Expanding the NT Offsets Framework: policy guidance on GHG emissions and biodiversity offsets

Margaret Michaels, Karen Trainor, Nicole Besgrove and Madeleine Grant
26 Oct 2022
Time to read: 5 minutes

The NT Government continues taking steps towards meeting its net zero emissions by 2050 target with the release of the Greenhouse Gas Emissions Offsets Policy and Technical Guidelines, and Draft Biodiversity Offsets Policy and Guidelines which form part of the NT Offsets Framework.

We have previously examined the NT Offsets Framework which adopts a target-based implementation model designed to achieve a Territory-specific approach to offsets aimed at improved environmental outcomes at landscape or regional scales. The NT Government has committed to an Offsets Framework comprising of: 

Triggering offset requirements

In the Territory, offsets are predominantly governed under the Environment Protection Act 2019 (NT) (EP Act) and can be required (where necessary) for development proposals that have undergone an environmental impact assessment or are subject to regulatory approval under another Act prescribed by the Environment Protection Regulations 2020 (NT). As a matter of corporate responsibility or social licence to operate, a proponent may provide voluntary offsets to compensate for the impact their development may have.

The EP Act requires proponents of development proposals which may have a significant impact on the environment to mandate the following approaches, in hierarchical order:

  • ensure that actions are designed to avoid adverse impacts on the environment;
  • identify management options to mitigate adverse impacts on the environment to the greatest extent practicable; and
  • if appropriate, provide for environmental offsets for residual adverse impacts on the environment that cannot be avoided or mitigated.

The first two approaches must be exhausted before an offset can be considered. Accordingly, offsets must be considered as a last resort to compensate for impacts of a development proposal that cannot be avoided or mitigated.

Greenhouse Gas Emissions (GHG) Offsets Policy and Technical Guidelines

GHG emissions offset requirements can be applied by conditions imposed on a statutory environmental authorisation under NT legislation, such as Environmental Approvals under the EP Act or Environment Management Plans under the Petroleum (Environment) Regulations 2016 (NT). Emissions may be identified through a distinct or “one off” emitting event such as land clearing or over the life of a development. Residual emissions include any emissions which remain after all reasonable steps have been taken to avoid or mitigate the production of emissions.

We previously examined the draft consultation GHG Offsets Policy and Technical Guidelines released in September 2021 which was developed to assist with the transition of the Territory to a low carbon economy and to support the achievement of the target of net zero emissions by 2050 as set in the NT Government’s Delivering the Climate Change Response: Towards 2050 A Three-Year Action Plan for the Northern Territory Government.

Approved on 4 August 2022, the GHG Offsets Policy and Technical Guidelines (GHG Offsets Policy), is a statutory instrument and is intended to be used as a guide to inform decision makers, assessing entities (such as the Northern Territory Environment Protection Authority), proponents and relevant government departments on the consistent, transparent and appropriate use and delivery of emissions offsets under Territory legislation.

While the final version of the GHG Offsets Policy, is for the most part similar to the draft consultation version, a key difference is the removal of indirect emissions offsets as a category of emissions offsets available to satisfy an emissions offsets approval condition. Indirect emissions offsets were proposed in the draft consultation version as offsets delivered by contributing funding towards research and development intended to support emissions abatement. Currently, such a scheme has not been implemented in any other Australian jurisdiction and has been removed from the final version of the GHG Offsets Policy.

The GHG Offsets Policy provides that, where emissions offsets are considered appropriate, proponents will be required to submit an emissions offset plan for approval that outlines the emissions offsets proposed to reduce, remove or capture emissions. Emissions offsets must be delivered using legitimate emissions offsets including:

  • Australian Carbon Credit Units (ACCU) administered and regulated by the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth); or
  • alternative emissions offset units governed by an Australian framework such as the Commonwealth Climate Active Neutral Standards or an international framework.

Notably, delivery by emissions offset units governed by an international framework is not currently permitted under the Safeguard Mechanism, which is the Commonwealth emissions offsets scheme that typically applies in conjunction to other State and Territory specific frameworks.

