Turning a new leaf in environmental regulation in Australia: the move to ‘nature positive’

There is a significant movement towards embedding the concept of nature positive into Federal and State environmental legislation. This is reflected in:

• The Federal Government’s Nature Positive Plan (2022) (Federal NP Plan) and staged legislative reforms throughout 2023 and 2024. These reforms established the voluntary Nature Repair Market (Stage 1)^[1] (see our previous commentary and the institutions that will support the drive to nature positive (Stage 2): Environment Information Australia (EIA) and Environment Protection Australia (EPA).^[2]A complete overhaul of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) (Stage 3) is expected following further consultation on exposure drafts of legislation which are yet to be released; and
• The NSW State Government’s response to an independent statutory review of the Biodiversity Conservation Act 2016 (NSW) (BC Act) led by Dr Ken Henry AC in August 2023 (BC Act Review) which has now progressed to legislative reform, in part (BC Act Response). The Biodiversity Conservation Amendment (Biodiversity Offsets Scheme) Bill 2024 (NSW) (BC Amendment Bill) was introduced into Parliament on 15 August 2024 and has been referred to the Legislative Council Committee for public consultation through an inquiry process that will report back to Parliament in October 2024. The amendments focus on developing a nature positive strategy and reforming the Biodiversity Offsets Scheme (BOS) which has been criticised for significant failures including that it has contributed to the decline, rather than an improvement, in nature outcomes.

The above raises the following questions:

1. Why is nature positive a focus for Government and what does it mean?
2. What are the implications for project proponents?
3. Are any more changes expected?

1. Why is nature positive a focus for Government and what does it mean?

The familiar phrase of ecologically sustainable development (ESD) seeks to minimise negative impacts on biodiversity and achieve no net loss. ESD remains an overriding objective of much of Australia’s current environmental regulatory framework. However, the BC Act Review foreword considers the term to be obsolete and outdated:

Of more concern, the objects of the Biodiversity Conservation Act 2016 are already obsolete. The crafting of the Act was, understandably guided by the principles of sustainable development. Those principles are no longer fit for purpose. As has been recognised in many global forums over the past few years, the natural environment is now so damaged that we must commit to ‘nature positive’ if we are to have any confidence that future generations will have the opportunity to be as well off as we are.

As a signatory to the Global Biodiversity Framework, Australia supports the goal of nature positive by 2030. One of the targets includes restoring, conserving and managing 30 per cent of terrestrial, inland water and coastal marine areas by 2030. This target is more commonly referred to as ‘30 by 30’ and the following diagram represents the objectives:

Source: www.naturepositive.org   

While there are different interpretations, restoration and repair of nature are at the heart of nature positive. This has been reflected in the Federal Government’s proposed definition of nature positive incorporated as part of the Stage 2 reforms (see section 6 of the NPEIA Bill):

Nature positive is an improvement in the diversity, abundance, resilience and integrity of ecosystems from a baseline.

The baseline is an important element of the above definition and will be set by the head of the newly established EIA (section 13(2) of the NPEIA Bill).

The NSW State Government has not yet proposed a nature positive definition but has included reference to the terminology in the BC Act Response as follows:

Nature positive means the environment is being repaired or regenerated. This contrasts with traditional sustainability approaches, which have sought to minimise negative impacts by slowing or stabilising the rate of biodiversity loss.

2. What does this mean for project proponents?

Overall, the policy and legislative developments will have four key impacts for project proponents.

‘Nature Positive’ will become a core objective

‘Nature Positive’ will likely be enshrined as a core objective of environmental legislation, which means that it is more than likely to be a mandatory matter to consider when assessing development applications and the proposed development’s impact on nature, including any proposed offsets.

However, the degree to which the concept will be taken into account by decision makers is unclear including whether the development itself will need to achieve a net positive outcome – say, 20 per cent improvement in biodiversity outcomes. Or alternatively (or in addition), will the development be assessed in the context of the broader objective of achieving nature positive at a State or Federal level, for example, exceeding the baseline referred to in the definition of nature positive in the NPEIA Bill?

This uncertainty is reflected in how nature positive will be transitioned into the BC Act. The BC Amendment Bill includes a provision requiring the BOS to ‘transition to net positive biodiversity outcomes’ and the NSW Minister for Environment must prepare a strategy for that purpose. A reference to some future state of the BOS is a highly unusual approach in legislation and the expectation would have been that the strategy be prepared first, prior to inclusion in the BC Act. Given the absence of detail, the implications of any net positive strategy is unclear, including how it will impact on individual project assessments. It is also likely to create uncertainty for decision makers as to whether the nature positive concept must be applied to applications prior to the making of the strategy by the Minister, particularly given the immediate introduction of the avoid, minimise and offset hierarchy referred to below. In the absence of an overarching strategy, decision makers and proponents alike are likely to find it difficult to navigate the BC Amendment Bill changes.

Avoid, Minimise and Offset (AMO) hierarchy

The AMO hierarchy is key to the government’s objective of achieving nature positive with an emphasis on upfront planning to avoid nature loss.

Rather than include the AMO hierarchy in strategies and guidelines sitting behind the legislation, the BC Amendment Bill proposes to incorporate the hierarchy into the legislative framework as follows:

• the proponent is to first take reasonable measures to avoid the impacts of the action on biodiversity values;
• the proponent is then to take all reasonable steps to minimise the impacts that have not been avoided; and
• the proponent is then to take biodiversity conservation measures under the BOS to offset or compensate for any residual impact on biodiversity values.

In addition, the proponent must identify the genuine measures taken or it proposes to take in order to avoid and minimise impacts in any relevant biodiversity development assessment reports (BDAR) submitted for assessment.

