Australia: NSW government plan to reach net zero emissions by 2050

In brief - A summary of the key measures that will take place in New South Wales between now and 2030 to reach Stage 1 goals

On 14 March 2020, the NSW Department of Planning Infrastructure and Environment released Net Zero Plan Stage 1: 2020-2030 of the plan to achieve net zero carbon emissions by 2050.

Stage 1 covers the years 2020-2030, and within this decade there are some ambitious and important targets which will have implications for NSW planning laws, but also practically to those industries impacted by the goals.

It is the first plan of its kind in Australia.

This article summarises the key priorities and goals of Stage 1.

Stage 1 key priorities

There are four simple priorities for Stage 1:

1. Drive uptake of proven emissions reduction technologies that grow the economy, create new jobs or reduce the cost of living.
2. Empower consumers and businesses to make sustainable choices.
3. Invest in the next wave of emissions reduction innovation to ensure economic prosperity from decarbonisation beyond 2030.
4. Ensure the NSW Government leads by example.

The Plan estimates that these four priorities will result in a reduction by 35.8 megatonnes of emissions by 2030 compared with 2005 levels (see Table A.2 "Expected reduction in carbon emissions by 2030"). That would be a 35% reduction of NSW's annual emissions from 2005 levels (see p.13). The key driver in those reductions (i.e. approximately 77% of those reductions) is expected to be the result of the uptake of "proven emissions reduction technologies" (Priority 1).

Specific goals of Stage 1

Priority 1 involves the three pillars of "driving technologies that:

• grow the economy;
• create new jobs; or
• reduce the cost of living."

Presumably this means that if the measure does not drive one of these three things it would not be pursued. This is not insignificant given the carbonised economy in NSW. However, this Plan does not provide for any significant displacement of the coal industry, which based on the NSW Government's recent Future of Coal Statement: Strategic Statement on Coal Exploration and Mining in NSW predicts a long slow decline.

The Plan recognises that the mining sector is one of the biggest economic contributors in NSW, and that mining will continue to be an important part of the economy in the future. It states:

The Plan instead states that the NSW Government will invest in a Coal Innovation Program. That program would focus on providing incentives to coal operators to capture and reuse methane released during mining (for example, by using the gas on-site or via the gas system), and provide research and industry partnerships with funding to commercialise emerging technologies to reduce emissions at hard-to-mitigate sites. The Plan suggests that the capture and reuse of gas from mines could help offset emissions from gas used in homes and businesses in NSW.

Investment in regional and rural NSW

The Plan lists several economic benefits, particularly for regional and rural NSW including:

NSW is planning to deliver three "Renewable Energy Zones" in the Central-West, New England and South-West to replace retiring generators in NSW with cheaper, renewable energy. Once fully established (over the next 20 years), these Zones are anticipated to drive up to $23 billion of private sector investment and create about 2000 construction jobs each year in regional NSW. Stage 1 will include fast-tracking the first of these Renewable Energy Zones.

Reducing electricity prices

Stage 1 also indicates that the NSW Government will support a new regulatory framework to promote generating new, lower cost electricity in NSW to reduce electricity prices, ensure reliable electricity supply, and protect the environment. Although this remains to be explained in more detail, based on the goals of this plan we expect that the lower cost electricity will be provided for by incentivising the development of technologies to generate this electricity, potentially with a combination of subsidies and reduction of "red tape" in the new regulatory framework.

Roll out technologies that reduce emissions and costs

As mentioned above, the main priority of Stage 1 is to develop and commercialise proven emissions-reducing technologies. This would create environmental and economic value for both households and businesses.

The cost of these technologies generally becomes cheaper as they are developed, which makes these more available. The classic example is the cost of generating solar energy. Electric vehicle battery prices have also fallen by more than 85% since 2010 (see p.7).

Falling prices naturally result in more availability of these technologies, which in turn supports economic growth and jobs such as manufacturing of the products, and associated businesses being established.

The flow on benefits of incentivising commercialisation of these products extends to consumers. Businesses and homes will be able to use these lower-emissions technologies to reduce their own running costs. For example, the Plan mentions that the recently installed solar panels at Ikea's Tempe store are expected to save $200,000 in electricity bills per year.

