NSW Guide for Large Emitters

We have a critical role in protecting the environment and community from the threat of climate change. This includes supporting industry and the community to meet the NSW Government’s net zero commitments.

Our Climate Change Action Plan 2023–26 commits us to partnering with NSW Government agencies to address climate change during the planning and assessment process for activities we regulate.

The guide ensures the EPA (and planning authorities) receives robust and consistent information about a proposed development to support a full assessment of its climate change impacts, focusing on greenhouse gas emissions.

In NSW, proposals for significant industry and infrastructure are assessed by the Department of Planning, Housing and Infrastructure (DPHI) or the Independent Planning Commission. The EPA provides advice to DPHI based on the information provided in a proponent’s Environmental Impact Assessment or Modification Report. The arrangements are outlined in the Environmental Planning and Assessment Act 1979.

The guide provides details about how proponents should prepare a greenhouse gas assessment as part of their planning proposal. The assessment includes expected greenhouse gas emissions and the proposed measures to mitigate these emissions over time.

The EPA will assess the proposal, including the greenhouse gas assessment, and provide advice to DPHI based on the information provided in the Environmental Impact Assessment or Modification Report. Each planning proposal will be considered on its individual merits.

No. The community and industry have called for clarity and consistency on how climate change is considered in the planning system. The guide addresses these calls.

The purpose of the guide isn’t to add more paperwork for proponents. It’s about ensuring proponents take real action to address the emissions from their projects because we all have a role in contributing to NSW achieving its net zero targets and protecting our environment and community from the impacts of climate change.

The Guide provides greater transparency in the planning process by clearly setting out the criteria proponents must address when assessing their development’s greenhouse gas emissions and mitigation opportunities. This means that there could be fewer requests for additional information made during the planning process, reducing costs for proponents and potential delays to projects being completed.

The guide applies to any proposals that had not progressed beyond the environmental impact assessment stage of the planning process as of 20 May 2024. This is when the consultation draft guide was published, which came into effect immediately. This is because the purpose of the guide is to inform the proponent’s environmental impact statement. However, planning authorities can use the guide to inform their considerations. The EPA may also refer proponents to the guide when seeking additional information if environmental impact statements are considered by the EPA to be inadequate.

No. The EPA is not a planning authority and does not approve planning proposals. In NSW, planning authorities are responsible for determining planning applications in accordance with the Environmental Planning and Assessment Act 1979. Planning authorities include local government, the Minister for Planning and Public Spaces and the Independent Planning Commission.

The EPA provides advice to planning authorities about planning proposals that will require an environmental protection licence or a licence variation.

Section 2 of the guide sets out information about when the guide applies. The guide will normally apply to:

• projects involving new facilities to be regulated by the EPA that are likely to have large greenhouse gas emissions, and to
• projects involving a change to a planning approval for an existing facility that is likely to have large additional emissions – this includes extending the duration of their greenhouse gas emissions.

A project may normally be considered by the EPA to have large emissions if it:

• requires development assessments and approvals, or a change to an approval, under the Environmental Planning and Assessment Act 1979, and
• involves one or more scheduled activities under Schedule 1 of the Protection of the Environment Operations Act 1997 and/or will be carried out at an existing licensed premises, and
• is likely to emit 25,000 tonnes or more of scope 1 and 2 of new greenhouse gas emissions of carbon dioxide equivalent (C0₂-e) in any financial year during the operational life of the project (based on planned operational throughput and as designed).

The above criteria are a guide only and are not intended in any way to limit the EPA’s regulatory discretion when applying the guide. The EPA may consider other factors when making a decision about how and when the guide applies. For example, the EPA may take a more flexible approach when applying the guide if a proposal helps NSW to substantially decarbonise and/or is a renewable energy project.

The EPA is progressively implementing greenhouse gas assessment requirements for all projects regulated by the EPA through a risk based approach.

