09/11/2024 | News release | Distributed by Public on 09/11/2024 17:06
This article was co-authored with Phoebe Saxon.
Consultation is currently underway on rules to support the operation of the Nature Repair Market following the commencement of the Nature Repair Act 2023 (Cth) (the Act) on 15 December 2023. The Nature Repair Market is anticipated to launch in January 2025 and is being lauded by the Government as a world-first legislated, national, voluntary biodiversity market.
On 4 September 2024, the Department of Climate Change, Energy, the Environment and Water (the Department) released its Discussion Paper: Nature Repair Market (Discussion Paper) to test various proposals and policy positions relating to proposed legislative rules necessary for giving effect to the Act.
Submissions close on 30 September 2024 and will assist with the Department's development of legislative rules - to be known as the Nature Repair Rules (Rules).
In our recent article we provided an overview of the Nature Repair Market, its objectives and how it is intended to operate. In this article we discuss the Department's policy positions and proposals for the creation of the Rules.
The Discussion Paper covers the following themes:
1. Biodiversity projects and their registration. |
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2. Biodiversity certificates (Biodiversity Certificates) and their content. |
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3. The Biodiversity Market Register (Register). |
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4. Assurance and notification, including biodiversity project reports, audits, and notifications. |
The key policy positions and proposals in the Discussion Paper are outlined below.
Under the Act, a project must comply with the biodiversity integrity standards specified in the Act to be approved for registration. Biodiversity integrity standards are intended to ensure that projects registered under an approved method are likely to result in a genuine and verifiable biodiversity outcome. The first biodiversity integrity standard specified in the Act relates to additionality and states that a project "must be designed to result in enhancement or protection of biodiversity in native species … that would be unlikely to occur if the project was not carried out."1
The Department proposes that the Rules should specify a requirement that a project cannot be registered where it is required under a Commonwealth, State, or Territory law as this would indicate that the project is not additional. The Discussion Paper asks several questions in relation to this policy position, including whether existing projects should be eligible to participate in the Nature Repair Market, and whether it is agreed that registered projects must include activities beyond those required under a Commonwealth, State or Territory law.
The Act sets out various information that is required to accompany a project registration application. The Rules may establish additional information requirements to support the CER's consideration of a registration application. The Discussion Paper lists examples of the type of information that would satisfy the requirements of the Act and additional information requirements. Key proposals include providing:
Information accompanying a project registration application is generally intended to be publicly available on the Register to increase transparency and confidence in the Market.
Methods developed under the Act may set a condition that a project must have a project plan. If such a condition is set, a project registration application must be accompanied by a project plan. A project plan is to detail how the project is intended to be carried out to achieve the biodiversity outcome in accordance with the method. The Discussion Paper seeks feedback on the ways in which a project plan can facilitate the registration and implementation of a biodiversity project. The Department has proposed certain content as an example of what could be included in a project plan, including:
The Department's proposes to exclude from registration under the Nature Repair Market, projects that are excluded from registration as an ACCU2 generating project under the Carbon Credits (Carbon Farming Initiative) Rule 2015. As such, the Department is proposing the following projects could not be registered on the Register or generate Biodiversity Certificates under the Act:
All projects registered under the Act will need to comply with a method. A method is a set of rules for undertaking Nature Repair Market projects, which will define the conditions that must be met for a project to be registered and for proponents to receive Biodiversity Certificates. Methods also specify the activities that project proponents can carry out and any restricted or prohibited activities.
The Department is currently collaborating with technical experts and other stakeholders to progress a pipeline of methods including:
The Department has indicated that where a method is varied under the Act, projects approved under that method will need to transfer to the varied method (within the time frame set out in the method) unless an exemption is applied for and obtained from the Clean Energy Regulator (CER).
Where a method is remade (i.e. a method is revoked and a new one made), projects would need to transition to a new method unless there is no method for which the project would meet eligibility requirements, or an exemption is applied for and obtained from the CER.
The specific circumstances for an exemption could include that:
The approach of requiring project proponents to transition to updated methods has emerged from the Chubb Review of the ACCU Scheme.
Biodiversity certificates may contain both qualitative and quantitative information but should be limited to information that is within the regulatory responsibility of the CER. This is so that the accuracy and integrity of a Biodiversity Certificate can be verified and maintained for the life of a project.
Biodiversity certificates are only intended to be varied in limited circumstances and therefore the content will need to reflect information that is unlikely to change over the life of the certificate. The Department's proposal is that a Biodiversity Certificate should specify only the following:
In terms of the information relating to 'project attributes,' the Department seeks comment on what these should be and has proposed a list of attributes including:
The Act requires the CER to keep a Register that will be a publicly available electronic repository of information held by the CER about biodiversity projects and Biodiversity Certificates. The Discussion Paper specifies the proposed information to be prescribed by the Rules for inclusion in the Register; this includes various information relating to project details, registration details, method details, compliance details, project plans, reporting details, project status details, and information about Biodiversity Certificates.
Regular reporting to the CER is required under the Act. Reporting includes the submission of biodiversity project reports, which will form a key feature in ensuring confidence in the Nature Repair Market. These biodiversity project reports will allow the CER to understand progress and compliance of a registered project. The Act contemplates two types of biodiversity project reports: Category A and Category B reports.
A Category A report must accompany an application for registration of a project, and must be provided to the CER at least every 5 years during the permanence period of the project where a Biodiversity Certificate has been issued in respect of the project. The Discussion Paper indicates that a Category A report will need to include, amongst other things:
Where a Biodiversity Certificate has not been issued or an application for a certificate has not been made, a project proponent must provide a Category B biodiversity project report at or within 6 months of the 5-year period since project registration. Such a report would inform whether the CER cancels a project registration where the project has not commenced within 5 years or is unlikely to result in issuing of a Biodiversity Certificate. The Department proposes in the Discussion Paper that a Category B biodiversity project report should be required every 5 years.
The Act allows for audits to be undertaken ap project registration, certificate application and issuance, and to accompany a biodiversity project report.
It is proposed that the Rules will specify when an audit will be required, which will ordinarily take place in connection with an application for a Biodiversity Certificate. It is proposed that there may be different audit requirements for Category A and Category B biodiversity project reports.
The Act requires a project proponent to notify the CER of any significant reversal of biodiversity outcome. A reversal of biodiversity outcome is the decline in environmental condition that is substantial and affects the ability to achieve or maintain the biodiversity outcome of the biodiversity project. The Act specifies that the Rules can prescribe the circumstances in which a reversal is deemed to be significant reversal. The Department proposes in the Discussion Paper that the Rules will define a significant reversal as one where:
In deciding whether a reversal is significant, the Rules will require a project proponent to have regard to the context or intensity of the reversal event or conduct as well as how important, notable or of consequence the effects caused or likely to be caused to the biodiversity outcome of the project.
It is also proposed for the Rules to define a reversal as not a significant reversal where:
Feedback on the Discussion Paper is due by 6:00pm 30 September 2024.
The Department's consultation page on the Discussion Paper can be accessed here.
Please contact our team if you require assistance in preparing submissions to the Department or are interesting in finding out more about the Discussion Paper or the operation of the Nature Repair Market.