The Resource Management Amendment Bill 2019 was not originally intended to address climate change. However, in what was a surprise to many, the Environment Select Committee recommended changes to the Resource Management Act 1991 (RMA) to enable decision-makers to consider the effects of a resource consent application on climate change. It also meant councils would need to take into account the National Emissions Reduction Plan and National Adaptation Plan when preparing policy statements and plans. The Select Committee's recommendations were incorporated into the Resource Management Amendment Act 2020 and will take effect on 30 November 2022.1 The Ministry for the Environment (MfE) and resource management profession are grappling with what this will mean in practice.
The article examines MfE's proposed approach to managing the effects on climate change under the RMA, considers some of the key issues that need to be resolved, and proposes solutions to those issues.
MfE's proposal
In a discussion document last year, MfE has proposed national direction - a national policy statement (NPS) and a national environmental standard (NES) - to govern the production of greenhouse gases (GHGs) from activities that burn fossil fuels in industrial process heat activities.2 For all other types of consenting and regional policy and plan making, MfE has proposed non-binding guidance to assist decision-makers under the RMA.
The NPS will consist of objectives and policies to phase out fossil fuels in industrial process heat. To be granted consent for an activity that burns fossil fuels, the applicant must:
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demonstrate there are no technically feasible or economically viable low-emissions alternatives;
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show the Best Practicable Option (BPO) has been applied to minimise GHG emissions; and
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have a GHG Management Plan in place (professionally certified for larger emitters) together with monitoring, reporting, and reviewing requirements.3
The NES will include a prohibited activity rule for discharges of GHGs from new coal burning assets for low and medium temperature heat activities.4 For phasing out coal and other fossil fuel use, reconsenting of those activities will require restricted discretionary consent. For activities that are currently permitted, there will be an 18-month period to apply for consent under the NES. Matters of discretion and conditions will include maximum consent duration (10 years for existing assets; 20 years for new assets), and a requirement for the applicant to show it has applied the BPO and adopted a GHG Management Plan. Activities that discharge less than 500 tonnes CO2 per year of total thermal load will be exempt from the NES.
MfE's proposed approach has a number of challenges that will need further consideration, which we set out in detail below.
We know about industrial activities – what about everything else?
MfE's approach to industrial process heat activities is relatively well-defined with objectives, policies, and rules in national direction. No such clarity currently exists for all other types of activities under the RMA. This includes activities that are essential, but which generate emissions, such as wastewater treatment plants and landfills. It also potentially affects a wide range of activities that do not directly generate emissions, but which may still be caught.
That is a concern because 30 November 2022 is approaching fast. The lack of clear direction is a real problem for applicants and decision-makers under the RMA. The key risk is that there is no clarity as to the bounds of the assessment, or how it is to be considered within a broader assessment under section 32 or 104. This will inevitably lead to testing through the Environment Court and higher Courts. But that takes time. It could be many years before there is clarity as to how these provisions are to be applied. There is also the risk of inconsistent application across New Zealand in the meantime. Even before these provisions come into force, we have seen recent testing of how far the RMA can go in relation to climate change.
Guidance or national direction?
We firmly believe that national direction is required to provide certainty for all parties. MfE has identified the potential for non-binding guidance. Put simply, that is not sufficient. The Environment Court has recently been critical of reliance being placed on non-statutory guidance to interpret RMA (or subordinate legislative) provisions.5 Those concerns apply equally to climate change.
We address below some of the key aspects that could be included within any national direction.
What types of emissions should be considered under the RMA?
Follow an activity up or down its supply chain far enough and you will hit GHG emissions. The activity might itself involve the burning of a fossil fuel such as a coal-fired power station or a gas-fired boiler. Or GHG emissions could be more remote to the activity in question, for example GHGs produced during the generation of electricity that is then used by the activity, or GHGs emitted during the production of construction materials.6 An important part of considering GHG emissions under the RMA will be knowing where to draw the line. The objectives, policies, and rules in proposed national direction for industrial process heat only regulate direct emissions of industrial activities. A similar approach (ie, focusing on direct emissions only) should be taken for non-industrial activities. This is the clearest approach and is also supported at law.
Effects of an activity on the environment, especially indirect effects, must be assessed according to limitations of nexus and remoteness to determine whether they should be assessed as part of the activity.7 There is a good argument that indirect emissions fail the tests of nexus and remoteness under the RMA:8
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They are not causally connected to the primary activity as the emissions would occur regardless of whether a particular project proceeded or not.
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Focussing on direct emitters will regulate emissions at source, not further down the supply chain.9 This is more efficient and reduces the risk of double counting emissions.
