Who’s the BOS?

The NSW Biodiversity Offset Scheme (BOS) will now apply to federal development approvals in NSW

By Peter Burnett

Federal environment minister Sussan Ley has announced new arrangements with NSW covering the application of biodiversity offsets under federal environmental impact assessment (EIA) laws. Under these arrangements the NSW Biodiversity Offsets Scheme (BOS) will cover both federal and state requirements and the federal policy on offsets will no longer apply.

Sounds complicated and technical, should we care? Absolutely we should. EIA is the cornerstone of our approach to environmental protection in Australia; offsetting has gone from being rare to common over the last 20 years; and the manner in which state and federal governments coordinate their approach to assessing development is key to effective environmental regulation. Everyone with an interest in protecting the environment should care about this new proposal.

Is this an improvement? Do the feds just want to get out of EIA? With offsets becoming the de facto bottom line in EIA, who’s the BOS now?

It is complicated

EIA is complicated, but doubly so under Australia’s federal system, where federal and state governments have overlapping EIA laws. Governments have been trying for decades to reach agreement on reducing the resulting duplication, but with limited success.

When the Environment Protection and Biodiversity Conservation Act (EPBC Act) was passed in 1999, one of its big selling points was that it would put an end to EIA duplication through a mechanism known as bilateral agreements, or ‘bilaterals’ for short.

There are two kinds of bilateral. An ‘assessment bilateral’ accredits a state to undertake a single EIA process to inform two approval decisions, one by the Federal environment minister and one by the state.

The more powerful ‘approvals bilateral’ accredits a state to assess and approve developments, without any federal involvement, on the basis that the state system has been accredited as meeting all federal environmental standards under the EPBC Act. The feds tried to go there twice, once under Julia Gillard and once under Tony Abbott, but these ‘one stop shop’ initiatives failed both times.

So we are only talking about assessment bilaterals here.

One of the problems with assessment bilaterals is that they combine two assessments into one but leave two separate approval decisions to be made, applying two sets of policy, including on offsets.

So this latest decision, under which the Commonwealth will apply the NSW BOS instead of its own offsets policy looks like it should streamline decision-making.

And that’s how Minister Ley and her NSW counterparts are selling it, of course. But what about substantive standards on environmental offsets? Does the BOS deliver environmental outcomes as good as, or better than, the federal offsets policy?

How do the two offsets policies compare?

The NSW BOS has some real strengths, especially that it is a statutory scheme administered by a government-controlled trust. This enhances governance by providing consistency, continuity and transparency. It leaves the non-statutory federal policy, which lacks even the basic transparency of a public offsets register, in the shade.

Nevertheless, some environment groups opposed federal endorsement of the BOS. A key concern was that the BOS is aimed at biodiversity generally, rather than at the threatened species and communities protected under the EPBC Act. As a result, it does not have a requirement that offsets address impacts on a ‘like-for-like’ basis, for example to offset an impact on the Eastern Quoll with something that benefits the Eastern Quoll.

NSW addressed this concern by amending its Biodiversity Regulation to impose a like-for-like requirement, but only for impacts on matters protected by the EPBC Act.

Another key concern raised by environment groups is that the BOS typically delivers smaller offsets than the federal policy, especially for species or ecological communities that have a higher threat status (eg, a species listed as critically endangered). The main reason for this difference is that the federal policy, unlike the NSW BOS, uses a discount factor, related to the likelihood of extinction. This discount factor increases the offset quantum as the threat status increases.

Presumably NSW objected to introducing a similar discount factor for federally protected species and communities. So the Commonwealth accepted the NSW position, justifying this with the argument the level of threat ‘would still be considered’ by the Commonwealth ‘as part of the broader regulatory process’.

Despite these soothing words, I think it’s unlikely that the Commonwealth will impose an additional offset in such cases, which arise regularly, because this would undermine the (streamlining) purpose of endorsing the NSW policy in the first place. At best, this caveat provides an escape clause to be invoked in egregious or highly controversial cases.

Different policies in different states?

One effect of Commonwealth endorsing a NSW-specific offsets policy is that this is likely to lead to different outcomes in different states. This is clearly undesirable from an environmental point of view, as ecosystems and bioregions straddle borders. I imagine Minister Ley might agree in principle but defend the difference in outcomes on pragmatic grounds.

The application of different policies also made my lawyer’s antennae twitch. Not only does the the Constitution prohibit the Commonwealth discriminating between states in certain cases, but the EPBC Act itself contains sections that translate these constitutional prohibitions into specific bans.

For example, sections 55 and 56 of the EPBC Act prohibit the environment minister from discriminating between states and parts of states through bilateral agreements in certain circumstances. However, it turns out that neither the Constitutional prohibitions nor the sections of the EPBC Act apply in this specific case, for reasons too complicated to explain here.

So, as undesirable as it might be to have two different policies on the same thing, there is no law against it in this case.

Streamlining or watering down?

In the short term, whether this is a good initiative, a streamlining or a watering down in the interests of putting the states in the driving seat, is a mixed question.

Clearly it will reduce the regulatory impact of overlapping the EIA schemes. And the NSW BOS does have some significant strengths, which the Commonwealth would do well to imitate when it responds to the current review of the EPBC Act.

But it is a worry that the Commonwealth has adopted a policy specifying what is an acceptable biodiversity offset, but then decided that a lower offset is acceptable if the impact occurs in NSW.

In the longer term, however, the more important policy question is not whether an offset is acceptable under a policy, but whether it is sufficient.

This highlights a fundamental weakness of the EPBC Act itself, which is that the Act doesn’t specify any objective standard of environmental sustainability, but leaves it to the environment minister to decide what is ‘acceptable’. Something that is clearly acceptable to a minister may nevertheless fall far short of sufficient.

