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23 Jul 2020

Climate change, offsets and hydrogen: NT Government setting the foundations for a net zero emissions target by 2050

By Nicole Besgrove, Karen Trainor and Margaret Michaels

The NT Government has released its policy foundations for a net zero emissions target by 2050 in the Territory and the principles for an offsets framework to support the newly commenced environmental regulatory regime.

Without missing a step following the commencement of the new environmental regulatory regime at the end of June, the NT Government has now released its Northern Territory Climate Change Response: Towards 2050, Northern Territory Renewable Hydrogen Strategy and Offsets Framework to map out its approach to meeting a net zero emissions target by 2050 and to support the new regime. We have considered some of the key points for each below.

Climate Change Response

Following consultation of the first iteration of its Climate Change Response in October 2019, the NT Government has finalised the Response along with a Three-Year Action Plan which sets out initial priorities, deliverables and timeframes spanning the next three years to deliver the objectives of the Response.

The aim of the Response is to provide the long-term vision required to protect the Territory and capitalise on the economic opportunities created by climate-smart action and is built on the following four objectives which will be implemented by the Territory's Office of Climate Change and the Office of Sustainable Energy.

As stated in the Response, further work will be undertaken to prepare detailed strategies and actions for each of the objectives and the Response will be reviewed in 2025.

Net zero emissions by 2050

This long-term objective is to "progressively reduce net greenhouse gas emissions in the Territory, with the goal of achieving net zero emissions by 2050" in accordance with the NT Government's Roadmap to Renewables and to align the Territory with other jurisdictions in Australia. The initial priorities to deliver this objective are summarised as follows:

  • Understand the Territory's emissions profile and trajectory towards net zero and enable identification of potential suitable interim targets and timeframes.
  • Determine a pathway to reduce the Territory’s emissions which will include the development of an Emissions Reduction Strategy.
  • Establish policy positions that support the emissions reduction target, including a policy on the expectations for the mitigation and management of emissions from new and expanding large greenhouse gas emitters and Greenhouse Gas Emissions Offsets Policy.
  • Deliver priority actions to achieve the 50% renewable energy target by 2030 which includes Remote Power System and Hydrogen Strategies, reforms to the Territory Electricity Market and delivery of a competitive battery energy storage system for the Darwin–Katherine electricity system (DKIS grid) and power systems plans for the DKIS and Alice Springs grids.
  • Reduce emissions associated with the NT Government’s operations and services.
  • Incentivise the uptake of electric vehicles in the Territory including the finalisation of the Electric Vehicle Strategy and development of an Implementation Plan.

A resilient Territory

This objective aims to "build resilience to climate change in the most vulnerable aspects of the Territory’s communities, economy and environment". The initial priorities to deliver this objective are summarised as follows:

  • Ensure a targeted and strategic approach to building resilience in the Territory by delivering an overarching strategy.
  • Promote industry resilience to climate change by identifying key risks to industries and sectors and developing an Industry/Sector Specific Climate Adaptation Frameworks.
  • Increase the NT Government’s preparedness to respond to the impacts of climate change by delivering a 10-year Emergency Response Strategy.
  • Improve landscape resilience to climate change impacts by delivering a Biodiversity Maintenance and Restoration Strategy.
  • Support Territorians to respond and adapt to the impacts of climate change by developing climate change risks adaptation and response frameworks.

Opportunities from a low carbon future

This objective is "to unlock opportunities for Territorians, industries and businesses in the transition to a low carbon future". The initial priorities to deliver this objective are summarised as:

  • Harness opportunities associated with the Territory’s natural assets by delivering a Critical Minerals Strategy and establishing a manufacturing hub.
  • Connect Territorians to funding opportunities.
  • Develop the Territory’s environmental services industries including the development of the Territory's carbon market industry and promoting Aboriginal jobs on country.
  • Skills development to support emerging green and low carbon industries by delivering a skills development strategy for new and emerging opportunities.

Inform and involve all Territorians

The fourth and final objective is that "all Territorians will understand the potential impacts from climate change, know what they can do to contribute to the response, and take advantage of any opportunities it provides". The initial priorities to deliver this objective are summarised as:

  • Promote climate conscious behaviours in Territorians by delivering a state of the climate science report, establishing a climate change website and raising awareness through education and communication.
  • Assist large landholders to take action to manage the risks of climate change by providing advice and extension services and incentivising climate conscious land management practices through targeted grant programs.

Renewable Hydrogen Strategy

The NT Government has a vision to become a leading producer of renewable hydrogen as it believes that the Territory is well placed to position itself at the forefront of the developing renewable hydrogen industry. This is because of the Territory's a significant amount of land well suited to large-scale solar renewable hydrogen developments, geographical proximity to key potential export markets in Asia, established world-scale energy production and export industry and commitment a target of net zero emissions by 2050.

