Key takeaways from the High Court's Scope 3 emissions decision
On 7 October 2026, the High Court of Australia delivered a highly anticipated judgment in MACH Energy Australia Pty Ltd v Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc [2026] HCA 35 – the first climate decision to reach the High Court. The Court dismissed MACH’s appeal by a 3:2 majority.
The decision clarifies the statutory requirement on an NSW consent authority to actively consider the Scope 3 greenhouse gas (GHG) emissions of a resource project and conditions to minimise “to the greatest extent practicable” that project’s Scope 3 emissions. The majority held that identifying and relying on overseas accounting or regulation of Scope 3 emissions did not, by itself, discharge the duty to consider minimisation conditions.
Gordon, Edelman and Beech-Jones JJ held that the Independent Planning Commission (IPC) did not consider whether to impose conditions directed to Scope 3 emissions, which comprised 98% of the Project’s emissions. Detailed conditions on Scope 1 and 2 emissions (the remaining 2%) did not discharge the duty. The failure was material and amounted to jurisdictional error.
The consent for the Mount Pleasant coal mine extension is therefore invalid. The matter has been remitted to the Land and Environment Court of New South Wales (NSWLEC) to consider whether to suspend the operation of the consent in whole or in part, and to specify terms compliance with which will validate the consent (whether without alterations or on being regranted with alterations).
MACH nevertheless succeeded on its principal ground. All five Justices held that s 4.15(1)(b) of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) requires consideration of the likely impacts of a development generally, wherever they occur. Impacts "in the locality" are neither the exclusive nor the central focus of the provision.
A week before the High Court judgment, the IPC’s approval of the Hunter Valley Operations extension application tested Scope 3 options, explained its choices and imposed a Scope 3 Management Plan. It offers an example of how a consent authority may record its consideration of Scope 3 conditions.
Background to the MACH Energy v DAMSHEG High Court decision
The appeal concerned the IPC’s approval of a development application to extend and expand the Mount Pleasant open cut coal mine in the Hunter Valley (Project). The consent granted an extension to the life of the Project by 22 years, to 2048, and permitted a further 406 million tonnes of coal to be extracted, doubling annual production from 10.5 to 21 million tonnes (mostly for export).
MACH Energy Australia Pty Ltd’s (MACH) environmental impact statement (EIS) estimated that 98% of the Project’s GHG emissions would be Scope 3 emissions – indirect emissions from sources the proponent does not own or control – arising principally from the combustion of the coal by overseas customers. Before consent was granted, the Denman Aberdeen Muswellbrook Scone Healthy Environment Group (DAMSHEG) submitted to the IPC that MACH had “not identified any measures to minimise the [GHG] emissions, including the Scope 3 emissions, of the Project to the greatest extent practicable”. No party before the IPC proposed any Scope 3 conditions. The IPC granted consent in September 2022 subject to detailed conditions on Scope 1 and 2 emissions, but none on Scope 3. It described Scope 3 emissions as “appropriately regulated and accounted for through broader national policies and international agreements (such as the Paris Agreement)”.
DAMSHEG began judicial review proceedings in the NSWLEC in December 2022. At first instance, Robson J dismissed all eight grounds. His Honour inferred from the IPC’s reasons that it had exercised its discretion not to impose conditions directed specifically to Scope 3 emissions. His Honour also held that the IPC did not need to address, under s 4.15(1)(b) of the EPA Act, specific impacts such as bushfire risk or changed rainfall, because these were “largely impacts of climate change generally”.
On appeal, the Court of Appeal unanimously upheld DAMSHEG’s s 4.15(1)(b) ground. Ward P held that the provision is “centrally concerned” with “the impacts of the proposed development on the locality”, and that “[a] causal enquiry as to the impacts on the locality was required”. Adamson JA reasoned that the climate impacts “would be disproportionately felt in the locality of the project”.
