For Australia to meet its commitment to Net Zero, and support future emissions and sustainability targets, new renewable energy infrastructure is essential.
In his independent review of the Biodiversity Conservation Act 2016 (NSW) (Act) in 2023, Dr Ken Henry AC (Henry Review) revealed that only five years since the Act’s operation, its objectives were already obsolete, and principles no longer fit for purpose. As such Dr Henry made 58 recommendations to reform the Act and associated Biodiversity Conservation Regulation 2017 (NSW) (Regulations).
One of those recommendations was to allow certain government priority projects that give primacy to the environment to enter into agreements about their offsetting obligations “in a way that provides certainty for biodiversity conservation, is aligned with a regional offset investment plan, delivers on-ground actions and generates credits on a like-for-like basis through entry into Biodiversity Stewardship Agreements, acquisition of land and conservation measures”.[1] Additionally, the recommendation outlines that the Minister for the Environment should be required to publish details of such agreements and publicly report on its outcomes.
Recent reform
In light of findings from the Henry Review the NSW Government has begun adopting its recommendations.
In 2024 the ‘avoid, minimise and offset hierarchy’ was established, which imposes a duty on proponents to first take all reasonable measures to avoid, or otherwise minimise, the impact of their actions on biodiversity, and any residual impacts must then be offset in accordance with the biodiversity offset scheme. Noting that while this reform is legislated, it is not operational until the regulations which set out the assessment standards are developed.
Then most recently, on the 9 May 2025, the Regulations were amended by the Biodiversity Conservation Amendment (Strategic Offset Delivery Agreements) Regulation 2025 to prescribe an alternate approach for the provision of biodiversity offsets for certain renewable energy and transmission project proponents.
This reform introduces a new approach to offsetting, in which ‘major project developments’ can enter into strategic offset delivery agreements (SODA). A SODA involves the proponent funding the Environment Agency Head (EAH) to carry out actions of retiring like-for-like biodiversity credits or funding biodiversity conservation actions targeted at species or ecological communities impacted by the development. This shifts the responsibility of directly managing an offsetting scheme from the project developer to the EAH, allowing the project to meet their offsetting obligations more efficiently. Any intention of the EAH to enter into a SODA must be published at least 28 days before doing so, and the EAH must action the benefit biodiversity values under the SODA within three years of entering into the agreement.
Importantly, SODA’s are only available to ‘major project developments’ that are defined as any State significant development or infrastructure that is either a priority transmission infrastructure project or a renewable energy zone (REZ) network infrastructure project, a renewable energy generation, storage, network or related infrastructure project in a REZ, or infrastructure to which a long-term energy service agreement applies.
Additionally, all SODA’s must be kept and made available on a public register. The register must include a copy of the agreement and a three-monthly report on expenditure incurred and details of the actions that were carried out.
Implications
The primary implication of this amendment is the shift of responsibility of managing biodiversity offsetting obligations required under approvals from renewable energy project developers to the EAH, streamlining the processes and promoting development. Importantly, this does not provide a lesser standard for renewable energy projects to meet their biodiversity offset obligations.
The EAH must only enter a SODA if they are satisfied its actions match or exceed the benefit to biodiversity values of the retirement of the whole, or a specified part, of the required number and class of biodiversity credits under the relevant planning approval. All actions taken must be consistent with the conservation investment strategy.
This change encourages the development of renewable energy and transmission projects, advancing NSW towards its Net Zero targets.
[1] Independent Review of the Biodiversity Conservation Act 2016, recommendation 27.