There is no definition of “reasonable measures”, “reasonable steps” or “genuine measures” in the BC Amendment Bill and no supporting information has been released to assist with the understanding of these phrases. Importantly it is unclear whether in interpreting these phrases, consideration will be given to what is feasible in the circumstances including considerations of the specific development type where avoidance may not be possible as a result of essential characteristics of the development, such as an energy or resources project whose location is largely dictated by geographical, climatic and/or geological considerations

The lack of definitional certainty creates ambiguity in the BOS assessment process for decision makers and proponents.

Reframing of the offsets regime: Restoration Actions and Contributions

Offsets will still form part of the nature positive framework but will be an option of ‘last resort’. The emphasis will instead be on avoiding environmental impact and engaging early in the development process to ensure that proponents are selecting the most appropriate sites to avoid nature loss. Part of this will mean the front loading of environmental considerations in the strategic planning process. In addition, proponents can expect greater focus on their site selection methodologies during the environmental assessment process. For example, could infrastructure be moved 200 metres to protect an endangered ecological community (EEC) rather than relying on offsetting.

The Federal Government has made it clear that offsetting is not a preferred outcome as it is failing to prevent environmental decline and often does not properly compensate for the loss of habitat. Importantly, offsets will be reframed as restoration actions and contributions and supported through the implementation of a National Environmental Standard (called the Restoration Actions and Contributions Standard (RARC Standard) which has been the subject of ongoing consultation, including updates to the calculator) to promote certainty and confidence. If a proponent makes a restoration contribution, the payments are intended to fund evidence-based investment strategies, which will be developed at arms-length from government.

Importantly, the framework will include the following:

• a legislative principle that ‘unacceptable impacts’ cannot be compensated for and that instead, proponents will need to avoid those unacceptable impacts;
• the RARC Standard will move away from averted loss and focus on restoration actions. For example, land already protected will not be accepted as an offset; and
• the restoration action or restoration contribution must be acquitted before the action is taken.

For NSW, the BC Amendment Bill includes a provision that indicates there may be restrictions on the payment of monies into the Biodiversity Conservation Fund (BCF) as an alternative to retiring ‘like for like’ biodiversity credits. The circumstances in which the use of the BCF may be limited have not yet been explained, however there is concern that if the BCF is not available for certain projects it may distort the biodiversity credit market, including increasing the cost of credits.

Planning tools and improved data

Planning tools and improved data are key to achieving nature positive outcomes and supporting proponents and decision makers alike. However, it is imperative that the promised planning tools and improved data is supplied at an early stage so as to support the transition to the nature positive legislative frameworks (including the determination of the relevant ‘baseline’ as discussed above). Any delays will undermine the implementation of the AMO hierarchy, result in a lack of certainty for proponents and inhibit the assessment and determination of projects.

The various Government initiatives include:

• The Federal NP Plan indicates that: Better data supports better conservation planning and better species and ecological communities listing decisions, and improves our ability to prioritise, coordinate and assess the effectiveness of regulation and investment to protect and restore the environment. As part of its focus on data, the Federal Government has included in the EIA Bill an objective to improve the availability and accessibility of high-quality national environmental information and data.
  • There is also an intention identified in the Federal NP Plan to develop regional plans with priority being given to areas experiencing development pressures with high biodiversity values (for example, renewable energy zones). The intention is for regional plans to speed up decision making and deliver nature positive outcomes at a landscape scale.
• The BC Act Response also supported the preparation of maps identifying current and future high biodiversity values to guide the community and decision makers about areas where biodiversity impacts should be avoided. The emphasis being on ‘guidance’ rather than indicating a ‘no-go’ option.

3. Are any further changes expected?

The simple answer is yes, and significant changes.

Stage 3 of the Federal Government reforms will result in substantial changes in order to implement a wholesale restructure of the environmental legislation to achieve nature positive outcomes. Key components of those reforms will include the RARC Standard which will likely be tightly controlled and which must result in a net gain.

Depending on the outcome of the Legislative Council Committee inquiry process which is due for release in October 2024, the BC Amendment Bill is the first stage in a suite of reforms proposed in response to the BC Act Review. A significant number of guidelines, standards, regulations and principles will also flow from the introduction of the amending legislation. At the same time, the Biodiversity Assessment Method (BAM) five-year review recommendations will also be implemented.

In preparing for the move towards nature positive, project proponents can expect far more scrutiny on site selection and the application of the avoid, mitigate and offset hierarchy. While this hierarchy has been found in policy documents for some time, the move towards embedding the concept in legislation will add additional emphasis to the application of the hierarchy by decision makers, including the likely introduction of principles and standards governing the implementation of the hierarchy in NSW.

Proponents should also prepare for more onerous and expensive offsetting obligations with a focus on restoration rather than averted loss. With ongoing political debate in both NSW and at a Federal level as to the adequacy of the proposed reform agendas, the next 12 months is looking to be a rocky and winding road in the nature positive journey. However, proponents should start to prepare themselves for a shift away from the governing objective of ecologically sustainable development towards an increasing focus on achieving gains for nature, potentially at an economic cost.

If you have any questions about the move to nature positive and how to comply with the shift in environmental legislation, please contact Julia Green and Samantha Daly.

^[1] Nature Repair Act 2023 (Cth).
^[2] Nature Positive (Environment Information Australia) Bill 2024 (Cth) (NPEIA Bill) and Nature Positive (Environment Protection Australia) Bill 2024 introduced into Parliament (second readings moved in the Senate on 12 August 2024).