Biodiversity offsets under scrutiny in Nature Repair Market consultation

The Australian Government is currently consulting on proposed changes to its "Nature Repair" scheme, under the Nature Repair Act 2023 (Cth), to enable the scheme to supply biodiversity offsets for projects approved under the Environment Protection and Biodiversity Conservation Act (Cth) 1999 (EPBC Act).

This coincides with the roll-out this year of the Government’s Environment Protection Reform package, which involved major changes to the EPBC Act in late 2025.

Given the importance of securing offsets for most EPBC Act approved projects, the proposed "nature repair" scheme changes are a major piece of the EPBC Act reform picture, and they might help to kickstart the scheme.

This article provides a recap on the "nature repair" scheme, outlines the proposal to adapt it for offsetting and offers some comments on the key issues which the consultation process raises.

The consultation papers and process

Three consultation papers have been released covering key elements of the Nature Repair scheme and its proposed adaptation to enable its use for biodiversity offsets:

• policy settings to enable the Nature Repair scheme to supply environmental offsets;

• the Threatened Species Characteristic; and

• amendments to the Nature Repair Rules to support integrity and administration.

The call for submissions, which closes at 5.00pm Monday 4th May 2026, is the latest in the series of consultations on elements of the Environment Protection Reform package.

The process of determining what biodiversity offsets are required, and then finding and delivering those offsets, remains one of the key approval-related risks for major projects in Australia, in terms of delay, cost and practical barriers.

The Australian Government's environmental law and policy reforms are imposing a more extensive and robust biodiversity offsets regime and are looking to provide additional opportunities to create offsets, using a legislative market mechanism via the Nature Repair Act. The Government aims to improve environmental standards and outcomes, provide greater clarity and certainty for offsetting, and allow more flexibility in the way that offsets can be secured.

EPBC Act offsets and the role of the Nature Repair scheme

Last year's EPBC Act amendments made biodiversity offsets a legislative requirement under the EPBC Act for the first time (prior to this, offsets depended almost entirely on a Government policy document). The EPBC Act provides three ways in which offsets can be delivered:

• conventionally, through the conservation of biodiversity values on dedicated land or other approved, less direct conservation measures;

• payment of a "restoration contribution charge", which the Australian Government will invest in offsets under a specific policy; or

• purchase of a Nature Repair Market biodiversity certificate and allocation of that certificate to the project whose impacts are to be offset.

This consultation relates to the third of these pathways. The additional flexibility which this pathway could provide has the potential to be very useful for proponents, so long as it is designed effectively. As with most aspects of the current environment protection reforms, the risks and opportunities are in the detail and require careful consideration.

The current state of the Nature Repair Market and offsets

Nature Repair Act refresher

The Nature Repair Act 2023 (Cth) (NR Act) came into effect on 15 December 2023, establishing a framework for a voluntary, national biodiversity market which allows the registration of eligible biodiversity projects on a Biodiversity Market Register administered by the Clean Energy Regulator (CER), and the generation of tradeable biodiversity certificates for those projects.

The Nature Repair scheme was modelled in some respects on the Australian carbon credit unit (ACCU) scheme. Briefly, some of the key features of the framework relevant to this consultation are:

• Eligible projects must satisfy a series of requirements to be registered, including that they are covered by an approved methodology.

• Methodology determinations are legislative instruments made under the Nature Repair Act for a particular kind of biodiversity project. They set out the requirements for implementing that kind of project, and the obligations on the person responsible for it.

• The Nature Repair (Replanting Native Forest and Woodland Ecosystem) Methodology Determination 2025 (Replanting Method) is the first and only method approved to date.

• Two other methods have been the subject of some public consultation: the Enhancing Native Vegetation method (ENV Method) and the Protect and Conserve method, but neither has been approved yet. The ENV Method is being developed to allow for offset-capable projects. It will allow for maintenance of remnant vegetation.

• A number of other statutory instruments sit beneath the Nature Repair Act:

• The Nature Repair Rules 2024 outline administrative requirements for registration of biodiversity certificates.

• The Nature Repair (Biodiversity Assessment) Instrument 2025 (BA Instrument) sets out a framework for describing and measuring biodiversity outcomes, using a standard set of fixed and variable biodiversity project characteristics. Biodiversity project characteristics capture particular aspects of biodiversity which can be measured or reported (eg. ecosystem condition, impact of threats, commitment to protection, threatened species and culturally significant entities).

Only one project, located in NSW, has been registered under the Replanting Method to date. No biodiversity certificates have been issued.

