NSW tightens clean air regulation for industry

Claire Smith, Lauren Smith
12 May 2022
Time to read: 5 minutes

Businesses have until 3 June to comment on proposed reforms imposing stricter air quality standards on older industrial premises, and new design controls on equipment used in the storage and handling of volatile organic liquids in NSW.

A more level playing field for industry, along with cleaner air, are the goals of draft laws currently open for public consultation from the NSW Environment Protection Authority (EPA): the draft Protection of the Environment Operations (Clean Air) Regulation 2022 and an accompanying Regulatory Impact Statement (RIS).

Two important changes have been proposed. First, air emission standards for older industrial premises that commenced operations between July 1979 and July 1997 would be tightened. Secondly, industry would need to comply with more stringent controls for tanks and loading plant used in the storage and handling of volatile organic liquids.

While the regulation does not dictate how these standards are achieved, industries caught by the proposed changes will likely need to upgrade their technology, plant and equipment to comply. The RIS outlines the expected costs to industry and ultimately the net benefits to be achieved through better health and environmental outcomes. The new regulation must be made by 1 September 2022, and public submissions will be accepted until 5pm Friday 3 June 2022.

The role of the Clean Air Regulation

The Clean Air Regulation is a regulatory tool used along with the Protection of the Environment Operations Act 1997 (POEO Act) and the Protection of the Environment Operations (General Regulation) 2021 to reduce air pollution in NSW. It seeks to improve regional and local air quality by setting standards for the emission concentration of pollutants from a range of sources including activities, fuels, equipment and plant. NSW is a signatory to the National Environment Protection (Ambient Air Quality) Measure which guides air quality through setting standards for priority pollutants.

According to the RIS, NSW broadly meets national air quality standards except during extreme events such as bushfires. However there are occasional exceedances of national standards for some pollutants of concern such as airborne particles PM10 and PM2.5 and ozone. It says air pollution costs approximately $6.4 billion in health costs per year in the NSW greater metropolitan region.

The Clean Air Regulation regulates the certification of wood heaters, controls 'backyard burning' of wood, rubbish and other vegetation; promotes cleaner motor vehicles and cleaner fuels; includes emission standards for industrial activities and plant and controls the storage/management of volatile organic liquids by imposing design and safety controls on equipment.

Air impurities from activities and plant

The Clean Air Regulation sets standards for maximum emission concentrations for activities and applies theses also to individual emission points. The emission standards which apply to scheduled premises differ depending on the date the industrial premises was commissioned or significantly modified, upgraded or replaced. Historically, the more recent the operation the more stringent the standard applied because of the emission reduction technology available for newer operations. For non-scheduled premises, the Clean Air Regulation sets emission standards for smoke and solid particles.

The Draft Regulation will introduce more stringent air emission standards for Group 3 and 4 scheduled premises, being those premises which commenced operations between 1 July 1979 and 31 July 1997. The changes will be implemented in two stages:

  • From 1 July 2025: meet the air emission standards applying to Group 5; and
  • From 1 July 2030: meet the air emission standards applying to Group 6.

The move follows previous reforms which required the oldest scheduled premises in NSW (Group 1 and 2), to meet stricter emission standards from 2007.

The proposed changes will affect approximately 100 licensed premises with 260 individual air emission sources. According to the RIS the changes would require a Group 3 or 4 operator to reduce:

  • its current particulate matter (PM) emissions concentration standard by 60% by July 2025 (to meet Group 5 standard);
  • its current PM emissions concentration standard by 80% by July 2030 (to meet Group 6 standard);
  • its current oxides of nitrogen (NOx) emissions standard of concentration by 20% by July 2025 (to meet the Group 5 standard); and
  • its current NOx emissions standard of concentration by greater than 70% by July 2030 (to meet the Group 6 standard).

For those operators which cannot meet the stricter conditions, there is an option for alternative emissions limits to apply through conditioning of Environment Protection Licences.

The proposed transition of certain scheduled premises to Group 5 and Group 6 emission standards is expected to achieve an estimated $665.6 million net benefit for NSW over the relevant 20 year period analysed in the RIS. These gains are due to health improvements resulting from reduced emissions.  Emissions would still fall if the Clean Air Regulation is retained in its current form. This is due in part to the expected closure of power stations and upgrade of older plant in some premises required under the Clear Air Regulation. The proposed reforms in the Draft Regulation are however expected to see further emission reductions, relative to the status quo.

The public consultation material notes that many of the Group 3 and 4 scheduled premises have already upgraded their equipment through licence condition requirements or pollution reduction programs. For those premises which don't meet the standards, changes will come at a cost. While the Draft Regulation does not dictate how an operator must achieve the reductions, upgrades to technology, plant and equipment will be necessary.  The RIS estimates that the proposed amendment will cost approximately $221.8 million for NSW over the 20 year period analysed. The cost is to be borne by industry, or the consumer if it can be passed on. Although the RIS notes that the costs are considerable, the changes are preferred over the current regulation because the benefits will ultimately offset these costs.

Storage tanks, loading plant and tank vehicles

Part 6 of the Clean Air Regulation manages volatile organic liquids (VOLs) by imposing design and/or safety controls on plant and equipment used for the storage and handling of VOLs. The effective management of these processes is key to preventing the evaporation of VOLs and the release of vapours as Volatile Organic Compounds (VOCs) into the air. The controls affect a range of industries such as petroleum, petrochemical, chemical and bulk storage industries.

The Draft Regulation will implement stricter controls for large storage and loading plant and small loading plant. For example, for large tanks that store VOLs commissioned on or after 1 July 2024, the tank will need to have a mechanical shoe primary seal, internal floating roof or external dome floating roof and rim mounted secondary seals.  Relevant operators should consult the detail of the Draft Regulation to understand the nature of all upgrades or new tank/plant requirements. Separate controls will apply to existing tanks commissioned before 1 July 2024 and new tanks commissioned after this date. A transition period is proposed for the introduction of controls for existing tanks and plant.

Under the current Clean Air Regulation controls for large loading plant, small storage tanks and large tank vehicles apply within the Sydney Metropolitan Area (SMA). Controls for large storage tanks apply within the SMA and also Newcastle and Wollongong areas.

The Draft Regulation will expand the geographic application of these controls. Controls regulating large storage tanks will apply to the SMA, Wollongong and Newcastle areas as well as the additional local government areas of the Blue Mountains, Central Coast, Cessnock, Kiama, Lake Macquarie, Maitland, Port Stephens, Shellharbour, Shoalhaven, Wingecarribee and Wollondilly. This broader region will also be subject to controls relating to small storage tanks, large loading plant and large tanker trucks, however their application will occur in a staggered manner.

According to the public exhibition materials the majority of storage tanks, loading plant and tank vehicles already comply with the control requirements. For those facilities that require an upgrade of equipment, the EPA estimates that the aggregate cost is $190,000, however industry costs are likely to be offset by the savings realised from recovered fuel products.

Implications for industry in NSW

Affected industries should consider the Draft Regulation carefully with their technical consultants to understand whether they already comply with the new requirements, and if not, how this might be achieved in the timeframe presented. The EPA acknowledges that many businesses will already meet the new standards, however for those which don't, it could be costly. The changes proposed for scheduled premises will mean industrial operators are on a more level playing field, as older and newer scheduled premises are already held to a higher emissions concentration standard. Businesses should review the RIS and Draft Regulation carefully and consider providing a submission to the EPA on the proposed changes by the 3 June 2022 deadline.

Get in touch

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.