NSW Land and Environment Court refuses development approval for Rocky Hill Coal Mine Project on climate change grounds

The NSW Land and Environment Court (Court) has refused development consent for the Rocky Hill Coal Project in the Gloucester Valley, citing the mine’s likely contribution to climate change as a key reason.

The decision will have wide-reaching consequences and will likely affect the viability of coal and other fossil fuel-dependent industries in Australia. The growth in international jurisprudence directly linking fossil fuel developments with climate change may also lead banks and others who would traditionally invest in these industries to consider alternatives.

Background

Gloucester Resources Limited (GRL) sought development consent for a new open cut coal mine approximately 5km south of the Gloucester town centre in New South Wales. Extraction of 2Mtpa of coal was proposed for a period of 21 years (Project).

The NSW Department of Planning and Environment referred the Project to the Planning Assessment Commission (PAC) (now the Independent Planning Commission) for determination, after receiving 2,570 submissions (2,308 objections).

On 14 December 2017 the PAC refused consent for the Project, citing:

• incompatibility with the underlying zoning of the land as primary production and environmental management zones, despite being a permissible land use under the State Environmental Planning Policy (Mining Petroleum Production and Extractive Industries) 2007 (Mining SEPP). Also, the potential land use conflicts with existing established uses, including rural-residential and tourism;
• that the Project would likely have significant residual visual impacts and would not be sympathetic to the Gloucester Valley’s character; and
• that the Project was not in the public interest, as any economic and social benefits were outweighed by the reduction in the residents' quality of life due to visual, noise and air quality impacts.

Court appeal

GRL appealed to the Court on 19 December 2017.

The proceedings were later joined by a local community action group, Groundswell Gloucester Inc (Groundswell). In joining the proceedings, Groundswell sought to bring additional arguments centred around the climate change impacts of the Project and its incompatibility with Australia’s commitments under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.

Summary of the Court's decision

The Court's decision in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 was handed down on 8 February 2019. His Honour Chief Justice Preston dismissed GRL’s appeal and upheld the PAC’s decision to refuse consent to the mine.

The Court’s reasons for refusal included that:

• the mine would have significant adverse impacts on the visual amenity and rural and scenic character of the valley, and social impacts on the community;
• the mine would have significant impacts on the existing, approved and likely preferred uses of land in the vicinity of the mine;
• construction and operation of the mine, and transportation and combustion of the coal from the mine, would result in the emission of greenhouse gases (GHGs), which would contribute to climate change and would not assist in achieving agreed emissions targets; and
• the costs of the mine, exploiting the coal resource at this location in a scenic valley close to town, would exceed its economic benefits.

Ultimately his Honour held:

'In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time. Wrong place because an open cut coal mine in this scenic and cultural landscape, proximate to many people’s homes and farms, will cause significant planning, amenity, visual and social impacts. Wrong time because the GHG emissions of the coal mine and its coal product will increase global total concentrations of GHGs at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions. These dire consequences should be avoided. The Project should be refused.'

Incompatibility with other land uses

The primary arguments against approval of the Project centred around clause 12 of the Mining SEPP. This required the consent authority to consider the compatibility of the proposed mine with other land uses in the vicinity.

The Court had regard to existing uses, approved uses and likely preferred uses in the vicinity of the Project in determining that:

• because of its visual, amenity and social impacts, the Project would be incompatible with the rural character of the land and the residential and rural-residential, agricultural and tourism uses in its vicinity;
• visual impacts would not be ameliorated by the amenity barriers proposed by GRL or the rehabilitated post-mining landforms;
• although the Project was compliant with relevant development standards for noise and air quality, residual noise and air quality impacts on residents would have adverse social impacts, including perceived impacts on health and wellbeing;
• the Project was likely to have major negative social impacts including impacts on the composition, cohesion and character of the community and local people’s sense of place, adverse impacts to the culture and Country of Aboriginal people, and issues of distributive inequity which would not be adequately addressed by way of the mitigation measures proposed by GRL; and
• the alleged public benefits of the Project (suggested by GRL to include an economic benefit to NSW of $224.5 million over the life of the mine) were substantially over-stated and did not outweigh either the public costs of the proposed mine or the public benefits of the existing, approved and likely preferred uses in the vicinity of the Project, if those uses were left unaffected by the Project. Significantly, while the benefits of the Project would be present only for the life of the Project, the negative impacts would endure.

