NSW Court of Appeal addresses environmental consequences in the case of Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc versus MACH Energy Australia Pty Ltd, decided on 2025 NSWCA 163.

In a significant decision, the Court of Appeal in Australia has ruled that project proponents must provide more comprehensive environmental impact assessments, including assessments of the potential impacts of their projects on the locality, even if those impacts occur on a regional or global scale.

The ruling was made in the case of Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd, where the plaintiff challenged the Independent Planning Commission's (IPC) decision to grant consent to a coal mining project. The project, which proposes to extend the operating life of the Mount Pleasant mine for an additional 22 years and extract an additional 406 million tonnes of coal, was found to have not adequately considered the impact of its Scope 3 emissions on the locality.

Scope 3 emissions, which account for the majority (98%) of the GHG emissions generated by the project, are attributed to the country within which they are emitted. These emissions, while not counted towards NSW's emissions under the Paris Agreement, still have a global impact, as they represent approximately 0.06% of yearly global GHG emissions.

The Court of Appeal held that the IPC failed to engage with the essential matter with which s 4.15(1)(b) of the Environment Planning and Assessment Act is centrally concerned, by not considering the causal connection between the Project and its impacts on the environment in the locality of the Project.

Justice Robson dismissed the application, but the Court of Appeal allowed the appeal on the ground that the IPC did not consider the impact of the Project's Scope 3 emissions on the locality as required under s 4.15(1)(b) of the EPA Act. The Court declared that the development consent was invalid for failing to consider a mandatory consideration and remitted the matter to the Land and Environment Court for consideration as to whether orders can or should be made which, if complied with, would validate the development consent.

The decision extends the "likely impacts" that are required to be considered in relation to the locality under s 4.15(1)(b), to those cumulative impacts that occur on a regional or global scale that are contributed to by the project. This means that consent authorities will need to consider the causal connection between downstream impacts and impacts in the locality under s 4.15(1)(b), be they impacts on the natural and built environments, or social and economic impacts.

The Court of Appeal's decision may have implications for future projects, as consent authorities will need to consider the causal connection between downstream impacts and impacts in the locality under s 4.15(1)(b), even if those impacts occur on a regional or global scale. The range of potentially adverse impacts of climate change in the locality that were required to have been considered may include deforestation, biodiversity loss, and water quality degradation, particularly when the locality is particularly susceptible to those impacts.

It is important to note that Scope 3 emissions are not included in the Project's emission reporting under the Paris Agreement accounting rules and Australian legislation to avoid double counting. However, the Court of Appeal's decision underscores the importance of considering the broader environmental and social impacts of projects, even if those impacts are not directly controlled by the project proponent.

The Court of Appeal's decision may require project proponents to provide more comprehensive environmental impact assessments, including assessments of the potential impacts of their projects on the locality, even if those impacts occur on a regional or global scale. This decision marks a significant step forward in ensuring that projects are developed in a more sustainable and environmentally responsible manner in Australia.

NSW Court of Appeal addresses environmental consequences in the case of Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc versus MACH Energy Australia Pty Ltd, decided on 2025 NSWCA 163.