The EPA has started with large emitters but will also prepare requirements and guidance for other proposed projects that are expected to produce smaller quantities of greenhouse gas emissions.

The guide itself provides a significant amount of assistance, including links to other important guidance and methodologies. We will also develop additional best practice guidance to assist proponents and our regulated community to adopt best practice mitigation.

Under our Climate Change Action Plan, existing EPA licensees will be required to prepare Climate Change Mitigation and Adaptation Plans. Licensees will demonstrate that they have considered how they can minimise their greenhouse gas emissions and exposure to climate risk.

The EPA’s Climate Change Action Plan sets out the draft of other related actions the EPA is taking to ensure existing licensees are also contributing to NSW’s net zero targets in a meaningful way.

The guide will apply to all greenhouse gases that might be emitted by proposed facilities.

Greenhouse gases include carbon dioxide (CO₂), which makes up almost 70% of greenhouse gases caused by human activities in NSW. Other greenhouse gases of concern include nitrous oxide (N₂O), methane (CH₄), sulphur hexafluoride (SF₆), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs). These are typically reported in terms of their ‘CO₂-equivalency’ (CO₂-e).

All of them.

Scope 1 and 2 emissions will be required to be assessed, which is consistent with the NSW Government’s Climate Change (Net Zero Future) Act 2023, the Net Zero Plan and the National Greenhouse Gas Emissions Reporting Scheme requirements.

Material sources of scope 3 emissions are also required to be assessed, to help proponents consider emissions along their value chains during the planning phase of their projects. Scope 3 emissions will not be taken into consideration when determining whether a project is a large emitter.

Under the guide, proponents will need to estimate their material sources of scope 3 emissions as part of their greenhouse gas assessment. This helps to ensure that proponents are firstly aware of these emissions and are considering how they can help to reduce them.

The guide includes a table that shows the typical sources of most scope 3 emissions for different industrial sectors. This is consistent with the approaches already taken in NSW (for many proponents), most Australian jurisdictions and internationally.

While these emissions are generally released before or after the proponent’s activities, proponents can reduce them through their choice of materials, choice of providers and at many other decision points. The guide levels the playing field by ensuring large emitters are considering their scope 3 emission and how to reduce them. It also contains guidance and references to useful resources to support these assessments.

The guide requires proponents to set emission reduction goals for their scope 1 and 2 emissions. This is not required for scope 3, but we do encourage it. The EPA does not intend to set scope 3 emission performance requirements. We will, however, be raising awareness about scope 3 emissions and how they can be reduced. Ensuring proponents are estimating their scope 3 emissions is an important first step to help proponents to understand where they come from, how their business decisions influence them and over time how they can reduce them.

The greenhouse gas assessment boundary must account for greenhouse gas emissions associated with relevant stages of the project addressing, as appropriate, construction (including demolition, land clearing and excavation), operation, decommissioning, closure, and post-closure activities such as remediation and rehabilitation.

The project boundary for a modification includes affected sources related to existing operations in addition to any new/additional sources. For modifications, some parts of a premises may not need to be modelled if its operation will not change and emissions will not increase as a result of the modification; but if emissions are projected to substantially increase as a consequence of the modification project, those parts of the premises need to be modelled. The process of setting an assessment boundary will help determine the parts of the premises that should be included in the assessment.

No. The guide has a different function to the Commonwealth Government’s Safeguard Mechanism. This is largely because Safeguard Mechanism obligations do not apply until a proposal has received planning consent and is operational.

The Safeguard Mechanism:

• does not include any assessment of activities
• is not an approval framework for new projects
• does not require details of how emissions will be reduced
• does not provide the information needed for NSW agencies and planning authorities to meet NSW legislative requirements.

The Safeguard Mechanism does not preclude the need for the EPA and the consent authority to:

• properly understand the potential greenhouse gas impacts of proposed new or significantly modified developments within NSW
• ensure all proponents are adequately avoiding, minimising and managing their emissions over all stages of the development.