The NT Offsets Framework applies in addition to the Commonwealth Safeguard Mechanism, under which large emitting facilities may be required to set a baseline limit on the amount of emissions they produce. Consequentially, some emissions may be subject to offset requirements under both schemes. To prevent duplication in offset delivery between the respective schemes, the GHG Offsets Policy provides that any emissions that are offset to satisfy the Commonwealth Safeguard Mechanism may be subtracted from the amount of emissions required to be offset by an NT emissions offset approval condition.

Draft Biodiversity Offsets Policy and Technical Guidelines

Along with the release of the GHG Offsets Policy, the NT Government has released a draft Biodiversity Offsets Policy and Technical Guidelines (draft Biodiversity Offsets Policy) for consultation which is designed to compensate for impacts on biodiversity at one site by requiring conservation and/or restoration activities elsewhere, and will also form part of the NT Offsets Framework once finalised. The draft technical guidelines inform the interpretation and application of the draft policy by providing additional detailed advice on how to meet the requirements of the policy.

Applying a biodiversity offset is an option that may be available to proponents to address residual impacts to biodiversity associated with a proposed development. As with GHG emission offsets, biodiversity offsets can only be considered as a last resort, where all reasonable steps have been taken to avoid and mitigate potential impacts to the environment.

Where biodiversity offsets are determined appropriate, the decision-maker can require significant residual impacts of the proposed development to be offset as a condition of the applicable statutory environmental approval (a biodiversity offset approval condition). Where such a condition is imposed, the proponent must develop a biodiversity offset plan outlining how offsets will be designed and delivered in accordance with the policy and the NT Offsets Framework, for approval by the relevant decision-maker.

The general approach is for biodiversity offsets to contribute to a net gain in the ecological condition of natural habitats in the Territory by supporting actions or activities that:

  • contribute to measurable positive outcomes in the condition of natural habitats, in habitats that are most relevant to the significant residual impact associated with the development, and
  • address priority transformative threats to the value or values that are the subject of significant residual impact, and the habitats in which they occur.

The draft Biodiversity Offset Policy proposes the following as eligible biodiversity offset activities:

  • direct habitat management activities: such as landscape-scale management of priority threats;
  • alternative direct measures: such as area-base protection of habitat or translocation; and
  • other compensatory measures: such as research, engagement and education.

Offsets may also be required under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) where a proposed development will have a residual adverse impact on a matter of national environmental significance after avoidance and mitigation measures are taken. As provided for in the NT Offsets Principles, the NT Government intends to prevent any duplication in the offsets required under the Northern Territory and Commonwealth schemes for developments in the Territory.

It is understood that the NT Government is working with the Commonwealth Government to enable the draft Biodiversity Offset Policy (once finalised) to be used to inform offsets required in the Territory under either the NT Offsets Framework or the EPBC Act. This will require the Commonwealth Government to accredit the draft Biodiversity Offsets Policy once finalised as meeting the offset requirements under the EPBC Act. The draft Biodiversity Offsets Policy provides the following with respect to the application of the Policy should it be accredited by the Commonwealth Government and where it is not accredited:

  • Commonwealth Government accredits the Policy - all offsets in the Territory required by either Territory legislation or the EPBC Act can be delivered in accordance with this Policy; or
  • Commonwealth does not accredit the Policy – any offsets required under the EPBC Act should be delivered in accordance with the Commonwealth Government requirements, but also in a way that aligns with the Biodiversity Offsets Policy to the greatest extend possible. Additional or different offsets in relation to the same residual impacts subject to offsets under the EPBC Act will not be required under Territory legislation and will only be required for those significant residual impacts not recognised under the EPBC Act.

Following consultation, it is understood that the draft Biodiversity Offsets Policy will be revised (if necessary), approved and implemented as a statutory instrument.

Submissions on the draft Biodiversity Offsets Policy can be made until Monday 14 November 2022 in the manner prescribed here.

If you would like to understand the NT Offsets Framework and how this applies to your proposed development or would like assistance with preparing a submission in response to the draft Biodiversity Offsets Policy, please contact us.

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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.