Delivering offsets – an evolving situation

A key condition of the Greens' support of the Nature Repair Bill in December 2023 was banning the use of biodiversity certificates as an environmental offsetting measure. Biodiversity certificates can presently only be used as a voluntary measure to evidence a person's ESG credentials.

The Environment Protection Reform Act 2025 (Cth) (EPR Act) (part of the fundamental reforms to Australia's environmental laws passed last November) will lift this the ban once the relevant provisions commence, most likely on 1 December 2026. At that time, the Nature Repair Act will be amended to allow the use of biodiversity certificates for an environmental offsetting purpose where:

• the applicable approved method expressly states that covered projects are capable of delivering environmental offsets; and

• the applicable biodiversity project meets any relevant requirements in the method and the Nature Repair Rules, including additional conditions which must be met for a project to be "offset-capable".

The Replanting Method does not allow the issue of certificates for an environment offsetting purpose, and we understand that there is no current intention to amend this. New methods must be approved before the Nature Repair Act can deliver offsets.

Current consultation on the Nature Repair Market

1. The offsets policy settings issue paper gives a higher-level overview of the policy intent. While it is a useful summary of some aspects of the framework and context, much of the content is:

• already confirmed in the EPR Act or the Nature Repair Act, and so is not being consulted on now; or

• relates to the content of the draft Offsets Standard, which is the subject of its own separate, ongoing consultation process.

2. The threatened species and threatened ecological communities issues paper is more technical. It relates to one of the five variable biodiversity project characteristics set out in the BA Instrument – the threatened species characteristic – which will be relevant for proponents seeking to:

• provide information on a biodiversity project or the status of threatened species in the project area; or

• assess and quantify the level of protection or measurable benefit for threatened species resulting from biodiversity project activities.

The Department is proposing that projects seeking to provide offsets for threatened species or ecological communities must use the threatened species characteristic. The threatened species characteristic is also relevant to the ongoing development of the ENV Method, which (as indicated above) is being developed to allow for offset-capable projects.

3. The final issues paper open for consultation sets out some proposed amendments to the Rules. It mostly covers matters which have been identified during the implementation of the Nature Repair Act as needing refinement, rather than matters specific to offsets.

Policy settings for the design and operation of an offset-capable Nature Repair Market

There are a number of circumstances in which the Nature Repair Market could provide an additional source for offsets:

• a developer may want to establish a biodiversity project for use as an offset for their own project;

• a landholder with a threatened species or ecological community on their property may want to establish a Nature Repair scheme project on their property to generate a certificate for sale to a developer, or may simply want to establish their property as "offset-capable" for future offsetting; and

• the Restoration Contribution Holder under the EPBC Act may want to invest contributions it has received into a Nature Repair scheme project.

The meaning of offset-capable

The policy intent is to enable the Nature Repair Market to supply environmental offsets required under the EPBC Act, or a State or Territory offsets scheme, and for the Market settings to be updated to allow for this. However, it is important to recognise that the Nature Repair Act and decisions made under it will remain separate and distinct from EPBC Act, State and Territory offsets schemes.

Essentially, the Nature Repair scheme focuses on the "supply side" of biodiversity offsets, and it is hoped that the EPBC Act and various State and Territory offsets schemes will separately generate the "demand" for Nature Repair Market certificates and govern the implementation of offsets.

The proposed changes to the Nature Repair market are intended to facilitate the suitability of Nature Repair projects and certificates for offsetting purposes – hence the introduction of the concept of "offset capable". Relevant measures to achieve this will include (for example) alignment with the proposed National Environmental Standard for Offsets which will be made under the EPBC Act.

However, the regimes which create the need for offsets and administer the delivery of offsets will be governed separately. So, for example:

• the CER will continue to regulate the Nature Repair Market, the registration of biodiversity projects and the issue of biodiversity certificates, but will not confirm that a particular project can be used as an offset under a particular regime; and

• the decision-maker under the EPBC Act or other applicable offsets regime will remain responsible for determining whether a specific biodiversity certificate or project meets the requirements of the Offsets Standard and the applicable offsetting obligations for that regime.

It will be critically important to ensure that this separation does not lead to an unworkable level of risk for proponents requiring offsets, which would limit the Nature Repair Market's value in an offsets context. The concept of "offset-capable" under the Nature Repair Act must provide a clear and reliable meaning which can be linked directly with clear offset requirements under the EPBC Act.

The requirements

A Nature Repair Market project proponent will need to elect whether a biodiversity project is to be offset-capable or not before registration because different requirements will apply in each case.