- Depending on where materials have been constructed, it could amount to regulating extra-territorial effects (for example coal used overseas). This goes beyond the jurisdictional limit of the RMA.10
- Controlling air discharges of GHGs through land use decisions would not sit comfortably with the different roles and jurisdictions of regional, as opposed to district, councils.
District councils can still conduct comprehensive urban planning and transportation strategies to mitigate the climate change effects of GHGs under national direction and in fact we are seeing this already through the NPSUD.11
Is offsetting GHGs under the RMA appropriate?
Offsetting GHG emissions has been accepted at a national scale. We do it when it is mandatory under the Emissions Trading Scheme (ETS) and we do it voluntarily in respect of a range of goods and services. Caselaw has previously suggested that conditions requiring offsetting emissions are not acceptable under the RMA.12 The current amendments remove some, but not all, of the underlying foundation for that position. It is entirely possible that offsetting emissions under the RMA is back on the table.
Offsetting under the RMA would need to apply at a national scale and not be restricted by regional boundaries. From a practical perspective, there is caselaw support for conditions of a resource consent operating outside the jurisdiction of a regional council, which would help support a nation-wide approach to offsetting.13 A broader approach makes sense, given that climate change effects are felt at a nation-wide scale and are not localised like traffic and noise effects. Many companies (particularly some of the larger GHG emitters) operate multiple sites across different regions around New Zealand. From an NZ Inc perspective, it also makes sense to look at climate change issues through a national lens. The risk of double-counting of offsets across different regions could be addressed in any national direction.
The interaction between the RMA and the ETS is less clear. The transferability of New Zealand Units to the RMA risks undermining the policy reasons for the changes to the RMA. However, it is only logical that if you plant a forest (irrespective of motivation), then you should be able to enjoy the benefits of that under the ETS.
Proving effects and significance of emissions
Decision-makers assessing resource consent applications are required to assess the actual and potential effects of an activity on the environment.14 How should the effects on the environment of GHGs be assessed? What constitutes a high, moderate, or low effect? How significant would GHGs need to be to require a consent to be declined? And for each application, can the adverse effect of GHGs be assumed or does it need to be proven in every case?
The difficulties in assessing the direct effects of emitting GHGs was considered in Smith v Fonterra.15 In that case the High Court found that while in the future it may be possible to assess the actual effects of specific emissions, at present it is difficult, if not impossible, to say which effects were caused by which emissions.16 A different approach was taken in the Australian case of Sharma v Minister for the Environment, whereby the Court found that specific emissions contributed to the overall risk of climate change and that risks can be small but still be a real risk.17 There is support for this "cumulative effects"-type approach in Environmental Defence Society Inc v Taranaki Regional Council, where the Environment Court found that "since all greenhouse gas emissions all contribute cumulatively to the same global atmosphere, every small contribution makes a difference".18
To minimise the need for every consent application to prove the adverse effects of climate change (which in itself would have a carbon footprint), it would be useful for MfE to produce a scale of effects supported by a scientific body of literature that can be relied on in each case (for example, if embodied carbon is required to be considered, what does a standard residential dwelling include, and what is the effect of those emissions on the environment). This would assist both applicants and decision-makers. Importantly, as already discussed above, the de minimis standard should also be included. MfE has essentially indicated that for low and medium temperature industrial process heat activities, that de minimis standard sits at 500 tonnes of CO2 per year of total thermal load at a site. Clarity that this threshold (or some other threshold) applies across industrial and other types of activities would be helpful.
What should national direction cover?
A set of clear markers are required to determine how the amendments to the RMA will work in practice. The following principles should be addressed by any national direction (and would become the basis for amendments to regional plans):
- Only direct discharges should be captured.
- A de minimis threshold for GHG emissions should be set.
- For activities exceeding the de minimis threshold, the use of controlled and restricted discretionary activity rules in an NES/regional plans (which provide an efficient way of controlling emissions through the consenting process).
- Ensuring activities adopt the BPO and have a GHG Management Plan in place are both practical and equitable ways that GHGs can be reduced over time. These could be secured for GHG emitting activities as information requirements forming part of the matters of control or discretion.
- Signalling a nationally consistent approach for GHG offsetting in the RMA context, which is integrated with the ETS and the voluntary offsetting programme in New Zealand.
It would also assist to provide some guidance for decision-makers as to what they are to do with any GHG emissions related information provided with an application. Does the fact that a wastewater treatment plant generates emissions mean that it can't be approved? What sort of conditions might be imposed?
Conclusion
Climate change is a critical issue, and will only become more significant under the Natural and Built Environments Act. Bringing climate change considerations into the resource management system needs to take place effectively. There are a number of challenges with considering the effect of GHGs on climate change under the RMA. We have outlined some potential solutions to the challenges faced with the goal of assisting in building a robust system for considering these important issues.