The implications of the recent Rocky Hill decision for major development

A recent landmark ruling by the NSW Land and Environment Court in which it refused a proposed coal mine on climate change (amongst other) grounds will have broad-reaching implications for future development and major projects across the country.

The Rocky Hill decision[1] builds upon a growing international jurisprudence directly linking fossil fuels and climate change and – independently of the numerous political machinations around the Paris climate change agreement – is likely to significantly affect coal and other fossil fuel-dependent industries in Australia.

In reaching its decision, the NSW Land and Environment Court drew upon international authority and expert climate change evidence to place the downstream (or scope 3) greenhouse gas (GHG) emissions at the feet of the proponent of a NSW coal mine.

The proposed Rocky Hill coal mine, set in rural Gloucester in the Hunter Valley, was found by the Court to be in the ‘wrong place’ at the ‘wrong time’. The ‘wrong place’ because of enduring impacts on community amenity and lifestyle, and the ‘wrong time’ because direct GHG emissions and indirect emissions from the use of produced coal would increase global concentrations of GHGs “at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions”.

The proponent argued it was not for the Court to enforce the Paris Agreement, and particularly not in relation to scope 3 emissions. But the Court applied a State Environmental Planning Policy, which prescribes consideration of downstream GHG impacts, and also found that ecologically sustainable development principles (also a component of the statutory ‘public interest’ criterion) require an assessment of climate change impacts.

The proponent offered no specific carbon offsets, arguing that others were doing enough to offset the project’s GHG emissions. The Court did not agree.

Expert evidence applying the ‘carbon budget’ methodology was well received. Evidence that all existing fossil fuel resources should remain in the ground to achieve global targets, however, was not. Instead, the Court found that deciding which fossil fuel reserves should be exploited requires a merits evaluation of each proposal, considering both its likely contribution to climate change and its other impacts.

The decision has been appealed.

Implications for major development

The climate change-related reasons for refusal cited in the Rocky Hill decision will have broad-reaching impacts on all high GHG emitting developments. Opponents of major projects here and around the world will cite the decision because of its thorough analysis of Australian and international law linking climate change impacts with GHG emitting projects.

NSW approval bodies are bound by the decision for all significant GHG emitting developments, including major infrastructure and fossil fuel projects. While the State Environmental Planning Policy applied by the Court in its ruling is NSW-specific, ecologically sustainable development principles and the public interest test broadly apply in environmental legislation. Consequently, direct and downstream GHGs should now be assessed.

A further implication of the decision is that carbon offsetting mechanisms will have greater importance. In balancing the benefits of approval versus a project’s negative impacts, consent authorities must assess a project’s climate change impacts, including likely indirect GHG emissions.

How to mitigate risk

While approval of significant projects may be harder, the decision specifies that each project must be assessed on its merits. Five tips for high GHG emitting developments are:

1. Assess the full range of project GHG emissions, including from downstream use of products.
2. Consider adopting the ‘carbon budget’ methodology to assess climate change impacts.
3. On the project benefits analysis, pay significant attention to direct and indirect impacts of your proposal. Mere job creation may not be enough. Rigorous economic and social impact analysis is required.
4. Well defined and concrete proposals for offsetting carbon impacts should be included for high GHG emitting projects.
5. Engage the best legal and technical consultants at the outset, in case your project finds itself in Court.

_{[1] Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7}