be ones relevant to the nature of the assessment and capable of being applied by the consent authority. In relation to the Australia's target under the Paris Agreement, Wilpinjong Coal specifically said:

"A consent authority in 2017 could not realistically form a view as to likely national emissions in 2030 and how a particular development might affect those emissions."

In any event, the company submitted that a GHG assessment was before, and had been considered, by the PAC.

Justice Sheehan accepted Wilpinjong Coal's submissions that these policy documents do not provide applicable guidance to consent authorities in assessing development applications. They set reduction targets without prescribing how these targets are to be achieved and were not capable of application by a consent authority. The PAC had sufficient material before it to satisfy the requirement in the Mining SEPP to consider the greenhouse gas emissions of the Project.

Biodiversity ground and relevant considerations

An alternative ground of legal challenge to the validity of the PAC's decision was the more traditional ground that there had been a failure to consider a relevant consideration, namely biodiversity impacts of the expanded mine.

Wollar submitted that the PAC had not adequately considered the biodiversity impacts by failing to consider the likely impacts of the whole development in the context of the expansion of the existing mine and did not take into account the clearing that was yet to be done within the existing approval area. . The Court agreed with Wilpinjong Coal that the PAC's duty to consider the likely environmental impacts of the development on the natural environment under section 79C(1)(b) of the Planning Act (now section 4.15) did not extend to a detailed assessment of the impact of the proposed development on the woodland that was the subject of the previous approval.

Justice Sheehan found that the PAC gave "close consideration" to the issues and material in the case, including where the Determination Report merely notes reference to the issues raised by the Project. This approach is consistent with Justice Griffiths decision in Malek Fahd Islamic School Ltd v Minister for Education and Training (No 2) [2017] FCA 1377 as to what constitutes adequate consideration of a mandatory consideration. Amongst other things, Malek Fahd held that "consideration" means "proper, genuine and realistic consideration", with the decision-maker engaging in an "active intellectual process". Wollar was unsuccessful in establishing that, on the balance of probabilities, PAC had failed to consider a relevant consideration in assessing the biodiversity impacts.

Justice Sheehan found for Wilpinjong Coal on each ground of challenge and dismissed the proceedings.

What does this mean for business?

This is one of the first Australian cases in which an environmental activist group has used Australia's ratification of the Paris Agreement to challenge a project approval. While the Court was not persuaded in this instance that Australia's commitment under the Paris Agreement was determinative in an environmental assessment context, it does highlight a continuing trend of planning regulation to require the consideration of climate change impacts (including in this case, consideration of downstream greenhouse gas emissions), when granting an approval.

As emerging domestic regulation seeks to give effect to policies for national and sub-national emission reduction targets, the spectre of further and potentially more successful legal challenges is likely to arise. As we have seen in the current debate about the extent of corporate climate risk reporting and disclosure obligations, when it comes to climate change, compliance with legislative requirements is the minimum expectation, and that a proactive approach in the environmental assessment process to dealing with the evolving issues may well be an equally prudent risk mitigation measure to safeguard a project approval.