Hopefully the current review of the EPBC Act led by Professor Graeme Samuel will recommend an approach that sets clear benchmarks for what is sufficient to maintain biodiversity and ecological integrity, and then requires that those benchmarks be met.

Image by Terri Sharp from Pixabay

The zero sum game – from biodiversity to emissions

A game for mugs or a magic pudding that just keeps giving?

By David Salt

Zero net emissions by 2050! It’s the goal proclaimed by many countries around the world*, and it’s aimed at stemming the tide of climate change.

Zero net emissions is the recipe for enabling business as usual (ie, strong economic growth) while supposedly dealing with the externalities resulting from business as usual (ie, civilisation-ending climate change).

And it’s a political winner because governments aren’t targeting specific economic sectors (ie, the fossil fuel industry). Indeed, this far away from 2050, they aren’t being pegged down by too many specifics on how it will be achieved. The generic solution, implicitly and explicitly rolled out everytime, is that technology will save the day.

The magic in the pudding

So where is the magic that drives this ‘zero-net’ proposition? It’s in the ‘net’ bit. This framing means you don’t have to be ‘zero’ in your emissions in any specific activity, like burning coal if that’s what tickles your fancy.

But you do have to be zero in your cumulative effort. If you produce carbon emissions in one area then you need to do something somewhere else that removes that carbon so the cumulative impact (the net effect) is zero.

How do you remove carbon from the atmosphere? The traditional way has been to plant trees or do existing activities in ways that emit less carbon, a good example being using renewable energy instead of fossil fuel energy.

It works as a political solution because it means you don’t have to explicitly say who is going to bear the burden of reducing their emissions. At some point, however, someone, somewhere is going to have to change their behaviour – after all, sustainability bites!

Experience so far with zero sum policy games suggests they are tricky to establish and easy to work around (ie, cheat).

Offset this

What, you weren’t aware of other zero-sum games? They’re actually quite popular and one place where it’s really taking off is in the arena of biodiversity conservation. The name of this specific game is called biodiversity offsetting.

When it comes to any economic activity with impacts on biodiversity there are many rules and regulations to prevent the loss of species and ecosystems.

To begin with, the proposer of a new economic development must demonstrate their proposal isn’t adversely impacting any native species or ecosystems. If it does, the developer is required to state what they will do about it to remove that impact.

Indeed, developers are expected to apply a mitigation hierarchy to their proposal (see the South Australian Government for an example) in which they need to show how they will first:
1. avoid the negative impacts of their development but doing it in a different way. But if there is still impact, they need to then demonstrate how they will
2. minimise the size of the impact of the development; and then
3. restore the area to make up for the impact.

However, if the developer can’t avoid, minimise or restore the impact they create, they can now offset the damage of the development by doing something good for the environment somewhere else. If you clear a stand of native trees over here for a shopping centre, you might offset this impact by planting the same species of tree somewhere nearby.

The aim is to achieve ‘no net loss of biodiversity’ over time. See, it’s a zero-sum policy game.

The trouble is, in many places it’s been seen by developers as a green light for development and has resulted in many perverse outcomes.

A green light for decline?

For starters, many developers don’t even bother with the mitigation hierarchy (because avoiding, minimising and restoring all cost considerable resources and regulators often don’t check to see whether the impact can be mitigated) and jump straight to some form of offset proposal. But proposing offsets for developments are usually quite complex and there’s a lot of research around to show they often don’t actually offset the impacts of the development (in space or time).

In some cases, the development impact is on something that is irreplaceable like the potential loss of threatened species. In these situations it’s impossible to offset the potential loss and the development should be blocked. Instead, the developer is sometimes asked to do something that might be ‘equivalent’ to a direct offset, like contributing money to an education awareness program that may help save the species. Such indirect offsets are not actually offsets at all but they do give cover for economic development to proceed.

The overall outcome is that while there is a goal of no net loss of biodiversity, biodiversity is lost anyway. Around the world we are seeing a mass extinction event taking place and biodiversity offsetting does not seem to be making any difference.

The devil is in the detail

The lesson here is that great care needs to be applied to the establishment of any zero sum policy game. It needs to be transparent, accountable and enforceable. And it cannot be applied merely as cover for business as usual to proceed without any checks and balances.

Economic activity that generates positive carbon emissions (ie, above zero) needs to be accountable for matching these emissions with activities elsewhere that generate negative carbon emissions (ie, activities that remove carbon).

Governments oversee this process and need to establish robust and transparent frameworks that keep track of these activities and their emissions, and report this tracking in a clear and simple way so everyone has faith in the system. To sustain this faith, the monitoring and measurement will need to be independent of government; something along the lines of what Zali Stegall recommended in her climate bill.

A lot of thought will need to go into how you trade emissions across time (eg, savings emissions today to pay for extra emissions in the future) and space (eg, buying emissions savings from another country for an emission heavy activity in our own backyard).

While the law surrounding such net zero policies will be enacted at the national level, it’s likely this game will involve the trading of positive and negative emissions between countries so the net zero frameworks will need to operate with agreed international norms.

The System of Environmental-Economic Accounts is one existing framework that might help with all of these issues.

Maybe net zero emissions is a policy pathway that might engage opposing political forces, something that efforts to date have failed to do. However, to transform the call for zero net emissions by 2050 into workable and effective policy, much effort will need to go into creating intuitions that will hold governments to account and prevent them from fudging the figures.

Image: the cover of the UN Emissions Gap Report for 2019

*According to the UN Emissions Gap Report for 2019, most emissions — 78%— come from the top 20 economies, the G20. Of these, only five had pledged to long-term zero net targets (and this did not include the three big emitters: China, the US and India). Around 70 countries worldwide have made pledges of being carbon neutral by 2050.