Climate change

Groundswell argued that the Project should be refused because the GHG emissions from the Project, both direct and indirect, would be inconsistent with Australia’s commitments under the UNFCCC and the Paris Agreement to keep global temperature increases to below 1.5º to 2ºC above pre-industrial levels, and would have a cumulative impact on climate change in the long term.

GRL argued that:

• although it did not contest the scientific evidence behind climate change, consent for the Project did not need to be refused to meet Australia's commitments. There are no governing structures under the UNFCCC and the Paris Agreement, or under State or Federal laws, that predetermine how GHG emissions reductions should occur. Therefore, 'to adopt a policy of no new coal mines would be to impermissibly legislate a strict rule of general application without jurisdiction to do so';
• scope 3 emissions (indirect emissions arising from sources not owned or controlled by GRL, such as from a third party purchaser burning coal) should not be considered when assessing the Project's impact, because Australia should not be held responsible for emissions caused by the burning of coal in other countries;
• preventing new coal mines might be consistent with reducing GHG emissions, but this is not the only way to achieve the desired emission reduction targets. Increasing the rate at which carbon is extracted from the atmosphere through carbon sequestration and preservation of carbon sinks could be an alternative means by which commitments are met; and
• most of the coal produced by the Project would be coking coal, an essential component in the making of steel, with limited substitutes. This critical role should justify the approval of the Project despite any climate impacts.

The Court found that the Project's GHG emissions would be sizable over the life of the mine. In response to each of GRL’s arguments, the Court held that:

• scope 3 emissions should be taken into account, in accordance with clause 14(2) of the Mining SEPP and precedents set in other decisions of the Court, as well as in the United States;
• there is a causal link between the Project and climate change and its consequences, as all of the Project's direct and indirect GHG emissions would contribute cumulatively to total GHG emissions,. His Honour cited Australian Conservation Foundation v Latrobe City Council,[1] Massachusetts v Environmental Protection Agency[2] and the Urgenda Foundation v The State of the Netherlands[3] decisions in stating that this point has now been recognised in many courts;
• as there was no specific proposal to offset the Project’s impacts by removing GHGs from the atmosphere, the argument regarding carbon sequestration as an alternative measure should be rejected; and
• the argument that coking coal is critical for the production of steel was overstated by GRL, as the demand for coking coal from steel production in Australia could be met by existing and approved mines.

His Honour referred to statements made in evidence by Professor Will Steffen on behalf of Groundswell, that in order to reach emissions reductions targets “most fossil fuels will need to remain in the ground unburned”. Deciding which fossil fuel reserves should be allowed to be exploited and burned requires evaluating the merits of each potential fossil fuel development by considering its GHG emissions and the likely contribution to climate change, as well as the development's other impacts.

In this case:

'Refusal of consent to the Project would prevent a meaningful amount of GHG emissions, although not the greater GHG emissions that would come from refusal of a larger coal mine. However, the better reason for refusal is the Project’s poor environmental and social performance in relative terms. As I have found elsewhere in the judgment, the Project will have significant and unacceptable planning, visual and social impacts, which cannot be satisfactorily mitigated. The Project should be refused for these reasons alone.'”

Implications

Building upon a growing international jurisprudence directly linking fossil fuels and climate change, this decision is likely to have wide reaching consequences for the viability of coal and other fossil fuel-dependent industries in Australia. Future proponents will need to seriously consider the decision, as will banks and others who would traditionally invest in or support coal and other fossil fuel-dependent industries.

It is possible that the increasing recognition of causative links between fossil fuel developments and climate change could pave the way for future compensation claims of the kind now being seen in the United States.

^{[2] 549 US 497 (2007).}

^{[3] Urgenda Foundation v The State of the Netherlands C/09/456689/HA ZA 13-1396, 24 June 2015; The State of the Netherlands v Urgenda Foundation 200.178.245/01, 9 October 2018.}