The guide ensures proponents provide enough information to appropriately inform planning determinations. That includes whether they will be or are already subject to obligations under the Safeguard Mechanism, and the nature of those obligations.

Yes. If the proposal will be electricity firming infrastructure and the proponent intends to enter into a Long-Term Energy Service Agreement with the consumer trustee, the proponent is to provide information about the project’s expected obligations under Part 12 of the Electricity Infrastructure Investment Regulation 2021. That information includes how the project’s proposed emission goals align with obligations under the Regulation, including the requirement for net zero emissions from 2036.

The EPA has considered the requirements of other jurisdictions when developing the guide. We have built on the most robust requirements and useful guidance with the aim of ensuring the assessments appropriately inform NSW decision making.

We are in discussions with other jurisdictions and attempting to align our future directions where appropriate.

Carbon offsets are activities that reduce greenhouse gas emissions or remove greenhouse gases from the atmosphere to compensate for emissions produced elsewhere. One tonne of offsets is equivalent to one tonne of CO₂ equivalent. There are various types and qualities of offsets, depending on the methodologies used to create them. Some offsets have additional social or environmental benefits. Carbon offsets are often used to offset an entity’s or jurisdiction’s residual emissions to meet a net emissions reduction target.

No. Carbon offsets must only be used for emissions that cannot be avoided, reduced or substituted (i.e. residual emissions). We will be looking to ensure that proponents make genuine efforts to reduce and minimise their emissions before relying on offsets. Where offsets are needed and allowed, they must be sourced from accredited Australian schemes, such as those overseen by the Commonwealth Clean Energy Regulator.

The EPA prefers that proponents prioritise the use of carbon offsets from NSW-based offset projects as offsets generated outside of NSW do not currently count towards the NSW emissions reduction inventory; for example, Australian Carbon Credit Units generated from NSW-based projects. If required, offset projects in other Australian locations may be used. International carbon offsets will not be accepted.

No. Any carbon offsets that the proponent proposes to use, or must purchase and surrender to satisfy a regulatory obligation, do not count towards the threshold criteria for identifying projects with large emissions. That is, the threshold of 25,000 tonnes of CO₂-e per annum during operation.

For example, if a proponent proposes to use offsets to reduce their greenhouse gas emissions below the emissions threshold, the guide will still apply.

Emission reduction goals demonstrate how a proponent plans to reduce their project’s emissions over time. For example, a proponent may set a goal to achieve a 70% reduction in scope 1 emissions by 2035.

Proponents of large emission projects are required to set interim and long-term scope 1 emission goals that represent a meaningful contribution to the emission reduction objectives of the state. Scope 2 goals are also required. Scope 3 goals are encouraged but not mandatory.

When setting emission goals, the EPA expects the proponent to develop goals that are achievable, explain how they will be achieved, and why they are a meaningful contribution to NSW emission reduction targets in the context of the industry sector or economy. We expect them to be broadly consistent with NSW's net zero targets. Where they aren't, proponents will need to demonstrate why their goals still represent a meaningful contribution to NSW's emission reduction targets.

The EPA will work with DPHI and DCCEEW to ensure that emission reduction goals developed by proponents during the planning process are met. These commitments may be reflected in a proposal’s development consent, environmental protection licence (once it is applied for and granted), climate change mitigation and adaptation plan, or other regulatory tools.

As we work to support NSW to reduce emissions to meet the state government’s 2030, 2035 and 2050 net zero targets, it will not be appropriate to expect all new or significantly expanded proposals to reduce their emissions at the same rate. What’s possible will vary depending on what mitigation technologies become available. To assist proponents, we will develop best practice guides that outline what’s reasonable and feasible at the sector and facility level.

Local Governments are unlikely to be the consent/approval authority for projects that will emit large quantities of greenhouse gas emissions. We will be working with local government licensees to support them in considering various greenhouse gas reduction pathways and the climate risks for their licensed facilities.