The verdict is in, the climate change duty is out: Full Court overturns Sharma
On 27 May 2021, in the ground-breaking decision of Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment [2021] FCA 560 (Sharma), the Federal Court of Australia determined that the Federal Minister for the Environment had a duty to avoid causing personal injury or death to children in Australia as a result of carbon emissions when deciding an application to approve a coal mine expansion.
Today, in yet another landmark decision, the Full Court of the Federal Court overturned this requirement.
Background
Under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act), actions which may have a significant impact on certain matters of national environmental significance require referral to the Minister for the Environment. The Minister then determines whether the action is a “controlled action”, and if so, it requires EPBC approval.
In its current form, the EPBC Act does not require the Minister to consider carbon emissions or climate change issues when assessing referrals. Consequently, many proponents do not ordinarily provide emissions information when submitting referrals.
The Sharma decision in 2021 drastically upended the status quo, forcing not only the Minister to consider issues beyond what the legislation prescribes, but also forcing proponents to unexpectedly provide comprehensive emissions data. Unsurprisingly, the Minister appealed the decision.
Practical implications
The climate change duty required by Sharma gained global attention and proved burdensome for many proponents, particularly those wishing to develop or expand coal mines.
In order for the Minister to demonstrate that she has satisfied her climate change duty, proponents have been required to provide various additional details that otherwise would not have been required, for example:
- the action’s projected greenhouse gas emissions (broken into scope 1, 2 and 3 emissions), usually taken from and supported by formal air quality and greenhouse gas reports (which take time and money to commission);
- information about the countries the coal will be exported to and how it will be used in those countries; and
- the social and economic benefits of the project (as this allows the Minister to determine whether those benefits help outweigh the risks posed by emissions).
Proponents have had to make difficult commercial decisions between delaying referral submissions in order to include this information upfront (which may be necessary if the proponent is hoping for one of the faster assessment methods), and submitting referrals without the information (which means the information will likely be requested by the Minister throughout the assessment process, and may lead to a more rigorous assessment method being selected by the Minister).
More broadly, proponents have faced considerable uncertainty while the Sharma appeal to the Full Court has been underway.
The way forward
The Full Court has ordered that the Minister’s appeal be granted. This decision provides welcome relief for many mining proponents, with the Full Court determining that – at least for the time being – the Minister need no longer consider the impact of emissions on Australian children when assessing EPBC referrals.
Sharma (by her litigation guardian) now has 28 days to seek special leave to appeal to the High Court. Given the spotlight that has been cast on the case and the increasing focus on climate change and net zero emissions, a special leave application seems likely. However, only time will tell whether the High Court would be prepared to entertain an appeal and potentially restore the climate change duty. We will continue to monitor the situation, review the Full Court’s detailed reasoning and provide updates as appropriate.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.