The Court of Appeal nevertheless rejected DAMSHEG’s ground under cl 2.20(1)(c) of the State Environmental Planning Policy (Resources and Energy) 2021 (NSW) (Resources SEPP). Ward P treated the IPC’s acceptance that Scope 3 emissions were “’regulated’ as well as accounted for elsewhere” as “a sufficient indication that the Commission considered there to be no need for the imposition of minimisation conditions”. Adamson JA agreed that “it cannot be inferred that the Commission failed to consider whether conditions ought be imposed on Scope 3 emissions”. Ward P and Adamson JA described DAMSHEG’s decision not to propose conditions as a “forensic choice”. Ward P held that this choice precluded DAMSHEG’s complaint, even though it was under no obligation to propose any conditions.
MACH was granted special leave to appeal to the High Court, alleging three errors in the Court of Appeal’s construction and application of s 4.15(1)(b):
- by reading s 4.15(1)(b) as requiring consideration of impacts "in the locality"
- by requiring a causal inquiry into the impacts of climate change
- by holding that climate change could be an environmental impact in the locality.
DAMSHEG filed a notice of contention arguing that the Court of Appeal should have found a breach of cl 2.20(1)(c), and at the hearing obtained leave to add a second ground. Melbourne Climate Futures and the Union of Concerned Scientists were heard as amici curiae, and two academic centres made written submissions only.
By a 3:2 majority, the High Court dismissed MACH’s appeal. Gordon, Edelman and Beech-Jones JJ held that the IPC failed to consider whether to impose conditions ensuring that all GHG emissions, including Scope 3 emissions, were minimised to the greatest extent practicable. That consideration was required by cl 2.20(1)(c) of the Resources SEPP, applied through s 4.15(1)(a)(i) of the EPA Act. The failure was material and amounted to jurisdictional error.
The Project approval has now been remitted to the NSWLEC. The NSWLEC may make orders “suspending the operation of the consent in whole or in part” and “specifying terms compliance with which will validate the consent (whether without alterations or on being regranted with alterations)”.
What the High Court ruled on Scope 3 emissions and planning approvals
Likely impacts are not confined to the locality (unanimous)
Section 4.15(1)(b) of the EPA Act requires a consent authority to consider “the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality”. All five Justices held that s 4.15(1)(b) is not confined to impacts in the locality of the development, but took different routes to that conclusion:
- Gageler CJ and Jagot J held that the words following the first comma are “not separate from the former part” and “function only to describe or explain aspects of the scope of the words before the comma”. They reflect “the practical reality that the likely impacts of many (if not most) developments will be confined to the locality”, but that reality “does not change the meaning of s 4.15(1)(b)”.
- Gordon J framed the obligation as “a two-stage analysis”. The consent authority must first identify the likely impacts of the particular development, subject to an “implied requirement of reasonableness”. It must then take those impacts into consideration, giving them weight “as a fundamental element” in the decision. Further, “impacts” may be local, national or global, depending on the nature of the development, and must be considered wherever they occur. Her Honour noted that the phrase “contains no geographical limit” and the examples given are non-exhaustive.
- Edelman J reached the same construction from the provision’s history: the predecessor provision (s 90) dealt separately with “the impact of that development on the environment” and with social and economic effects “in the locality”, and the former “was not constrained by locality”.
- Beech-Jones J agreed with the reasons of Gageler CJ and Jagot J, and of Gordon J.
All five Justices nevertheless held that the IPC had discharged the obligation. Gageler CJ and Jagot J reasoned that, because the Project would contribute to global emissions, the IPC’s consideration of the impacts of climate change globally “necessarily encompassed the required consideration of the impacts of climate change locally”. Their Honours also held that whether impacts would be “disproportionately felt in the locality” was a question of fact for the IPC, and “not a matter for the court to decide”.
Gordon J reasoned differently. Her Honour held that s 4.15(1)(b) does not require consideration of particular sub-issues, and that the EIS passages DAMSHEG relied on concerned impacts on the Project and its locality, not the impacts of the Project itself. Edelman J held that the IPC’s reasons expressly considered environmental impacts in the locality.