The Renewable Hydrogen Strategy provides the following five point hydrogen plan to achieve the NT Government's vision which are to be achieved by implementing a number of key actions which we have summarised below:

  • Local Industry Development: preparing local industry capabilities, logistics and supply chains to facilitate the adoption of renewable hydrogen by hydrogen industry within the Territory’s economic development strategies, understanding the enabling infrastructure requirements, growing expertise in hydrogen production and supportive supply chains and working with other industries to understand opportunities to integrate hydrogen use.
  • Resource Management: investigate how to optimise the Territory's resources and infrastructure to facilitate hydrogen industry development by completing the National Hydrogen Infrastructure Assessment, securing access to energy export infrastructure, defining the potential role of hydrogen in the net-zero emissions by 2050 target and incorporating potential hydrogen industry demand in water strategies and plans.
  • Grow and Harness Demand: take action to grow and harness demand for hydrogen to maximise the local use and international export potential for the resource by participating in domestic and international hydrogen forums and conferences, promoting the Renewable Hydrogen Strategy to existing and prospective trade partners, developing case studies and pilots for hydrogen application in the Territory, assessing the future potential for hydrogen in the Territory’s remote power systems and continuing to enhance trade relationships with key trading partners and promote and secure export opportunities
  • Support Innovation: support innovation and facilitate expansion of local knowledge and expertise in hydrogen by encouraging trials of hydrogen technologies in applications high on the hydrogen cost curve, exploring opportunities for demonstration projects that increase community confidence and understanding of hydrogen technologies and establishing a Hydrogen Working Group (ie. representatives of key government agencies) and Industry Reference Group (ie. industry leaders with an interest in hydrogen) to revise and implement Renewable Hydrogen Strategy.
  • Responsive Regulation: prepare local industry capabilities, logistics and supply chains to facilitate the take up of renewable hydrogen production by reviewing existing legislation, regulations and standards, coordinating with the Commonwealth and other Australian jurisdictions to develop best practice regulatory frameworks for hydrogen, addressing barriers to the development under current planning and regulatory approval mechanisms, developing technology neutral reliability and security services procurement frameworks for the Territory’s regulated electricity systems and consider the potential for grid-connected electrolysers to provide these services and building hydrogen safety knowledge and capacity within government and industry bodies.

Offsets Framework

Under the new Environment Protection Act 2019 (NT) (EP Act) there is a power to require offsets from projects that have undergone environmental impact assessment or are subject to regulatory approval under another Act as prescribed by the Environment Protection Regulations 2020 (NT). As a matter of corporate responsibility or social licence to operate, a proponent may provide a voluntary offsets to compensate for impacts of their project.

When deciding the appropriateness (or not) of an offset under the EP Act, the following hierarchy, which is in order of priority, must be applied with the first two approaches to be exhausted before an offset can be considered:

  • 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;
  • if appropriate, provide for environmental offsets for residual adverse impacts on the environment that cannot be avoided or mitigated.

The NT Government proposes to use a target-based implementation model to allow for a Territory-specific approach to offsets aiming at improved environmental outcomes at landscape or regional scales. This approach differs from the environmental offset model currently used in other Australian jurisdictions whereby the residual impact of a project is either offset by the proponent by protecting or restoring an area of habitat of equivalent value or by making a monetary payment into an offset fund.

It is understood that the NT Government will develop the following which will be the subject of future consultation in order to develop the target-based offsets model:

  • ·outcome-based targets for the Territory;
  • a compensation guideline to specify the type and amount of compensation required for identified significant residual environmental impacts; and
  • governance and operational management frameworks.

The NT Government also proposes to undertake consultation with the Commonwealth Government to determine the extent to which the target-based offset model in the Territory would satisfy potential offset requirements under the Environment Protection and Biodiversity Conservation Act 1999 (Cth).

The Offsets Framework is to be comprised of the following (some of which is yet to be drafted) which will guide the application of offsets in the Territory.

NT Offsets Principles

The Offsets Principles are to be used to guide decision-making with respect to the adequacy (or not) of the measures proposed by a proponent to offset the residual impacts of their project and are:

  • offsets must contribute to relevant Territory targets;
  • offsets must be designed to deliver maximum benefit to the Territory;
  • benefits of offsets must be additional and secured;
  • offsets must be knowledge-based and design must be responsive;
  • stakeholder engagement, disclosure and transparency is required; and
  • duplication of offsets must be avoided.

Offsets Policies and Technical Guidelines

Policy documents and supporting technical guidelines are to be prepared with respect to the following offsets:

Biodiversity offsets: to compensate for impacts on the environment or biodiversity at one site through activities elsewhere. It is understood that the NT Biodiversity Offsets Policy and Biodiversity Technical Guidelines will be the next component prepared for the Offsets Framework which is expected to occur in the second half of 2020 and will involve the identification and determination of the biodiversity offsets targets.

Greenhouse Gas Emissions (GHG): actions undertaken to reduce or absorb GHG emissions in one location or locations to compensate for an increase in GHG emissions produced elsewhere. It is understood that the NT Greenhouse Gas Emissions Offsets Policy and Greenhouse Gas Emissions Technical Guidelines will be informed by the NT's Emissions Reduction Strategy which is to be prepared in accordance with the Climate Change Response and Three-Year Action Plan discussed above by mid-2022.

Offsets Framework Administrative Guidelines and Offsets Register

It is understood that:

  • Administrative Guidelines are currently being developed and are proposed to be finalised by the fourth quarter 2020; and
  • an Offsets Register which is required to be kept under the EP Act is currently under development.

If you would like any further information about the NT Government's Climate Change Response, Renewable Hydrogen Strategy and/or the Offsets Framework 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.