In encouraging the use of lower-emissions technologies, NSW planning laws are likely to evolve. In the last couple of years we have already seen:

• electric vehicle charging stations became exempt development under the State Environmental Planning Policy Infrastructure 2007 (Infrastructure SEPP): see clauses 104A - 104B.
• Division 4 "Electricity generating works or solar energy systems" of the Infrastructure SEPP was amended:
• • to include "electricity storage" within the definition of "electricity generating works", in order to cover batteries (see clause 33); and
  • to list certain solar energy systems, wind monitoring towers, and small wind turbine systems as exempt development: see clause 39 of the Infrastructure SEPP.

Given the planning laws can make such technology easier and cheaper to implement, or alternatively more difficult and costly, we anticipate several changes to construction and planning laws following recent amendments to NSW planning policies.

The Plan foreshadows the following changes to incentivise the uptake of electric vehicles:

• New buildings will be required to be electric vehicle-ready, with changes to the National Construction Code and NSW Building Sustainability Index (BASIX). For example, they may be required to provide electrical conduits and wiring to simplify installation of electric vehicle charging equipment.
• Licensing and parking regulations will be amended to support the rollout of electric charging infrastructure and the uptake of electric vehicles.

Stage 1 of this Plan will support investigation into opportunities to create new market opportunities, for example the use of hydrogen as a fuel, so that NSW is positioned well to move early on new technologies and potentially develop globally competitive goods and new market opportunities.

The next six months will be pivotal for the companies in Australia leading hydrogen technologies, since funding for some of those investing in this area is contingent on progress being made, which has obvious difficulties given the economy's "hibernation" during the pandemic.

Informing consumers of lower emissions choices

Priority 2 involves empowering consumers so they can make lower emissions choices.

Importantly for the development industry, the NSW Government plans to advocate for the National Australian Built Environment Rating System (NABERS) to be expanded beyond commercial buildings, to allow other building users to compare energy efficiency, water usage and waste management services when looking to buy or lease building space. For example, the Plan suggests expanding the use of NABERS to schools, retirement living, industrial warehouses, retail tenancies, and supermarkets.

We also anticipate changes to the National Construction Code and BASIX for the delivery of cost-effective, low emissions outcomes for residential, commercial and public buildings.

This will drive emissions reductions in the building sector, and the demand for low emissions building materials. This ties back to Priority 1 ("Drive uptake of proven emissions reduction technologies") by incentivising the use of building materials such as bricks manufactured with a net zero emissions result.

Those new kinds of building products will also allow NSW building suppliers to maintain a competitive advantage against overseas imports.

NSW Government wants to lead by example

The NSW Government importantly recognises the need to lead by example in implementing the strategies outlined in the Stage 1 Plan. Some examples of the NSW Government's short-term goals include:

Regulatory changes anticipated once detailed delivery plan available, but impact of COVID-19 on timelines remains to be seen

We anticipate several regulatory changes as a result of the NSW Government incentivising the uptake of lower-emissions technologies, to assist those goals being realised. This may result in some significant changes to the building materials industry also. In this regard, changes will not be unveiled until the detailed delivery plan is published.

This Plan aligns with the Memorandum of Understanding entered into by the Federal Government and the State of NSW on 31 January 2020, setting out the actions and outputs in relation to solving NSW's emerging reliable energy generation problems.

Priorities 1 and 3 of NSW's Plan are also reflected in the Federal Government's "Technology Investment Roadmap Discussion Paper: A framework to accelerate low emissions technologies", released on 21 May 2020. That strategy goes towards fulfilling Australia's commitment under the Paris Agreement to limit emissions by the second half of this century. It contains several of the same goals as the NSW Plan, including backing gas and a shift towards renewables in reducing emissions. Echoing the priorities of the NSW Plan, Angus Taylor MP has said of the Technology Investment Roadmap:

NSW's Plan was prepared in a pre-COVID NSW. It will remain to be seen whether the timelines for goals set out in the Plan will still be reached despite the pandemic. However, if the larger goal of net zero emissions by 2050 in NSW is to be realised, rather than remain an aspiration, meaningful changes need to start occurring now. Whilst 2050 is many electoral cycles away, 2030 is not so distant, and the Stage 1 horizon only extends 10 years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.