Gageler CJ and Jagot J (with whom Beech-Jones J agreed) declined to require consent authorities to address every sub-issue raised in an EIS or in submissions. The level of specificity is “ordinarily a matter for the consent authority”, and a submission or EIS raising an impact does not oblige the authority to consider it “at the same level of particularity”. The IPC did not have to address “each and every climate change impact across the globe”. Gordon J warned that DAMSHEG’s approach “risks rendering the scheme administratively unworkable” and “risks courts engaging in de facto merits review”.
As a result of the finding on the first ground of construction, MACH’s second and third grounds did not arise and were not decided. Ground 3 contended that the emissions of a single project cannot be shown to cause specific local climate impacts. Gordon J held that the issue “cannot and should not” be addressed, noting the “considerable force” in the submission that it would not have been appropriate to decide a question not raised below, and on which scientific evidence might have been adduced in answer. Edelman J observed that there is a “strong argument” that matters with a “likely impact” on the natural and built environments should be read broadly, to include “matters that make non-trivial contributions to a process that has such an impact”.
The Court (Gageler CJ and Jagot J, and separately Beech-Jones J) rejected MACH’s reliance on Ross v Lane, by which it argued that a failure to consider a s 4.15(1) matter could not invalidate the consent. Gordon J and Edelman J did not separately decide the point.
Scope 3 minimisation conditions must be considered (3:2)
The case turned on cl 2.20(1)(c) of the Resources SEPP. Before granting consent for mining, petroleum production or extractive industry, the consent authority must consider whether to impose conditions to ensure “that [GHG] emissions are minimised to the greatest extent practicable”.
All five Justices accepted that “[GHG] emissions” in cl 2.20(1)(c) extends to Scope 3 emissions. The division concerned whether the IPC’s reasons disclosed performance of the duty.
Ultimately, the majority found that:
- Two distinct inquiries: cl 2.20(2) directs the consent authority to consider an assessment of emissions, including downstream emissions, having regard to State and national policies. Clause 2.20(1)(c) directs it to consider minimisation conditions. The IPC’s analysis of whether Scope 3 emissions were “appropriately regulated and accounted for through broader national policies and international agreements” answered the first inquiry, not the second. As Gordon J put it, “[t]he question the Commission asked did not discharge the Commission’s obligation under cl 2.20(1)(c)”. Beech-Jones J described the obligation in cl 2.20(1)(c) as composite. In his Honour’s view, the “active intellectual process” required by s 4.15(1)(a)(i) is directed to conditions with a “sharper objective”: ensuring that all emissions, including Scope 3, are minimised to the greatest extent practicable. That is more than asking whether Scope 3 emissions are “appropriately regulated”.
- Why non-consideration was inferred: the IPC only considered minimisation conditions after putting Scope 3 to one side as accounted for overseas pursuant to the initial assessment inquiry under cl 2.20(2). The IPC then dealt expressly with Scope 1 and 2 emissions in detail. Given Scope 3 was 98% of emissions, its silence supported the inference that it never considered Scope 3 conditions. Gordon J also noted that neither MACH nor the NSW Department of Planning and Environment (the Department) proposed any Scope 3 conditions, and the IPC did not identify any itself. Her Honour further observed that “scopes” is an accounting concept, and that “[t]he impact of [GHG] emissions is the same, regardless of how they are categorised”. In support, her Honour referenced the recent advisory opinions on climate change of the International Court of Justice (2025) and the International Tribunal for the Law of the Sea (2024), noting that there is no reference to emissions “scopes” in the Paris Agreement or any other international law.
- The error was material: Gordon J, with whom Beech-Jones J agreed, held that there was a “realistic possibility” that, had the IPC turned its mind to the question or sought submissions, “conditions to minimise Scope 3 emissions could have been imposed”. It was then for MACH to establish that an approval without Scope 3 conditions “was inevitable. It did not, and could not, do so”. Edelman J reached the same result through “practical injustice”, in the sense that the IPC’s reasoning “could have been different had consideration been given”, which is built into a ground of review concerned with mandatory relevant considerations.
