In April 2023 the Western Australian Environmental Protection Authority (WA EPA) released a new revision of its Environmental Factor Guideline on Greenhouse Gas Emissions (Guideline). The previous revision of the Guideline brought significant changes that demonstrated the WA EPA’s commitment to protecting the environment and ensuring proper scrutiny of a proposal’s greenhouse gas emissions (see our previous article: WA EPA turning net zero ambitions and policies into project reality). However, that revision only imposed an aspirational net zero by 2050 target. New features of the revised Guideline:

• Impose a requirement to achieve net zero by 2050, with a linear emissions reduction trajectory from 2030. This is the WA EPA’s ‘minimum’ expectation.
• Extend the Guideline’s application to projects with Scope 2 emissions greater than 100,000 tonnes of carbon dioxide equivalent, which must also now have a greenhouse gas management plan.
• Clarify that offsets are to be used as a last resort only and will be scrutinised for integrity. Importantly, the Guideline does not restrict the type or provenance of offsets.
• Introduce as a relevant consideration for the WA EPA whether other Commonwealth and State legislation meets the WA EPA’s objectives, in order to avoid duplication (such as in respect of the Safeguard Mechanism).
• Requires that an independent best practice review of available measures to avoid or reduce scope 1 emissions should accompany proposals.

WA EPA imposes linear trajectory to net zero by 2050

As a ‘minimum’ expectation, the new Guideline requires that a proponent’s environmental management plan demonstrate linear emissions reductions from 2030 to reach net zero by 2050, which the Guideline notes is consistent with the Paris Agreement and the sixth report of the Intergovernmental Panel on Climate Change. The Guideline makes it clear, however, that the WA EPA expects that ‘proponents should seek to exceed these expectations and reach net zero well before 2050’, with the ultimate goal that WA overall reaches net zero reductions well before 2050. This demonstrates that the WA EPA’s goal is not to obtain minimum adherence from proponents, but to encourage real action in the fight against climate change and global warming.

As part of this, the WA EPA has released a template environmental management plan, intended to support transparency and consistency of disclosure. This should be considered a ‘living’ document, to be updated over time. The Guideline suggests a proponent’s environmental management plan should be published publicly in temporal alignment with the 5-yearly reporting under Article 4 of the Paris Agreement. This template ensures clarity around the information proponents are required to submit, thereby reducing uncertainty for proponents and increasing the WA EPA’s operational efficiency.

Additionally, the WA EPA has expanded the threshold for proposals it must consider such that new proposals, or changes to existing proposals or implementation conditions, where reasonably likely to exceed 100,000 tonnes of carbon dioxide equivalent scope 2 emissions (being emissions from the generation of the power used by proponents in their project proposal) in any year, will also be considered by the EPA (in addition to those project proposals that exceed 100,000 tonnes of carbon dioxide equivalent scope 1 emissions).

Scrutiny of offsets in achieving net zero reductions

The WA EPA recognises that offsets may be necessary to meet its emissions reduction requirements, particularly as new technologies develop. As such, there is scope for offsets to be used in part to meet a proponent’s net zero target. The template environment management plan sets out the information a proponent will be required to include, such as the circumstances in which offsets will be used, as well as the general type (eg forestry, renewable energy etc), certifying body and provenance of offsets. This allows for offsets to be generated domestically and internationally, under an Australian, voluntary or international scheme. Proponents can therefore procure offsets under the Emissions Reduction Fund in Australia or voluntary schemes such as Verra and Gold Standard or even, once established, international offsets under Article 6.4 of the Paris Agreement.

Proponents must also detail the integrity and assurance mechanisms that apply to the offsets as well as their consistency with ‘offset integrity principles…such as the as the standards in the Commonwealth Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) or the principles in the Climate Active Carbon Neutral Standard for Organisations, Commonwealth of Australia, 2022.’ This suggests the WA EPA will consider generally accepted integrity standards in submissions to it.

However, offsets are still considered a last resort mechanism and the emissions hierarchy of avoidance, reduction then offset should be adhered to.

WA EPA's holistic approach to emissions reduction

The Guideline expressly acknowledges that the WA EPA will take into consideration whether other State or Commonwealth emissions reduction legislation applies to the proponent, including the Safeguard Mechanism under the National Greenhouse and Emissions Reporting 2007 (Cth) (see our most recent articles on amendments to the Safeguard Mechanism: Parliament approves the Safeguard Mechanism (Crediting) Amendment Bill 2023 and Final Safeguard Mechanism design released). As part of the information submitted in the template environmental management plan, a proponent is required to provide information on the emissions trajectories it has modelled under other applicable Commonwealth and State legislation, and explain to the WA EPA any discrepancy between those trajectories and the one provided to the WA EPA.

However, the Guideline does caveat the consideration of other applicable legislative mechanisms in that the WA EPA will only consider those mechanisms to the extent ‘they reflect contemporary science and are consistent with the EPA’s objective’. This retains flexibility for the WA EPA to ensure that, even if other emissions reduction legislation applies, only anything at or above the WA EPA’s standard will be relevant. This may affect proponents in particular where emissions reduction trajectories under the Safeguard Mechanism are not as steep as the linear trajectory required under the Guideline.

Notwithstanding this, the Guideline does acknowledge that the WA EPA considers proposals on a case-by-case basis. It may be that, as part of its assessment, the WA EPA will consider the reasonableness of having a linear trajectory down to net zero by 2050 in circumstances where, for instance, a proposal is also covered by the Safeguard Mechanism under which the reduction is not as steep.

Best practice review in adopting measures to reach net zero

A proposal should be accompanied with the following reviews:

• An expert review to demonstrate how best practice ‘design, technology and management’ measures have been adopted by the proponent to avoid or reduce scope 1 emissions both at the start of a project and with regular reviews throughout the life of the project. The Guideline sets out the WA EPA’s understanding of best practice as: ‘the most effective, best combination of technologies used and the way in which an installation is designed, built, maintained, operated and decommissioned to avoid and minimise the environmental impacts arising from emissions’. Any review should be independent. The template environmental management plan also sets out the key items to be summarised as part of that review.
• An expert review considering the extent to which offsets satisfying the integrity principles are ‘likely to be reasonably practicable and available at the time of proposed future surrender’.
• Any reviews demonstrating the proposal’s consistency with relevant sector pathways or benchmarks.

WA EPA’s guideline: The outlook for significant emitters in the road to net zero

The WA EPA’s new Guideline imposes a minimum linear net zero trajectory from 2030 to 2050, which it expects proponents should exceed. There is the potential for tensions between this mechanism and the baseline reductions under the Safeguard Mechanism. However, the WA EPA has always indicated that each proposal will be considered on a case-by-case basis and clearly states that it will consider relevant State and Commonwealth emissions reduction legislation, as well as discrepancies in reduction trajectories. The threat posed by climate change is significant and it is not amiss for the WA EPA to expect proponents to push the boundaries of what is possible in order to pave the road to net zero.

Proponents should be aware that the WA EPA will now assess proposals where scope 2 emissions meet the threshold requirement of 100,000 tonnes of carbon dioxide equivalent. Offsets will continue to be a mechanism of last resort, but the WA EPA affords great flexibility in allowing proponents to choose the type and provenance of the offsets they use. Not least, various expert reports will be required of proponents, including an independent best practice review of available measures to avoid or reduce scope 1 emissions.