Landmark legislation to address climate change has been passed by NSW Parliament and will commence within days, paving the way for accelerated Government action on climate change across the State economy and society.

NSW will soon have a strong legislative framework for action on climate change which will accelerate the way Government agencies address climate change. Measures include new greenhouse gas (GHG) reduction targets (with a ratchet mechanism), the establishment of an independent Net Zero Commission, a focus on climate change mitigation and adaptation in development assessments and decision-making. These changes are likely to increase the prospect of climate-related litigation.

Parliament passed the Climate Change (Net Zero Future) Bill 2023 on 30 November 2023, and it is now awaiting assent. Several amendments were made to the Bill as introduced in October, following a subsequent Parliamentary Committee review. In a rare feat, the Bill received unanimous support in the Legislative Assembly. The Bill deals not only with climate change mitigation, including legislated greenhouse gas reduction targets, but also climate change adaptation, with an emphasis on resilience.

We have outlined below the key features of the Bill, the legal and political context in which it was made, and some implications for the State economy and society.

The Bill's guiding principles, including recognition of a right to a sustainable environment

One of the Bill's most significant features is its "guiding principles", since it seems the Government intends that these will shape the development of policies and action in NSW to address climate change.

As the Minister for Climate Change said when introducing the Bill into Parliament, these guiding principles are "the considerations that will shape action, make sure nothing and no-one is left behind and keep government accountable".

Section 8 provides an extensive list of guiding principles. We have commented on a few below.

  • Some guiding principles express a call to action – for example:
    • "there is a critical need to address climate change, which is a serious threat to the social, economic, and environmental wellbeing of NSW"; and
    • action to address climate change should be taken as soon as possible to minimise costs and adverse impacts.
  • In an Australian first, one of the guiding principles states that "action to address climate change should be consistent with the right to a clean, healthy and sustainable environment".

    The concept of a right to a healthy environment has been developing in other jurisdictions worldwide, particularly in Europe in connection with the European Convention of Human Rights. This was demonstrated in the Urgenda case (2019), in which the Court held that the Dutch Government had an obligation to take action to reduce GHG emissions in order to protect various rights under that Convention from the threat of climate change.

    The reference in the Bill to right to a clean, healthy and sustainable environment does not necessarily impose a corresponding duty on the Government or any other person to act consistently with that right. This issue was considered in detail in the Sharma Federal Court cases in 2021 (first instance) and 2022 (appeal). However, the recognition of the right is an important step towards the framing of corresponding obligations, or at least significant considerations for Government decision-making, and it could influence the direction of climate-related litigation.

  • One of the guiding principles is that the NSW Government is responsible for urgently developing and implementing strategies, policies and programs to address climate change and pursuing best practice in addressing climate change.

    This broadens the responsibility which the NSW Land and Environment Court held, in the Bushfire Survivors case (2021), that the NSW EPA has to develop environmental quality objectives, guidelines and policies to ensure the protection of the environment in NSW from climate change. That case led to the development of major policy initiatives dealing with climate change mitigation and adaptation, which are now showing specific actions by NSW Government agencies.

  • Other guiding principles recognise the NSW Government's "commitment to a fair transition" (as described in the Second Reading Speeches), highlighting factors such as the need for fiscal responsibility, contributions from stakeholders such as First Nations peoples rural, regional, and remote communities, potential impacts on household costs and equity and social justice impacts, and climate change threats to biodiversity.

Net zero and other greenhouse gas reduction targets

The Bill legislates the NSW Government's current policy of net zero GHG emissions by 2050, but it also includes:

  • two interim targets:
    • 50% reduction on 2005 GHG emissions by 2030; and
    • 70% reduction on 2005 GHG emissions by 2035;
  • power to ratchet up targets via regulations, by bringing target dates forward and/or increasing target GHG emission reduction percentages;
  • a requirement for regulations to introduce additional interim GHG emission reduction targets for 2040 and 2045, and scope for other additional interim targets;
  • a very broad power to make regulations to provide for other matters such as:
    • implementing GHG emission reduction targets;
    • other matters relating to primary targets and interim targets, including imposing functions on the newly formed Net Zero Commission in relation to the targets; and
    • calculating and assessing GHG emissions.

The targets are expressed in comprehensive terms, referring to "net greenhouse gas emissions in New South Wales". This does not distinguish between the various emission scopes. It also refers to "net" emissions, thereby allowing for the use of offsets.

The regulation-making powers give the NSW Government considerable scope to legislate specific measures giving effect to the GHG emission reduction targets.

Significantly, section 11 places a positive obligation on the Premier and the Minister for Climate Change to achieve the 2050 net zero target.

Climate change adaptation

Section 10 of the Bill establishes an "adaptation objective" of making NSW more resilient to a changing climate, and provides a power to make regulations "about the implementation of the adaptation objective".

This gives the NSW Government considerable scope to legislate specific measures for climate change adaptation, which could reach all areas of Government action, all sectors of the NSW economy and household activities.

Net Zero Commission

The Bill establishes the Net Zero Commission as an independent body, with one of its key roles being to hold Government to account on climate-related matters (as noted in the Second Reading Speeches).

The Commission has a wide range of monitoring, review, advisory and reporting functions, and several specific recommendation functions (section 15). These include:

  • to identify and recommend action that should be taken by the NSW Government to address climate change, including strategies, policies and programs that should be implemented by the NSW Government;
  • to make recommendations to the Minister about giving effect to the guiding principles, ways to reduce net GHG emissions in NSW and achieve the adaptation objective;
  • to make recommendations to the Minister about "greenhouse gas emissions and action to address climate change relating to specific business or industry sectors" and
  • to make recommendations to any NSW Government department Secretary and the Independent Planning Commission under the Environmental Planning and Assessment Act 1979.

The inclusion of this last recommendation power suggests the NSW Government proposes to facilitate careful consideration of climate-related issues in the development assessment and decision-making processes for major projects.

How does NSW compare with other States?

With the passage of the Bill, NSW joins Victoria, the ACT, Tasmania, and the Commonwealth in legislating a target of net zero by 2050. Other jurisdictions have different interim targets (eg. the Climate Change Act 2022 (Cth) provides for a target of 43% below 2005 levels by 2030).

Significantly, NSW is the only state referencing the "right to a clean, healthy and sustainable environment" in its legislation (although the ACT Government has recently indicated it is considering a similar legislative recognition).

Climate change action in NSW already underway

The Bill provides legislative support for recent NSW Government action to address climate change, via initiatives such as the NSW EPA's Climate Change Action Plan 2022-25 and the Government's NSW Climate Change Adaptation Strategy.

In acknowledging the passage of the Bill, the Minister for Climate Change (the Hon. Penny Sharpe) recognised both the challenge and the "economic opportunity" which climate change poses. We expect accelerated Government action in both of these areas.

What does the Climate Change (Net Zero Future) Bill 2023 mean in practice?

While the Bill provides few hard obligations (other than on the Government in relation to GHG emissions reduction), it signals some significant practical implications. We should expect:

  • more specific action across Government agencies, as they seek to deliver on Government commitments to climate change mitigation and adaptation and respond to the Bill's emphasis on accountability;
  • climate change mitigation and adaptation to play a more significant role in Government policy setting and decision-making, including in relation to procurement, infrastructure design and delivery, and development approvals; and
  • a higher risk of climate related litigation, as stakeholders focus on the increased commitment to Government accountability and the elevated importance in Government policy and action on climate change mitigation and adaptation.