The Commonwealth Government has released its new Environmental Offsets Policy (Policy) under the Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act).

The Policy, which opened for comment in August 2011 as part of the Government’s national environmental law reform agenda, replaces the draft 2007 statement and includes a greater focus on direct offsets. It also applies to any new referrals and variations to approval conditions from 2 October 2012 and to any proposed actions currently under assessment in respect of which a decision has not yet been made. A copy of the Policy is available here. This article outlines the key elements of the Policy.


An environmental offset is a conservation measure that compensates for adverse environmental action. They are intended to compensate for the residual impact of a proposed action after avoidance and mitigation steps have been taken. Examples of environmental offsets include protecting at-risk environmental assets, restoring threatened species’ habitat and improving heritage places.

Figure 1 of the Policy provides a useful flowchart depicting when an environmental offset could be appropriate and when the Policy will apply. See diagram on right.


The national Policy applies to all matters protected under the EPBC Act and seeks to clarify the role of offsets in environmental impact assessments. It also provides greater guidance on how the suitability of an offset is considered by the Department. According to the Policy, offsets will only be considered after all reasonable actions to avoid or mitigate environmental damage have been investigated. Thereafter, each proposal will be considered on a case-by-case basis. However, the Policy does not provide a route by which a proposal with unacceptable impacts may be approved.

Click here to view diagram.

The Policy’s five main aims are to:

  • ensure the efficient, effective, timely, transparent, proportionate, scientifically robust and reasonable use of offsets under the EPBC Act;
  • provide proponents, the community and other stakeholders with greater certainty and guidance on how offsets are determined and when they may be considered under the EPBC Act;
  • deliver improved environmental outcomes by consistently applying the Policy;
  • outline the appropriate nature and scale of offsets and how they are determined; and
  • provide guidance on acceptable delivery mechanisms for offsets.


Although most States and Territories have environmental offsets policies of their own, the focus of this Policy is on protecting EPBC Act matters of “national environmental significance” and therefore it does not derogate from the existing State and Territory policies. In fact, the Policy recognises such State and Territory policies and provides that offsets under these policies may count towards an offset under the national Policy, to the extent that it compensates for the relevant impacted protected matter.


“Direct offsets” are those actions that provide a measureable conservation gain for an impacted protected matter. A “conservation gain” is a benefit which maintains or increases a protected matter’s viability or reduces any threats of damage, destruction or extinction to the protected matter. This can be achieved by, for example, improving an existing habitat, creating a new habitat or increasing the values of a heritage place.

Under the Policy, direct offsets must make up at least 90% of the total offset requirement, with “other compensatory measures” making up the remainder. It will only be in limited circumstances that deviation from the 90% direct offset requirement will be considered. In this way, the Policy hopes to deliver an increase in the conservation gain provided by each offset.


Suitable offsets are determined based on their compliance with the requirements set out in the Policy. These requirements state that suitable offsets must:

  • deliver an overall conservation outcome that improves or maintains the viability of the protected matter;
  • be built around direct offsets but may include other compensatory measures;
  • be in proportion to the level of statutory protection that applies to the protected matter;
  • be of a size and scale proportionate to the residual impacts on the protected matter;
  • effectively account for and manage the risks of the offset not succeeding;
  • be additional to what is already required, determined by law or planning regulations or agreed to under other schemes or programs;
  • be efficient, effective, timely, transparent, scientifically robust and reasonable; and
  • have transparent governance arrangements including being able to be readily measured, monitored, audited and enforced.


The Policy is accompanied by the Offsets Assessment Guide (Guide) which gives effect to the Policy’s requirements. The Guide will be used by the Department to provide consistency in determining the suitability of offset proposals under the EPBC Act. Government decision-making about offsets will be informed by robust scientific data and evidence and the Government has prepared the Guide with the aim of ensuring decisions are made in a consistent and transparent manner. Although it will be used primarily by the Department, the Guide is publicly available and may be used by relevant stakeholders when preparing a referral for environmental assessment. A copy of the Guide is available here.


Offsets can be delivered by a range of mechanisms, included market-based mechanisms and contracting third party providers.


While avoidance and mitigation measures remain the primary strategies for managing the potential significant impact of a proposed action, the Policy seeks to provide greater guidance and consistency in the application of offsets in situations where avoidance and mitigation measures cannot adequately reduce the adverse impacts of a proposed action.