Five trends shaping environmental regulatory reform in 2024

A number of recent and upcoming reforms are fundamentally changing the landscape for environmental protection, housing and infrastructure delivery in Australia. These changes present a number of opportunities, but also challenges associated with rapid regulatory change and frequent tension between different policy objectives and/or stakeholder interests.

Recent case law and regulatory decisions have demonstrated the challenges involved in balancing environmental protection with economic development and infrastructure delivery, particularly in relation to the transition from fossil fuels to renewable energy.

This insight considers some of the key trends and areas of focus for 2024:

• Significant Commonwealth environmental law reforms;
  
  
• Housing policy to address housing supply and affordability issues;
  
  
• First Nations’ engagement and consultation (particularly in the context of energy projects);
  
  
• Expectations around climate and nature-related disclosures; and
  
  
• The challenge of securing approvals for development of Australia’s rural and offshore areas as part of the energy transition.

Five trends will require careful consideration in 2024.

1. Government shifting to a ‘nature positive’ approach to environmental law

The Federal Government has committed to its Nature Positive Plan (NPP), which includes significant reforms to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). The NPP details a shift from the current requirement for ‘no net loss’ to Matters of National Environmental Significance to a requirement for a ‘nature positive’ approach to development.

To support this shift, the Commonwealth proposes to introduce National Environmental Standards, which will apply to all decision-making under national environmental law. The purpose of the Standards is to provide more certainty to proponents by shifting from a process-driven and discretionary approach to an outcomes-based approach to national environmental assessments. The Commonwealth also proposes to designate areas of varying environmental value for the purpose of prohibiting, allowing or streamlining development approvals within the designated areas.

Another significant reform is the proposed establishment of an independent federal EPA. The EPA would generally replace the Minister as the new independent, federal environmental approval decision-maker responsible for project assessment, decisions and post-approvals compliance and enforcement.

Whilst the NPP did not adopt the recommendation of the Independent Review of the EPBC Act to introduce limited rights to seek merits review of decisions made under the EPBC Act, it does suggest a possible strengthening of third-party enforcement provisions. It is not clear what type of provisions are envisaged. It may be that the Commonwealth is considering rights similar to those in the Environment Protection Act 2017 (Vic), which allows third parties who constitute ‘eligible persons’ to bring civil proceedings to enforce non-compliances.

An exposure draft of the new laws is expected to be introduced into Parliament early this year. While some streamlining of process is promised, this does not necessarily increase prospects of securing approval. Indeed, the NPP indicates that there will be heightened expectations for environment protection and meaningful engagement with Indigenous people and the community. The pathways and grounds for third-party challenges may be expanded. Overall, it is likely that a ‘higher bar’ will apply, but there will be greater clarity around what is required to meet that bar and improved assessment timeframes.

2. States pushing for housing reforms to improve affordability

With increasing pressure to improve housing affordability, a number of states are reforming planning regulations to encourage residential development.

New South Wales

The NSW Productivity Commission released a report last week, highlighting the societal impacts of Sydney’s housing affordability challenges.

The NSW government has announced several reforms for 2024. These include:

• proposals to re-zone areas near metro stations and town centres across Sydney;
  
  
• creating new state-assessed pathways for residential development;
  
  
• introducing density bonuses for developments that include 10-15% social and affordable housing; and
  
  
• the development of a pattern book of endorsed low-rise and mid-rise housing designs which will have an accelerated approval pathway.

Victoria

In Victoria, planning scheme amendment VC242 was introduced in September 2023, seeking to facilitate certain types of residential development. For example, larger scale residential development with a cost over $50 million in Melbourne, or over $15 million in regional Victoria, may benefit from a new particular provision if the development includes a minimum of 10% affordable housing. For these developments:

• the Minister of Planning will be the responsible authority for a permit application;
  
  
• the permit application will be exempt from certain requirements (including objector rights to apply for review); and
  
  
• certain restrictions (e.g. height and setback requirements) can be waived by the Minister for Planning.

The Victorian Government intends to reduce the timeframes for approving eligible permit applications from over 12 months to four months.

In the same month, Victoria also introduced planning scheme amendment VC243, which codified residential development standards and implements the Future Homes project across the state. Future Homes is a streamlined planning process that provides ready-made exemplar architectural apartment designs – comparable to the pattern book proposed in NSW.

Queensland

Similarly, the Queensland Parliament passed the Housing Availability and Affordability (Planning and Other Legislation Amendment) Bill 2023, which proposes a new, streamlined, state-led development assessment process for priority developments, including affordable housing.

3. Companies needing to increasingly focus on Indigenous perspectives

The importance of meaningful engagement with First Nations people continues to be a significant area of focus. This is driven by a series of matters which have highlighted that regulatory frameworks, administrative processes and/or stakeholder (including Indigenous) expectations often do not align.

In the context of energy, resources and infrastructure projects, this has led to projects increasingly being challenged in relation to potential impacts on Indigenous cultural heritage and the adequacy of consultation with Indigenous people.

This trend has been particularly evident in the context of offshore petroleum developments, with a string of challenges to developments based on their impact on Indigenous sea country and proponents’ consultation with relevant Indigenous peoples (Santos NA Barossa Pty Ltd v Tipakalippa [2022] FCAFC 193; Cooper v National Offshore Petroleum Safety and Environmental Management Authority (No 2) [2023] FCA 1158; Munkara v Santos NA Barossa Pty Ltd (No 3) [2024] FCA 9).

