What has happened?
In October 2017, the NSW Planning Assessment Commission (PAC) refused an application by Gloucester Resources for development consent for its Rocky Hill Coal Project (Project).
In making this decision, the PAC exercised power delegated to it by the NSW Minister for Planning.
Gloucester Resources appealed this decision in the Class 1 jurisdiction of the NSW Land and Environment Court in August 2018. Proceedings in this jurisdiction are “merit appeals” in which the Court “stands in the shoes” of the original decision maker and determines for itself how to exercise the decision making power.
On 8 February 2019, the Chief Judge of the Court handed down a judgment dismissing the appeal: see Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7.
In dismissing the appeal, the Court held that the Project would have significant direct and indirect adverse impacts which would outweigh its potential benefits.
One of the adverse impacts considered by the Court related to the potential impacts of the Project on climate change due the emission of greenhouse gases (GHG).
This includes GHG emitted both directly and indirectly by the Project.
Indirect GHG emissions can occur either “upstream” (due, for example, to the Project’s use of electricity sourced from offsite power stations) and “downstream” (due, for example, to the combustion of Project sourced coal at offsite steel mills).
The lengthy written judgment handed down by the Court provides clear guidance as to how the emissions of GHG should be evaluated in the broader context of evaluating the overall merits of a proposed development.
Findings by the Court
The Court found that the Project would have significant adverse impacts including:
impacts upon visual amenity and the rural and scenic character of the locale;
social impacts on the community;
impacts on existing, approved and likely preferred uses of land in the vicinity of the mine; and
impacts due to GHG emissions, which will contribute to climate change.
It held that these adverse impacts would outweigh the potential beneficial economic and social impacts of the Project.
Indeed, the Court held that the Project’s visual amenity impacts, social impacts, and impacts on land use alone were sufficient reasons to refuse to grant approval. Its likely GHG emissions and contribution to climate change merely added a further reason for refusal.
To be clear, the Court did not consider whether the Project’s potential impacts on climate change alone were sufficient reason for it to be refused development consent.
In considering the potential impacts of the Project on climate change, the Court made the following key observations (paraphrased briefly):
Both direct and indirect GHG emissions should be considered: see [486]-[513]
The Environmental Planning and Assessment Act 1979 provides that, when considering an application for development consent, it is necessary to have regard (see section 4.15):
to the contents of any Environmental Impacts Statement (EIS) prepared for the application. In this case the Project EIS contained a GHG assessment which covered both direct and indirect GHG emissions and considered the overall impacts of the Project in accordance with the principles of “ecologically sustainable development” (ESD);
to the public interest which the Courts have held can include the principles of ESD (which in turn can include consideration of the impact of a development on climate change);
to the content of any relevant Environmental Planning Instrument. In this case, clause 14.2 of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007, required GHG emissions, including “downstream” emissions, to be considered.
All GHG emissions contribute to climate change: see [514]-[524]
The Court found that the direct and indirect GHG emissions of the Project will contribute cumulatively to the global total GHG emissions;
It held that it is not relevant that that these emissions, whilst substantial, will only contribute a small fraction to overall global emissions;
In this regard, the Court noted that other courts have recognised that “climate change is caused by cumulative emissions from a myriad of individual sources, each proportionally small relative to the global total of GHG emissions, and will be solved by abatement of the GHG emissions from these myriad of individual sources.”
The Project’s emissions will contribute to climate change: see [525]-[528]
The Court found that the evidence before it showed that there is “a causal link between the Project’s cumulative GHG emissions and climate change and its consequences.”
It noted that, whilst the NSW Government has endorsed GHG emission reduction policies which do not prescribe how those reductions are to be achieved or which specifically prohibit the approval of new GHG emission sources, that “the exploitation and burning of a new fossil fuel reserve, which will increase GHG emissions” cannot assist in achieving the emission reduction objectives.
No specific proposal to offset the Project’s emissions: see [529]-[530]
During the case, Gloucester Resources argued that the Project would not “necessarily cause the carbon budget to be exceeded, because … reductions in GHG emissions by other sources (such as in the electricity generation and transport sectors) or increases in removals of GHGs by sinks (in the oceans or terrestrial vegetation or soils) could balance the increase in GHG emissions associated with the Project.”
The Court rejected this argument and described it as “speculative and hypothetical”.
The Court observed that there was:
“… no evidence … of any specific and certain action to ‘net out’ the GHG emissions of the Project. A consent authority cannot rationally approve a development that is likely to have some identified environmental impact on the theoretical possibility that the environmental impact will be mitigated or offset by some unspecified and uncertain action at some unspecified and uncertain time in the future.”
Possibility of abatement unrelated to the Project not relevant: see [531]-[533]
Gloucester Resources argued that effective global abatement of GHG emissions calls for “making emissions reductions where they count most and generate the least economic and social harm.”
It submitted that denying approval to individual coal mines, such as the Project, would not achieve this abatement objective at least cost.
The Court rejected this argument for the following reasons:
When determining an application for development consent for a coal mine, the task of the decision maker is not to formulate policy as to how best to make emissions reductions to achieve the global abatement task. Its task is limited to determining “whether to grant or refuse consent to the particular development the subject of that development application”.
Potential emissions reductions from other abatement sources are unrelated to the development that is the subject of the development application that the decision maker is required to determine.
Assumptions of market substitution and carbon leakage unproven: see [534]-[545]
Gloucester Resources argued that GHG emissions caused by the Project would occur regardless of whether it was approved because:
if coal production moves to overseas mines, GHG emissions could increase because those mines may be subject to less stringent regulation (i.e there will be “carbon leakage”); and
strong demand for coking coal from steel producing countries such as India could result, if demand is not met by Australian mines, in new mines being developed overseas (i.e there will be “market substitution”).
The Court rejected these arguments for the following reasons:
as to “carbon leakage”, the Court found there was no evidence to substantiate this argument. Instead, the evidence indicated that existing and approved Australian coal mines could meet current and likely future demand for coking coal; and
as to “market substitution”, the Court found, on the evidence before it that there was “no certainty that there will be market substitution by new coking coal mines in India or Indonesia or any other country supplying the coal that would have been produced by the Project.“
Producing coking coal not a justification for GHG emissions: see [546]-[449]
Gloucester Resources noted that the Project would produce high quality coking coal that is required for the most common way of making steel which is, in turn, a product that is “critical to our society”.
The Court rejected this argument noting the current and likely future demand for high quality coking coal could be met by existing and approved coal mines in Australia.
Implications
This case provides a useful overview of how the Land and Environment Court will assess the GHG emissions of proposed development when considering whether or not that development should be granted development consent.
Further information
For further information on this judgment and its potential implications for your development please contact Marcus Steele, Director, on (02) 8005-1976 or marcus.steele@bicksteele.com.au.