The duty is to consider conditions, not necessarily to impose them. The vice identified by the majority was the absence of any engagement with the question, not the absence of Scope 3 conditions themselves. Gordon J and Beech-Jones J inferred non-consideration from the reasons as a whole. DAMSHEG bore the onus on the balance of probabilities. Edelman J went further. His Honour held that the duty was to manifest consideration in the IPC's reasons, which it had a statutory duty to give.
In Mullaley Gas and Pipeline Accord Inc v Santos NSW (Eastern) Pty Ltd [2021] NSWLEC 11, the IPC’s approval of the Narrabri Gas Project was upheld because it expressly considered Scope 3 minimisation conditions and declined them as outside the proponent’s control. Here, by contrast, Gordon J and Edelman J both relied on the Court of Appeal’s observation that “[t]here was plainly much more that the Commission could have done”. While appropriate conditions are a matter for the IPC and beyond the scope of the High Court’s consideration on appeal, Gordon and Edelman JJ endorsed Adamson JA’s observation in the Court of Appeal that the Commission could have imposed conditions such as requiring the coal to be washed before it is exported, limiting the coal that is exported to coal of a certain high calorific content or requiring that the coal be exported only to those countries which have nationally determined contributions (NDCs) under the Paris Agreement.
Proponents, not objectors, must propose mitigation measures
The majority rejected the Court of Appeal’s view that DAMSHEG’s “forensic choice” not to propose conditions precluded its challenge. Gordon J held that the EPA Act “placed responsibility on MACH, as the development proponent, to propose conditions to mitigate adverse environmental effects”, and “[t]here was simply no obligation on DAMSHEG to propose such conditions”. Beech-Jones J added that “[t]he public interest loomed large over the exercise of the Commission’s function”, so that the IPC could not confine itself to the contentions of the interested parties.
The dissent and other points
Gageler CJ and Jagot J dissented and would have allowed the appeal brought by MACH. Their Honours agreed with the majority that cl 2.20(1)(c) of the Resources SEPP covers Scope 3 GHG emissions. They also agreed that it requires specific consideration in every case. However, they differed on the interpretation of the IPC's reasons. Reading the IPC’s reasons as a whole, their Honours inferred that the IPC was satisfied that, given global cooperation under the Paris Agreement, the imposition of Scope 1 and 2 conditions was enough and that Scope 3 conditions were therefore not necessary. On that reading, “[i]t cannot be inferred that the Commission failed to comply with s 2.20(1)(c)”.
The NSW Government’s response to the MACH Energy High Court decision
In a ministerial release on 7 October 2026, the NSW Government said it will carefully consider the judgment and engage with MACH, which has indicated it will pursue its options. It noted that the mine continues to operate under a separate approval until 2032, and that the decision does not prevent the expansion being reconsidered or coal mine extensions being approved. It pointed to the recent Hunter Valley Operations approval as an example of detailed Scope 3 consideration.
A contrast: Scope 3 conditioning at Hunter Valley Operations
A week before the High Court’s decision, on 30 September 2026, the IPC approved the Hunter Valley Operations (HVO) North and South continuation projects, allowing open cut mining to continue at HVO North to 2045 and at HVO South to 2042. Scope 3 emissions from HVO are estimated at approximately 98.1% (794 Mt CO₂-e) of total emissions.
The IPC actively considered Scope 3 mitigation in the HVO approval:
- It considered Scope 3 alongside other climate impacts: the IPC accepted that Scope 3 emissions are not counted towards NSW targets and are outside the applicant’s direct operational control. It nevertheless treated them as relevant to the projects’ climate change impacts. It also declined to discount them on the basis that other suppliers would fill the gap if the projects were refused.
- It sought submissions on an export destination condition first: the IPC floated a condition limiting exports to jurisdictions that were parties to the Paris Agreement and complying with their emissions targets, regulations and policies. It invited comment and sought the advice of the NSW Department of Planning, Housing and Infrastructure (DPIE) (previously, the Department) on workability, enforceability and unintended consequences.
