At the Australian Hydrogen Conference (West) 2022 in December, the Hon. Minister Alannah MacTiernan announced the WA Government’s release of the “Renewable Hydrogen Guidance: land tenure for large scale renewable hydrogen projects” and “Western Australia's Renewable Hydrogen Policy: consideration of highest and best use”.

The new policy and guidance outline the WA Government’s decision-making processes relating to access and use of Crown land in WA for renewable hydrogen project proponents.  In particular:

• the new guidance outlines the processes that apply to obtaining land tenure across the life cycle of renewable hydrogen projects, including for investigation/feasibility studies, project development and infrastructure; and
• the new policy outlines the processes that apply to managing situations where there are competing projects in respect of Crown land suitable for large-scale renewable hydrogen projects. This includes competition between large-scale renewable hydrogen projects or between large-scale renewable hydrogen projects and mining or other projects (such as pastoral, tourism or carbon farming projects).   

Key takeaways

The new policy and guidance are useful documents for any large-scale renewable hydrogen project proponent seeking land tenure in WA. 

The key takeaways arising from the policy and guidance are that it is important that project proponents in the early stages of project planning:

1. identify other parties that could have an interest in the proposed site, including Traditional Owners, existing tenure holders under the Land Administration Act 1997 (LAA), mining and petroleum tenure holders, as well as other proponents of hydrogen projects and other parties with an interest in the site.  Early engagement with the Department of Planning, Lands and Heritage (DPLH) can help identify interest holders and provide advice on key issues relevant to a project and the selected area of Crown land;
2. consider the project’s capacity to provide social and economic benefits to Aboriginal people and communities in the long term.  Proponents are encouraged in the new guidance to work with native title parties in the development of projects, including the development of joint ventures and other economic opportunities for Aboriginal people;
3. engage early and meaningfully with interest holders, aiming for mutually beneficial agreements and, where there are existing legal or statutory interests over the land, receiving written consent from those interest holders;
4. consider engaging Government agencies to assist with negotiation of consents or agreements; and
5. understand that the Highest and Best Use Assessment will only be available to project proponents where they can demonstrate that engagement with interest holders has been carried out with all best efforts and in good faith.

The release of the new policy and guidance is timely given:

• the increasing demand for access to Crown land in WA for large-scale project development;
• the progress of large-scale renewable hydrogen projects in WA towards commercialisation, as well as the wider efforts to diversify and decarbonise the State’s economy; and
• the widely anticipated introduction of the proposed diversification lease reforms in early 2023.

For more information on land acquisition and assembly in relation to hydrogen projects, and renewable projects more broadly, watch our Clean Energy and Decarbonisation Masterclass here.

Recommended process for hydrogen proponents

It is widely understood the LAA recognises land access for the following two stages:

• feasibility and investigations (such as geotechnical studies, soil testing, flora and fauna surveys etc) facilitated under section 91 licences; and
• construction and operation facilitated under section 79 leases and section 144 easements.  Section 79 leases allow a proponent to be granted exclusive tenure for purposes approved by the Minister for Lands.  Crown easements are used to establish infrastructure on Crown land, such as power lines, roads, transmission lines etc and are often sought in conjunction with Crown leases.

The new guidance provides useful Government recommendations about the processes that will be followed for granting land tenure for renewable hydrogen projects across the investigation / feasibility and implementation phases. 

The new guidance addresses both the existing tenure frameworks under the LAA and, most usefully, also addresses policies and processes that are not set out in the LAA.  These are particularly important given that, as noted in the guidance, each Minister maintains discretion in decision making under the various statutes and legislative powers that apply. 

Section 91 licences

Written consent from native title holders or registered claimants, any existing lessees of the land and other interest holders is an expectation of Government before a section 91 licence will be granted.

Where the proposed section 91 licence intersects granted mining, petroleum or geothermal energy tenure, consent from the Minister for Mines and Petroleum (on advice from the Department of Mines, Industry, Regulation and Safety (DMIRS)) is required under section 91(5) of the LAA.  The new guidance recommends early engagement with DMIRS to mitigate land use conflict over temporary infrastructure placement.  Where the proposed section 91 licence does not intersect granted tenure, DMIRS must still be engaged to provide advice on any impact on access to State resources.

The new guidance further notes that the grant of a single proponent (exclusive) section 91 licence may also be considered in specific circumstances.  Historically, exclusive section 91 licences have seldom been required or granted for large-scale projects.  The new guidance outlines when the Minister for Lands may consider a grant of an exclusive section 91 licence:

• the maximum area for exclusivity is 12,000 square kilometres, but with flexibility to provide exclusivity beyond the maximum if a justifiable reason is provided;
• consent is obtained from relevant interest holders;
• free and informed consent is obtained from the native title party;
• section 91(5) LAA approval is obtained if the area intersects with tenure, or otherwise DMIRS’ agreement;
• a development plan is submitted with the application;
• the licensee demonstrates an ongoing requirement for the land through annual reporting;
• the licence endures for a maximum period of two years plus a two-year extension;
• exclusivity for section 91 licences would only be from competing hydrogen projects; and
• on referral of a section 91 LAA licence application from DPLH to DMIRS, a file notation area will be made public.

An exclusive section 91 licence may be a valuable tool for a hydrogen proponent where the proposed hydrogen project could not co-exist with other projects.