Relevant methods (including the ENV Method) would specify method-specific requirements that biodiversity projects will need to meet in order to be capable of delivering environmental offsets, and those requirements would reflect the requirements in the final Offsets Standard. As a result, the substantive content of the requirements for a Nature Repair Market project to be offset-capable are not actually in the current consultation documents. Instead, they will be determined by the separate consultation process for the draft Offsets Standard.

Timing

The amount of time it takes for the issue of a biodiversity certificate is another matter that could impact take-up. The Department has indicated that the ENV Method (incorporating offset-related requirements) is expected to be finalised in late 2026 to enable the supply of offset-capable projects by 2027. However, we understand that, under the proposed ENV Method, it is intended that biodiversity certificate applications cannot be made until at least five years after registration – presumably to allow time to demonstrate the success of the project providing the offset.

It is unclear whether a proponent with an offset obligation can rely on a registered Market project to acquit this liability, or whether this can only occur once a biodiversity certificate is issued and purchased. If it is the latter, the delay between registration and certificate issuance appears problematic.

Other matters

A Nature Repair Market project proponent can elect to remain in the voluntary market, which would mean:

• the project could not deliver an environmental offset;

• the additional offset requirements would not apply; and

• it may be possible to rely on the project for the purposes of the ACCU scheme instead.

Eligible Market Projects can either be used as an EPBC Act offset or be stacked with an ACCU scheme project, but not both. This reflects the ACCU scheme's legislated "additionality" requirements.

Also under consideration for offset-capable Market projects are:

• additional notification and publication requirements for offset capability and offset use;

• additional security requirements for projects committed for an offset purpose, to align with Principle 2 (Security) of the draft Offsets Standard; and

• requirements to ensure relevant information is available for offset decision-makers on environmental offset obligations.

The Threatened Species Characteristic

The Threatened Species Characteristic is being designed with two policy considerations. The first is to support Nature Repair Market projects which implement activities addressing key threats, improve habitat quality, increase habitat availability and/or support recovery or persistence of relevant threatened species.

The second is to design with an understanding of the intersection with the draft Offsets Standard so as to:

• incentivise and maximise environmental outcomes;

• provide a consistent and credible framework for collecting information and verifying benefits that are likely to also meet offset requirements for threatened species; and

• optimise the interoperability of the Nature Repair Market and the various available offsets regimes.

The intent is to provide a framework that will allow proponents to prepare a single, consistent evidence base which can be used for Nature Repair Market participation and offset suitability assessments offset regimes.

Indicators, scoring factors and Threatened Species Characteristic scores

The certification architecture is method-driven, highly technical and relies on a number of defined terms. The method specifies which variable biodiversity project characteristics apply.

The Department would create a Threatened Species Characteristic calculator tool to help Market project proponents determine each of the scores and make the necessary calculations.

Project-level and species-level scores for the starting and forecast state of the threatened species characteristic are to be published on the Biodiversity Market Register, so that market participants can determine the offset benefit of the project activities.

This scoring system is not meant to line up directly with the significance or net gain requirements under the EPBC Act. Instead, the plan is that the same kind of information required for determining these Nature Repair Act scores would be relevant to the EPBC Act decision.

High-confidence benefit pathway

These scores would only be relevant – and the associated Market project could only be offset-capable and capable of obtaining a biodiversity certificate – if the project was on the "high-confidence benefit pathway". This pathway will require a high confidence both in the species' presence on the project site and the Market project's benefit for the species. This is aligned with the level of confidence required by the Offsets Standard.

A separate "potential benefit pathway" would be available, but sits in the voluntary Market framework.

Other matters

The issues paper also discusses the requirements of the "suitably qualified person", the evidence they must provide of the assessment and other associated process requirements. Most of the details are to be provided in guidance which is still being developed.

An optional "green tick" verification system would be available for registered Market projects, for projects of a higher value and where a good outcome is more likely. This system is entirely voluntary and separate from registration, certificate and offset-capability requirements.

Nature Repair Rules amendments to support integrity and administration

The amendments proposed in this third issues paper would:

• Introduce rules for the identification, assessment and management of significant reversals of biodiversity outcomes of Market projects.

• Define a clear, practical test for Market project proponents to meet certificate equivalence requirements, where the original biodiversity certificate issued for a Market project is no longer available and the CER has required the certificate to be relinquished.

• Implement administrative amendments intended to streamline Market operations, improve usability, and ensure alignment with the updated legislation.

Most of the proposed amendments appear uncontroversial. One suggestion that may require further consideration is the proposal to update the published National Biodiversity Assessment System scores for Market projects on the public register whenever a new version of that System is released.