Increased greenhouse gas emissions matter in mine development

We've been following the activities of the Climate Action Network Australia (CANA) as we monitor climate change risk (see our previous Alerts). Along with other green groups, it has now successfully argued that increased greenhouse gas emissions caused by burning brown coal in a power station are a relevant planning matter when considering planning scheme amendment to facilitate a mine expansion in Victoria.

The decision in Australian Conservation Foundation v Minister for Planning [2004] VCAT 2029 (29 October 2004) is an important one both for those concerned about climate change risk, and for Victorian planning law.

The case brought by Australian Conservation Foundation, WWF Australia, Environment Victoria and the Climate Action Network Australia highlights the importance of considering the indirect effects of a development, but how remote those impacts can be is still unclear. We suspect that this case will prove influential in future planning cases.

The Hazelwood mine and power station in Victoria's Latrobe Valley has operated for about 40 years using brown coal. Existing brown coal mines serving the power station are not expected to produce a reliable coal supply beyond 2009, so the owner of the power station wanted to develop an additional coal field to enable the power station to continue to operate until 2031, called West Field.

To mine West Field, the Morwell River and Strzelecki Highway must be diverted, and these changes and other aspects of the project require the grant of various licences, permits and approvals, including a Planning Scheme Amendment (PSA) to the Latrobe Planning Scheme.

Victoria's Minister for Planning approved terms of reference for a panel inquiry to be conducted under the Planning and Environment Act 1987 (Vic) and the Environment Effects Act 1978 (Vic), expressly excluding from consideration matters relating to greenhouse gas emissions from the power station.

The applicant green groups made submissions on the environmental impact of greenhouse gases generated by continuing to burn brown coal at the power station beyond 2009. The Panel stated that it would not consider matters outside the terms of reference given to it by the Minister, effectively ruling that in making its assessment it would not consider the greenhouse gas impacts of burning coal won as part of the West Field Project.

First, the Tribunal decided that the Minister for Planning cannot give the Panel terms of reference in its role under section 24 of the Act. On the other hand, the Panel does still have some constraints on how it performs its tasks. The Panel should consider relevant submissions, and the P&E Act and the content of the PSA together form the terms of reference for considering submissions about the amendment.

There is a two-part test to determine the scope of considerations for the Panel:

• A submission concerning a PSA will only be relevant if it raises planning issues, to be ascertained by reference to the P&E Act and the PSA. Matters outside this scope are not relevant considerations in the preparation, consideration, adoption or approval of the amendment, and must be ignored.
• The submission must be "about an amendment", which includes submissions relating to indirect effects of the amendment, if there is a sufficient nexus between the amendment and the effect. One way of assessing the nexus is to ask if the effect may flow from the approval of the amendment; and, if so, whether, having regard to the probability of the effect and the consequences of the effect (if it occurs), the effect is significant in the context of the amendment.

The test has some similarities with the requirement under the Commonwealth's Environmental Protection and Biodiversity Conservation Act that "all adverse impacts" be considered, which, according to the recent Full Federal Court decision in the Nathan Dams case, means direct or indirect effects and is not confined to direct physical effects. Both these propositions applied to the test in Victoria's P&E Act, said the Tribunal (as we suggested they might in our Alert on the Nathan Dams case).

Using this test, the Tribunal held that there is a sufficient nexus between the approval of the PSA and the environmental effect of greenhouse gases that are likely to be produced by the power station's operations beyond 2009. The PSA will make it "more probable that the Hazelwood Power Station will continue to operate beyond 2009; which, in turn, may make it more likely that the atmosphere will receive greater greenhouse gas emissions than would otherwise be the case; which may be an environmental effect of significance." By failing to consider the green groups' submissions, the Panel failed to consider all relevant matters.

It is likely that - as we have previously suggested - groups such as CANA will explore various types of legislation as potential means of addressing climate change. Of course, the decision might still be appealed, but until then, it gives a fillip to that further exploration.

Does this decision bind tribunals or courts in other states? No, but as with the case it relied upon - Nathan Dams - the reasoning it uses will be persuasive. This means that assessments of developments and projects in other states might end up looking at indirect effects of a project, making it more likely that potential future greenhouse gas emissions will be a relevant planning issue.

Contrary to some media reports however, it does not mean that all projects in Victoria will now have to consider greenhouse gas emissions before being approved. It will depend on the facts and circumstances of each case. The key will be to ascertain what the planning issues are, having regard to the framework of the Planning and Environment Act, and then determine if there is a sufficient nexus between the proposal and the environmental effect.

The decision also means that while the Minister for Planning may limit the scope of a panel under the Environment Effects Act, or an advisory committee under the Planning and Environment Act, when a Panel is considering a Planning Scheme Amendment, terms of reference will have no legal effect and the Panel will not be bound by them.

If you would like any further information or an individual briefing at no charge on any of the issues we discuss in this Alert, or the implications of climate change on your business, please contact any of our experts listed below.