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HG Alert: Climate change objections not enough to stop proposed mining lease - 2 Apr 2012

A Queensland Land Court decision handed down last week confirms that the issue of climate change, while clearly a matter of general public interest, is only one of a number of matters that the Court must weigh up in considering whether the public right and interest will be prejudiced by a project.

The judgment, in the case of Xstrata Coal Queensland Pty Ltd & Ors v Friends of the Earth - Brisbane Co-Op Ltd & Ors, and Department of Environment and Resource Management [2012] QLC 013, was handed down on 27 March 2012.

Here, partner Sarah Persijn and associate Olivia Williamson discuss the objections to Xstrata's project that were raised by Friends of the Earth on climate change grounds, and outline the Court's determination about the significance of these grounds in determining whether mining leases and environmental authorities should be granted.

Key points

  • The decision in this case demonstrates that the Court will take into account all relevant considerations when determining whether the grant of a proposed mining lease is in the public interest. The Court found that the evidence in this case did not justify the refusal of the project based on the objections that had been made on the grounds of climate change.
  • Each case will turn on its own facts. Importantly, this case does not rule out the possibility that evidence of climate change impact may be sufficient to warrant a refusal. Such evidence, however, will be one of a number of matters for consideration.
  • For the purposes of the Court's task under the Environmental Protection Act and Mineral Resources Act, climate change impact is restricted to the impact of the mining activity itself, and does not extend to emissions from sources not owned or controlled by the mining company.

The background to this case

The applicants in this case, Xstrata Coal Queensland, ICRA Wandoan and Sumisho Coal Australia, applied for three mining leases under the Mineral Resources Act 1989, and an associated environmental authority under the Environmental Protection Act 1994, for a proposed open cut coal mine near Wandoan.

Timeline of events

  • The three mining lease applications were lodged on 24 May 2007.
  • On 21 December 2007, the project was declared to be a 'significant project' for which an Environmental Impact Statement was required under the State Development and Public Works Organisation Act 1971.
  • On 21 July 2008, aspects of the project were determined to be a 'controlled action' by the relevant Commonwealth Minister under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth).
  • On 12 November 2010, the Coordinator-General released a report recommending that the project proceed subject to conditions, including conditions for the environmental authority.
  • On 10 December 2010, a draft environmental authority was issued under the Environmental Protection Act.
  • On 13 January 2011, the Mining Registrar issued Certificates of Public Notice for the mining lease areas.
  • On 14 March 2011, the Commonwealth Minister approved the controlled action under the Environmental Protection and Biodiversity Conservation Act.
  • Objections to the project were referred to the Land Court under the Mineral Resources Act and the Environmental Protection Act.
Friends of the Earth and various landowners objected to the decision to conditionally approve the project.

Greenhouse gas emissions

The greenhouse gas emissions associated with the project were assessed in the Environmental Impact Statement using the methodology detailed in the Greenhouse Gas Protocol (and other documents). The Greenhouse Gas Protocol defines direct and indirect emissions through the concept of emission 'scopes', which are as follows:

  • Scope 1 emissions: direct greenhouse gas emissions from sources that are owned or controlled by a company.
  • Scope 2 emissions: indirect greenhouse gas emissions from the generation of purchased electricity consumed by the company.
  • Scope 3 emissions: all other indirect greenhouse gas emissions resulting from the company's activities, but occurring from sources not owned or controlled by the company. Examples include extraction and production of purchased materials, transportation of purchased fuels and use of sold products and services.
The scope 1, 2 and 3 emissions from the project were expected to represent 0.17 percent of annual global emissions.

The Environmental Impact Statement indicated that a Greenhouse Gas Management Plan would be developed for the project, with the aim of reducing the project's scope 1 and 2 emissions only, on the basis that they are the only emissions over which the applicants have control.

To mitigate the carbon footprint for both the construction and operational phases of the project, the Coordinator-General imposed a condition requiring the proponent to develop and implement that Greenhouse Gas Reduction Management Plan for the scope 1 and scope 2 emissions of the project.

Friends of the Earth's arguments

Friends of the Earth lodged objections on climate change grounds to the project's mining leases and the draft environmental authority under both the Mineral Resources Act and Environmental Protection Act.

Friends of the Earth submitted that the Court should recommend refusal of the project because:

  • Scope 3 emissions from the mine must be considered when assessing its impact under the Mineral Resources Act and Environmental Protection Act.
  • The public right and interest is prejudiced due to the contribution the mine will make to climate change and ocean acidification.
  • The mine is not consistent with the principles of ecologically sustainable development set out in the National Strategy for Ecologically Sustainable Development.
Friends of the Earth argued that the climate change effects of the project should outweigh all other factors to be taken into account in assessing the project, and that this should lead to a recommendation that the mining leases and environmental authority be refused.

