Feedback on the Australian government’s nature repair market draft legislation has highlighted the proposal’s current lack of detail, calling for greater clarity on key areas, while some are concerned about the potential for perverse outcomes, particularly in jurisdictions where conservation laws are lacking.

The government released a consultation paper on its exposure draft in December, saying the market would be designed to encourage investments in biodiversity and drive environmental improvements across Australia.

It followed the release of the devastating findings of the State of the Environment Report last year, which found the country’s natural habitats and biodiversity in a poor and deteriorating condition.

Conservation group and carbon project developer Greening Australia welcomed the draft legislation, saying the market could make a significant contribution to Australia’s commitment to protect 30% of its land and seas by 2030.

But while the market has the potential to attract much-needed investment in biodiversity, Greening Australia said the legislation leaves a “significant level of detail still to be developed” and that further consultation was needed.

Greening Australia raised demand issues highlighted by other experts, that have warned there may be little private demand for biodiversity credits in the early phase of the market, and called on the government to act as a cornerstone investor over the first three years of the scheme to ensure market confidence builds.

It also cited concerns with how the nature repair market would sit alongside Australia’s carbon credit market, given that there are already Australian Carbon Credit Units (ACCUs) generated from projects that offer biodiversity co-benefits.

“Delays in articulating how carbon and biodiversity markets operate together is likely to result in uncertainty in the market and delays in investment,” it said.

The group highlighted that the government has also not yet issued a clear statement of how the nature repair market would interplay with already operating environmental offset schemes, such as the one in New South Wales.

Greening Australia said there was an apparent intention to allow – at minimum – commonwealth environmental offsets within the repair market, which it said was a cause for concern.

“If offsets are allowed to dominate the nature repair market, there is the potential for them to significantly skew the purpose as well as biodiversity outcomes that the market delivers,” it said.

It said if offsets were allowed, the legislation should be renamed to reflect this, and there should be a three-year delay before allowing offsets into the scheme to give the market sufficient time to establish itself, alongside appropriate consultation processes.

NGO Environment Centre Northern Territory, however, said offsets should be barred from the market completely, arguing they would never deliver positive outcomes for nature.

“To do so would risk the foundational principle of the market being ‘nature positive’ and erode the trust of investors,” it said.

That discussions mirrors a wider global debate over what kind of biodiversity credits should be allowed to be used by which actors for which purposes.

DEVIL IN THE DETAILS

Going into further detail, Greening Australia said the language of the legislation should be tightened to include the phrase restore/restoration, alongside instances of enhance/enhancement, in the Objects of the Act.

It said the words “restore” and “restoration” were terms much more familiar and meaningful to environmental managers than “enhance” and would align with Australia’s commitment to the Montreal-Kunming Global Biodiversity Framework to the restoration of 30% of degraded lands by 2030.

Chartered Accountants Australia and New Zealand (CA-ANZ) highlighted in its submission that the issues facing the Australian government are present elsewhere as well, saying  there was a “gap in reliable and credible data, and a global skills shortage” in the sustainability finance space.

“We commend the government’s recognition and the importance given to environmental protection and biodiversity in Australia, including efforts to establish a national framework to enhance and protect biodiversity,” it said.

On international alignment, CA-ANZ said the framework should line up with the Taskforce on Nature-related Financial Disclosures, which it said could help attract international investment.

It added that the assurance considerations and developments that apply to the nature repair market should be connected with the assurance related framework being developed by the government for climate-related disclosures.

“Given the expectation that disclosures in this space will extend beyond climate, the assurance framework developed will need flexibility if it is to be able to cover further climate system impacts over time, including nature, biodiversity, and water, as well as other sustainability topics,” it said.

CA-ANZ also highlighted the Clean Energy Regulator, which has been tasked to oversee the scheme, would need to be empowered with the funding and resources it needed to monitor information within the market, and to stamp out any greenwashing that could occur.

FOOLHARDY

Meanwhile, Environment Centre Northern Territory was more critical of the legislation in general, saying it had serious concerns about the proposal in its current form.

“Establishing a credible nature market will be a significant challenge; only as strong as the foundational environment law that underpins it,” it said.

To that issue, it said the NT had a major legislative and policy vacuum pertaining to biodiversity conservation.

There is no overarching legislative or policy framework to support biodiversity conservation, and, because of this, the territory should be excluded from the repair market until such basic policy architecture was in place, the group said.

“Establishing foundational biodiversity conservation law and policy in the Northern Territory is an urgent necessity, with the NT recognised as having some of the weakest environmental protections in the country,” it said.

“Proceeding with a market mechanism to produce biodiversity credits in the NT without foundational biodiversity policy in place would lack robustness, integrity, and is a significant risk not only to the Northern Territory’s nature, but to the government as an environmental regulator.”

It argued while the laws and regulations currently in place in other jurisdictions may be sufficient to support the integrity standards needed for a repair market, it would be “foolhardy” to establish a market in the NT.

Speaking on the legislation more broadly, the NGO said the federal Environmental Protection and Biodiversity Conservation (EPBC) Act needs urgent reform before the nature repair could be established.

Robust legislation to stop broad-scale land clearing, put an end to unsustainable water extraction, and cut GHG emissions were immediate steps the government could take right now to halt further biodiversity loss, and these actions would be immediately effective and not reliant on untested voluntary markets, according to the group.

It added that a private sector market would not substitute adequate public sector investment in Australia’s ecological restoration.

However, it said an efficient and effective national nature repair market could be part of the answer to Australia’s biodiversity crisis, so long as very strong, clearly expressed and enforced national standards lay at the market’s foundation, supported by federal and NT environmental reforms.

The government closed its latest round of consultation on its proposal on Friday, and further consultation this year will work through the details of how the scheme will operate.

This will include the rules and methods for developing the market and will consider how people can participate in the market, the government has said.

By Mark Tilly – mark@carbon-pulse.com

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