- It imposed a Scope 3 Management Plan: conditions B4 to B8 of the HVO North consent require the development of a plan, to the Planning Secretary’s satisfaction, describing protocols so that “reasonable and feasible measures” are implemented to ensure exported coal is consumed only in jurisdictions that are parties to the Paris Agreement, or that the Planning Secretary considers have policies for reducing GHG emissions. The plan’s stated aim is to minimise Scope 3 emissions “to the greatest extent practicable”, mirroring cl 2.20(1)(c) of the Resources SEPP. The plan must be revised every five years for consistency with Commonwealth trade and emissions policy. Commonwealth policy prevails if there is an inconsistency, and the Planning Secretary may release the applicant if other NSW or Commonwealth legal mechanisms cover the field.
This approach reflects the High Court’s central point: the duty is about process, not outcome.
The HVO Scope 3 conditions are modest and focus on process. Most major coal-importing countries are party to the Paris Agreement, so a destination limit of this kind may do little to restrict where coal is sold or to reduce the volume of Scope 3 emissions. The conditions also operate subject to Commonwealth trade and emissions policy and can be released if other legal mechanisms cover the field. This approach responds to concerns about workability and jurisdiction.
In any case, the HVO approach is likely to be the template for any reconsideration of the Mount Pleasant consent on remittal.
What the High Court's Scope 3 decision means for future NSW resource project approvals
This is the High Court’s first decision on how Scope 3 emissions must be dealt with by an NSW consent authority in considering a development application for a resources project. Whilst a highly anticipated judgment that has attracted much attention, it is ultimately an administrative law review assessing whether a consent authority validly discharged its statutory obligations under NSW’s planning law framework.
The decision clarifies what the relevant NSW planning instruments require a consent authority to consider, and how a Court may interpret whether a consent authority’s reasons demonstrated that it had discharged its statutory considerations. The practical consequence is that the adequacy of a consent granted under the NSW planning framework will, where the Resources SEPP is engaged, necessitate appropriate consideration and recorded reasons extending to Scope 3 and minimisation conditions.
Key developments to monitor |
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Remittal to the NSWLEC The NSWLEC will now consider appropriate orders under Division 3 of Part 3 of the Land and Environment Court Act 1979 (NSW). These include suspending the consent and specifying terms that would validate it, either as it stands or by regranting it with alterations. Any path to validation is likely to require the cl 2.20(1)(c) question to be properly addressed, and Scope 3 minimisation conditions could follow. |
Policy and legislative change The NSW Government is examining the judgment and may consider a response to amend cl 2.20 or issue guidance on Scope 3 conditions to provide further clarification. |
Guidance on mitigation measures Gordon J referred to the NSW EPA’s Greenhouse Gas Mitigation Guide for NSW Coal Mines (March 2026) in her Honour’s reasons. This guide and the HVO conditions are likely to be considered reference points for what are practicable minimisation conditions. |
Interaction with climate disclosure As mandatory climate-related financial disclosure (CRFD) under the Corporations Act 2001 (Cth) extends to Scope 3 emissions, Scope 3 conditions such as export limits or offset obligations will become relevant to companies’ disclosures on emissions, transition plans and climate-related risks. This includes not only companies that are captured as reporting entities under the mandatory CRFD regime but also supply and value chain entities that will be required to provide relevant information to reporting entities. |
What resource project proponents should do following the High Court’s decision
Now is a good time for those engaged in projects with significant GHG emissions to:
- Check pending approvals: projects currently under assessment, and significant modifications, should be reviewed against the High Court’s decision.
- Review application documents and consider measures to address Scope 3 mitigation, not just quantification: an EIS should identify practicable measures to minimise Scope 3 emissions (such as export destination limits, product quality, offsets and end-use requirements) and explain which are proposed and why others are not practicable.
- Factor Scope 3 conditions into commercial planning: conditions such as those imposed on HVO may affect offtake arrangements, customer mix and offset procurement, and should be considered early, including in financing and transaction due diligence.