The applicants outlined their position in relation to the climate change issues raised by Friends of the Earth by making the following submissions:

  • Stopping the project will not affect the amount of greenhouse gases in the atmosphere. If the project is stopped, the coal that it would have produced will be replaced by coal produced elsewhere, which will produce the same or a higher amount of greenhouse gas emissions when burned.
  • The mining and burning of coal from the project will have negligible or no separate impact on climate change and ocean acidification and, balancing any impacts against the benefit of the project, it should be permitted to proceed.
  • Even if it is considered appropriate to consider matters of policy, it is not the policy of the State or Commonwealth Governments to act as Friends of the Earth suggests.

The decision of President MacDonald

Land Court President MacDonald conducted separate assessments and analyses of the relevance of greenhouse gas emissions against the framework of the Mineral Resources Act and Environmental Protection Act. Her Honour noted, at the outset of the assessments, that the two statutes are interconnected, even though they have different objectives.

Mineral Resources Act

The Mineral Resources Act required the Court to consider whether there would be any adverse environmental impact caused by "those operations" - namely, the operations to be carried out under the authority of the proposed mining leases. The Court held that operations to be carried out under the authority of the proposed mining leases are confined to the physical activities associated with winning and extracting coal from the place where it occurs or from its natural state. The 'operations' referred to in the Mineral Resources Act did not extend to the transportation of coal to ports, and to the burning of the coal in power stations overseas (that is, scope 3 emissions). The Court was therefore required to only consider the impact of scope 1 and 2 emissions generated by the physical activities associated with winning and extracting the coal.

The President considered the submissions further, in case she was wrong on this construction. In looking at the meaning of the word 'impact', Friends of the Earth encouraged the Court to take guidance from the decisions under the Environmental Protection and Biodiversity Conservation Act in relation to the phrase 'all adverse impacts'. President MacDonald declined to do so and issued a warning to exercise extreme caution in considering decisions from other jurisdictions where the statutes construed are in different terms from the Mineral Resources Act.

In forming that view, Her Honour considered the concept of 'action' under the Environmental Protection and Biodiversity Conservation Act by way of comparison. The Court observed a significant difference in the meaning of the word 'operations' (which is used in the Mineral Resources Act) and 'action' (which is used in the Environmental Protection and Biodiversity Conservation Act). This perceived difference led the Court to conclude that the word 'operations' is limited, and did not extend to incorporate greenhouse gases emitted from, or potential environmental impacts arising from, the activities of transport and using coal.

Although it was not disputed that the project will generate greenhouse gas emissions that will contribute to climate change, the Court was persuaded by the evidence put forward by the applicants that indicated that the extent of impact of the scope 1 and 2 emissions will have a comparatively minor adverse impact on the environment, and therefore did not warrant refusal of the proposed mining leases.

In any event, the President was not convinced that the climate change argument advanced by Friends of the Earth could outweigh the significant economic contributions that the proposed mine will provide on a local, State and Commonwealth level.

The President held that Friends of the Earth's climate change objections, on their own, did not provide a 'good reason' to justify a refusal of the proposed mining leases on public interest grounds. However, it was acknowledged that the issue of climate change is a matter of general public interest and one which may militate against the grant of the proposed leases.

Environmental Protection Act

Her Honour held that the Court, in exercising its function under the Environmental Protection Act to make recommendations about the grant of environmental authorities, is limited to considering only those 'mining activities' which are the subject of the environmental authority application before the Court. As such, the President accepted DERM's submission that the adverse climate change effects from the project's scope 3 emissions is 'completely irrelevant' to the Court's consideration of the application under either the Mineral Resources Act or Environmental Protection Act.

The Court did not consider that the proposed project was unsustainable and thereby inconsistent with the principles of 'ecologically sustainable development' set out in the Environmental Protection Act. For these reasons, the Court recommended that the mining leases and the draft environmental authority be adopted, subject to a number of recommendations.

Other issues

There were a number of issues that arose for determination in this case, including important issues about the relationship between the Mineral Resources Act, the Environmental Protection Act and the State Development and Public Works Organisation Act.

An underlying question in relation to the issues raised was the extent to which the Court may consider objections and make recommendations about proposed conditions that relate to the same general subject matter as the Coordinator-General's conditions. This is a matter which does not appear to have been previously examined by the Land Court or its predecessor, the Land and Resources Tribunal. We will discuss this issue in a future article.

For more information about the impact of climate change on mining projects, please contact HopgoodGanim.