8.2 - Proposed key reform directions
The offset policy should be replaced with clear laws. The EPBC Act should require offsets only be considered when options to avoid and mitigate impacts have been demonstrably exhausted.
The EPBC Act should require that offsets deliver genuine restoration to offset the impacts of the development. Requirements for restoration should be proportional to the risk to matters of national environmental significance (MNES), with more stringent requirements for highly endangered species or ecological communities.
To provide the certainty needed to invest in restoration ahead of impacts occurring, the EPBC Act should require a decision-maker to accept robust advanced offsets that are created before approval is granted. Restoration offsets should be encouraged to enable a net gain for the environment to be delivered.
If offsets, including advanced offsets, were to be supported with greater certainty under the EPBC Act, then this could be the catalyst for a market response. Proponents are generally not in the business of managing habitats as their core business. However, there are expert land managers and specialist project managers who deliver these services, as has been demonstrated through the operation of the carbon market124. The right policy settings would provide certainty for these players to invest in landscapes, confident that developers will be in the market to purchase the restored and protected habitat or management services down the track.
The concept of a biodiversity restoration market should frame the approach to offset reforms. Settings should promote regulatory certainty, transparency and competition, and the supply of robust offsets including:
- market depth—the ability for a wide range of participants to purchase restoration for a range of reasons. Voluntary buyers (for example, companies purchasing credits for green credentials), philanthropic investors and government funds should be able to purchase credits
- market integrity—the integrity of the environmental market unit is central to a successful and trusted market. This requires market transparency, clear standards, reporting and registries all backed by firm monitoring, compliance and enforcement (see Chapter 9)
- market efficiency—buyers and sellers should be able to easily find each other, and the overhead costs to participate kept as low as possible.
Laws that accept advanced restoration offsets, and provide a robust market to underpin them, will mean that third parties will pre-empt the needs of developers, invest in restoration activities now, and then on-sell the robust offset to proponents when they need them. This will provide business with a far simpler mechanism to meet their residual obligations to offset their impacts.
There are barriers between biodiversity markets that are currently delivered at an individual state or territory level. Consideration should be given to how systems could be better aligned (for example. by enabling recognition of cross-border offsets). This would reduce costs for business while delivering the same environmental benefits.