1. Offsets as an opportunity - the NSW experience
Presentation to EIANZ National Biodiversity Offsets Conference, Canberra
Nick Thomas, Partner, Clayton Utz
27 August 2019

2. NSW Biodiversity offsets scheme
Legislated biodiversity impact assessment and offset scheme
Market for trading biodiversity offset credits
Builds on 2006 Biobanking legislation, but locks in new scheme
New form and process for assessment - from BBAM to BAM
Focus on biodiversity credits and credit-equivalent payments
Stricter requirements for nature, scope and timing of offsets
avoid impacts
mitigate impacts
offset residual impacts

3. What triggers the bos?
Biodiversity scheme bolts on to planning approval pathways
State significant development / infrastructure (major projects)
applies unless DPIE determines the project is not likely to have any significant impact on biodiversity values
Part 4 development (local / regional development)
applies to development which is likely to significantly affect threatened species
Division 5.1 (or former "Part 5") activities
applies to development that is likely to significantly affect threatened species
proponent can choose whether to opt in
Test of significance of impact

4. BOS AT A GLANCE NSW Minister for Environment
Public register of biodiversity credits, agreements, transactions, EOIs
NSW Minister for Environment
Biodiversity Conservation Trust 1
NSW Dept Planning, Industry and Environment (DPIE)
management actions
no. and class(es) of credits issued
Total Fund Deposit amount
annual reporting requirements
schedule of annual payments
registered on land title
retire credits
Biodiversity Conservation Fund
Biodiversity Development Assessment Report (BDAR) 5
Accredited assessor, applying BAM
offset payment
Biodiversity Stewardship Payments Fund
Planning approval authority
annual payment 2
total fund deposit 3,4
Biodiversity Stewardship Agreement
Biodiversity stewardship site owner
Biodiversity credit purchaser
(developer)
credit obligation
Project approval, with offset conditions
credits
credit price ($)
1 Biodiversity Conservation Trust administers aspects of the offset scheme
2 Annual payment as per schedule in biodiversity stewardship agreement, paid over 20 years
3 Based on present value of estimated total management cost
4 In practice, credit purchaser pays total fund deposit amounts ("Part A payment") into Fund to ensure registration of credit transfer
5 Sets out assessment of offset obligation and no. and class(es) of credits for offset obligation

5. impact assessment scheme
Developers offsetting impacts
Landholders creating credits
Biodiversity development assessment report (BDAR)
Biodiversity stewardship site assessment report (BSSAR)
assess biodiversity values of proposed development site
assess biodiversity values of proposed stewardship site
assess impact of proposed development on those biodiversity values
set out the measures to avoid or minimise the impact
set out proposed management actions for the site
for residual impacts - specify number and class(es) of credits required for offset
specify number and class(es) of credits that may be created from those actions
Only an accredited assessor can prepare a BDAR or BSSAR
Must be in accordance with the Biodiversity Assessment Method (BAM)
Must apply the BAM as at ≤14 days pre-lodgement

6. Biodiversity offset conditions
Planning pathway
Considerations for approval authority
Biodiversity conditions
When credits must be retired
Part 4
(local/ regional)
Must consider BDAR
May also separately consider impact on biodiversity values
Must impose credit obligations as per BDAR
May vary BDAR credit requirements up or down having regard to project's environmental, social and economic impacts (if reasons given)
Before development which would affect biodiversity values is carried out
SSI / SSD
(major projects)
May impose credit obligations as per BDAR or otherwise
Same as above
Division 5.1
(infrastructure, exploration)
May impose credit obligations as per BDAR or otherwise (if reasons given)

7. Satisfying an offset obligation
Retire credits in accordance with approval condition
how strict is the "like for like" requirement?
variation rules in the Biodiversity Conservation Regulations
Credits are expenditure!
Pay into Biodiversity Conservation Fund
offsets payment calculator determines amount of payment
statutory premium on market price for credits (now approx. 30%)
some incentive for retiring credits instead of paying into the Fund
Biodiversity Conservation Trust uses funds to
acquire and retire credits, applying "like for like" rules and variation rules
pay for other biodiversity conservation measures or actions
Mine rehabilitation can be used as an alternative form of offset

8. Like-for-like offset rules
impacting on…
like-for-like offset
Threatened ecological community (ecosystem credits)
Same threatened ecological community
Same local region
Hollows for hollows
Other native vegetation (ecosystem credits)
Similar vegetation under same or greater threat
Same local region
Hollows for hollows
Threatened species habitat (species credits)
Same species anywhere in NSW
Same local region means same IBRA subregion, adjacent IBRA subregions, or IBRA subregions within 100km of the site
IRBA means Interim Biogeographic Regionalisation of Australia (ie. recognised bio region classification)

9. Cumberland IBRA subregion and adjacent subregions (for credit trading)

10. Transition from biobanking to bos
Remain valid under BC Act
Can be converted to BC Act "equivalent"
OEH / DPIE conversion notices caused concern for credit holders
Biobanking credits
Biobanking offset obligations
Biobanking agreements
Remain in place and will be administered as Biodiversity Stewardship Agreements
DAs with Biobanking assessments
Various extensions to utilise Biobanking scheme instead of BOS Western Sydney - DA by 24 Nov 2019
Biobanking agreement applications
Could be submitted up to 25 Feb 2018 in some cases, but had to be finalised by 25 Feb → long transitional lead time

11. Update on NSW / Cth Bilateral
Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act)
Specified approval triggers, based on matters of national significance - most likely threatened species and ecological communities
No statutory requirement for offsets, but allows for offset conditions
Important to avoid duplication of assessment and offset obligations
Bilateral agreement accredits specified State assessment methods
draft amendments to accredit Biodiversity Conservation Act 2016
NSW and Cth agencies are negotiating details - likely tightening of NSW "like for like" rules where EPBC Act species / communities affected
DoEE accredits projects on a case-by-case basis until bilateral agreement amendments signed

12. FROM LIABILITY TO OPPORTUNITY
Plan ahead
Understand your neighbourhood
look out for credit potential; early awareness of new credits
find ways for more efficient / effective credit creation (eg. collaboration)
Understand your market
likely buyers for credits you have / want
current and future sellers of credits you have / want
Develop a strategy for your organisation to ensure offsets on time
aggregate multiple project offset needs (eg. across a project portfolio)?
consider acquiring credits in advance
alternatives to credits (eg. payments into Fund)
 Cost negative → cost neutral → cost benefit → profit