In Tipakalippa, the Full Federal Court upheld the decision that the approval of an environment plan was invalid because the proponent had not consulted Indigenous people with a connection to ‘sea country’, which may be affected by the proposed activities. In doing so, the Court confirmed that proponents’ obligation under the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) to consult with persons whose ‘interests’ may be affected by proposed activities includes the traditional connection of Indigenous people with sea country and its marine resources.

In January this year, the Federal Court in Munkara dismissed an application made by Indigenous Tiwi Islanders. The applicants argued that the proponent was required to revise its environment plan for the construction of a pipeline because it had evidence of a “new environmental impact or risk”, being the potential impact of the proposed pipeline on the tangible and intangible cultural heritage of Tiwi Islanders and associated sea country. Ultimately, the Court was unpersuaded by the applicants’ evidence, which it held did not demonstrate that the proposed pipeline would have the impacts alleged. The Court also clarified that the discovery of pre-existing yet unknown risks (including impacts on cultural heritage) does not attract the obligation to submit a revised environment plan.

Despite the mixed success of these challenges, they demonstrate that stakeholders’ expectations in relation to consultation and the assessment of Indigenous cultural heritage (both tangible and intangible) continue to evolve. They present legal, operational and reputational risks to projects, even after they have been approved.

4. Climate and nature-related disclosures are expanding

The Federal Government has released draft legislation for the introduction of mandatory climate-related financial disclosures in Australia from 2024/25 (Draft Legislation). We have analysed the Draft Legislation and associated standards in Mandatory climate-related financial disclosure: government releases draft framework.

Notably, disclosure of material scope 3 emissions would be required for all reporting entities from their second reporting year onwards. However, the Draft Legislation proposes a three-year safe harbour for scope 3 emissions data and disclosure of scenario analysis, with a limited carve out for certain actions brought by ASIC.

The Draft Legislation anticipates that the sustainability reporting requirements will be expanded to other areas in the future. While the potential topics are not defined in the Draft Legislation, it seems reasonably likely that the sustainability disclosure regime will be expanded to include nature-related financial disclosures, given the Government’s support for the Task Force for Nature-related Financial Disclosures (TNFD). In September 2023 the TNFD released its final recommendations for nature-related risk management and disclosure (TNFD Recommendations).

The need to assess and report on both climate and nature-related risks and opportunities will impose new burdens on organisations. Despite the apparent alignment between the two frameworks, it is crucial for organisations to exercise caution and avoid conflating climate-related disclosures with nature-related disclosures. Nature-related financial disclosures are inherently complex, and require organisations to bring in new skills and capabilities. For instance, the location-specific aspect of nature-related disclosures calls for local knowledge and in-depth ecological assessments.

Despite these challenges, the TNFD Recommendations assist organisations to manage and disclose nature-related risks and dependencies by enabling them to translate high-level challenges such as soil degradation or deforestation into specific considerations and actions. Organisations should take active steps to embrace TNFD frameworks early by investigating supply chain exposures and regulatory risks. Organisations that do so will position themselves well to meet potential future reporting requirements.

5. Tension between net-zero and environmental protection objectives is increasing

Recent decisions on wind farm projects in Australia have highlighted the delicate balance between expanding renewable energy capacity and safeguarding local ecosystems and environmental values.

In January 2024, the Federal Minister for the Environment and Water decided that a proposal for a terminal to support the assembly and installation of multiple offshore wind farm projects in Port Hastings, Victoria, was ‘clearly unacceptable’. The project involved the reclamation of 29 hectares of seabed and dredging up to 92 hectares of the Western Port Ramsar Wetlands. The Minister considered that these actions would lead to irreversible damage to the wetlands, threatened species and ecological communities, and migratory species.

This follows the Victorian Minister for Planning's assessment in July 2023 of a wind farm development in Willatook, which recommended imposing onerous conditions to protect threatened fauna in the area, including bats and brolgas. These included buffer zones which would result in a significant reduction of the number of turbines and a construction ban of five months per year. The developer (Wind Prospect) called the conditions “hugely problematic” and stated that it will “pursue all available avenues for an appeal”. It is understood the planning permit has not yet been issued by the Minister.

By contrast, the NSW Government recently approved construction of a wind farm in the Yanco Delta, despite community concerns regarding visual amenity, noise pollution and impacts on the critically endangered plains-wanderer bird. This is the first wind farm project approved in the State in over two years and will be one of the largest wind farms in NSW.

These decisions highlight the challenges faced for proponents of renewable energy projects, and the increasing tension (even conflict) between net-zero and environmental protection (and, in due course, nature positive) objectives. The differing regulatory approaches in each jurisdiction compound this challenge by creating uncertainty as to where the line will be drawn between conflicting priorities for projects across the country.

Looking ahead

While opportunities abound in project development in Australia (particularly in residential housing and renewable energy projects), increased regulatory burdens and the risk of litigation present significant challenges. Organisations will need to be proactive in managing their increased and evolving regulatory obligations, as well as remaining alert for risks to existing and future projects.