Final land tenure for a renewable hydrogen project

Once granted a section 91 licence, a hydrogen project proponent may undertake the necessary feasibility and investigations in preparation for an application for a section 79 lease.  Such investigations assist identification of the disturbance footprint, locations for infrastructure and access requirements for the proposed section 79 lease. A hydrogen project proponent may also be granted a section 88 option to lease agreement.

An option to lease is a contractual arrangement which provides security to a proponent that the Minister for Lands will grant long term tenure over an area subject to satisfaction of conditions.  It is usually granted after receipt of a project definition document and feasibility works are undertaken to demonstrate the viability of the hydrogen project. 

The new guidance also notes that the grant of final land tenure is subject but not limited to:

• a registered Indigenous Land Use Agreement with the native title holders or registered claimants, to which the State is a party and on terms acceptable to the State;
• obtaining written consent from:
  • the Minister for Mines and Petroleum under section 16(3) of the Mining Act 1978 (WA) (Mining Act) (on advice from DMIRS).  Similar to the grant of a section 91 licence, early in engagement with DMIRS is recommended;
  • existing lessees of the land; and
  • other interest holders.

Proponents are advised to choose an area of low prospectivity and be mindful of existing mining and petroleum tenements and operations when selecting locations for project infrastructure to reduce land use conflict.

Proposed diversification lease

The proposed diversification lease will enable a holder to conduct single or multiple land uses on a large area of Crown land where the primary land use can coexist with other land uses.  A hydrogen proponent could pursue a diversification lease following the completion of investigative and feasibility studies, including determining the footprint and land access requirements.

An existing LAA lessee could surrender its lease in whole or in part for a diversification lease, but the conditions of the diversification lease could still allow that lessee to use the site for other purposes, like cattle grazing, via a sublease, provided the purpose is compatible with the renewable hydrogen project.

The Minister for Mines and Petroleum has an approval role under section 16(3) of the Mining Act for any Crown land tenure change.  The new guidance suggests that the interaction between the Mining Act and diversification leases will be similar to that of pastoral leases.

See our articles “Diversification leases policy release for public comment in WA” and “WA Government diversification lease policy should be tough on land use” for further information on diversification leases.

Exemption under section 19 of the Mining Act

The new policy notes that there is an option for the Minister for Mines and Petroleum to grant a temporary exemption over a defined area of Crown land pursuant to section 19 of the Mining Act which would preclude new applications for mining tenements for an initial period of two years. Hydrogen proponents would therefore gain time required to undertake necessary feasibility and geotechnical studies.  The new policy notes the section 19 exemption can only be applied to Crown land not currently subject to any granted mining tenure or pending applications. 

Co-existence is priority

Where multiple proponents have an interest in the same area of Crown land, the WA Government has confirmed its preference is for co-existence, which could include sharing the same land at the same time or sequential use of the same land.  According to the new policy and guidance, co-existence will require project proponents to identify and consider the constraints that may arise because of other interests and land uses at an early stage and engage with such existing interest holders with a view to reaching a mutually beneficial agreement.  The new policy and guidance provides some examples of what co-existence could look like at different project stages, including:

• at the feasibility stage: separate locations of infrastructure and could involve sharing of access to that infrastructure;
• at the implementation stage: the grant of separate tenure  where significant infrastructure (including solar panels and wind turbines) is to be located and possibly sequential use of the same land.

The Minister for Mines and Petroleum, and other relevant decision-making Ministers, will receive advice on relevant matters from the Renewable Hydrogen Ministerial Taskforce, established by the WA Government and to be supported by a Senior Officers Group. The Senior Officers Group will present any agreed or other co-existence arrangements to the Ministerial Taskforce, which includes the relevant Ministers.  Although the decision-making Minister will have regard to any co-existence arrangement recommended by the Ministerial Taskforce, the decision-making powers of the Minister remain unfettered. 

Highest and best use assessment for competing projects

The Senior Officers Group will also present to the Ministerial Taskforce when a co-existence agreement cannot be reached, only after all efforts for good faith negotiations have been made.  Notably, the new policy and guidance has for the first time publicly announced a “Highest and Best Use Assessment” to be carried out by the Senior Officers Groups and considered by the Ministerial Taskforce to recommend the preferred project to the decision-making Minister(s).  Once again, the Ministerial Taskforce can make recommendations only and such recommendations will not fetter the decision-maker’s powers.  Project proponents must be able to demonstrate the best endeavours have been made to come to an agreement before a Highest and Best Use Assessment will be made.

A Highest and Best use Assessment will not be considered where co-existence arrangements cannot be reached between existing granted rights and interests (e.g. native title holders, mining, petroleum and geothermal tenure and pastoral leases) and a hydrogen project, reinforcing the importance of early and meaningful engagement with existing interest holders.  

Where a Highest and Best Use Assessment is carried out, it will be based on, among other things, each project proponent’s record for genuinely engaging with Aboriginal people and communities, its capacity to provide social and economic benefits to Aboriginal people and communities in the long term, and its previous record on respecting and protecting Aboriginal culture and heritage.  For more on negotiation renewable energy projects with Native Title holders, see “Clean Slate: setting the standard for negotiating renewable energy projects with Native Title holders”.  

Further, as part of the application process, project proponents will be required to submit information on the following, which will be considered in making the Highest and Best Use Assessment:

• alignment to Government strategic policy;
• interaction of tenure types and potential for co-existence;
• financial capability;
• value and opportunity for the State;
• size and impact on the Crown land concerned;
• infrastructure and servicing;
• ESG responsibilities;
• local content;
• timeframes;
• regulatory applications;
• synergies with other industries; and
• consent of existing interest holders.