NSW EPA's new prescriptive climate change mitigation requirements mean big changes for high-emitting industries
What you need to know
- The NSW Environment Protection Authority's (EPA) has introduced new prescriptive climate change mitigation requirements for high-emitting licensees.
- The reforms were first proposed in July 2025 and were the subject of an eight-week public consultation between July and October 2025. While the final reforms published in March 2026 demonstrate a pulling back by the EPA of several of the more controversial proposals, the reforms nevertheless represent a significant change to climate change mitigation practices for existing and new licensees in NSW.
- The reforms include the phasing in of new climate mitigation requirements into environmental protection licences (EPLs) for licensed facilities that emit more than 25,000 tonnes of CO2-e (scope 1 and scope 2) per year. There is also new reporting obligations for these licensees, including an obligation to report annual climate change emissions to the EPA as well as three-yearly Climate Change Mitigation and Adaptation Plans (CCMAP). The EPA has also introduced prescriptive mitigation measures for coal mine operators to address fugitive methane emissions.
- The majority of the reforms, including the new climate change licensee requirements, will be phased in from 2027 (which is later than was first proposed).
What you need to do
The reforms are likely to present challenges for licensees as they grapple to understand this new regulatory layer and how it fits alongside their existing regulatory and reporting frameworks (such as the Safeguard Mechanisms and the recently enacted mandatory climate-related financial disclosures regime).
We encourage all organisations that may be affected by the reforms to familiarise themselves with the changes and to begin readying themselves for these reforms to take effect.
Reforms designed to help NSW meet its GHG emissions reductions targets
The reforms are an attempt by the EPA to drive emissions reductions within NSW to ensure the State meets its greenhouse gas (GHG) emissions reduction targets as prescribed by the Climate Change (Net Zero Future) Act 2023 (NSW). Those targets are:
50% reduction on 2005 levels by 2030;
70% reduction on 2005 levels by 2035; and
net zero by 2050.
The reforms stem from the decision of the NSW Land and Environment Court (LEC) in Bushfire Survivors for Climate Action Inc v Environment Protection Authority [2021] NSWLEC 92 in which the LEC found the EPA has a duty under s 9(1)(a) of the Protection of the Environment Administration Act 1991, "to develop environmental quality objectives, guidelines and policies to ensure environment protection from climate change". The decision did not prescribe any detail about how the EPA should discharge that duty, leaving it to the EPA's discretion (which we suggest would be governed by ordinary principles of administrative law, including procedural fairness and reasonableness).
Through these reforms, the EPA is specifically targeting EPL licensees that emit more than 25,000 tonnes of CO2-e of scope 1 and scope 2 per year. The EPA has said that although this equates to only approximately 10% of the EPA's licensees, this group of high emitters is responsible for around 50% of all NSW emissions.
Interestingly, NSW emissions reduction targets have for some time been more ambitious than Federal targets, and the reforms, when first proposed, suggested this gap would widen. However, on 18 September 2025, the Federal Government announced a new, more ambitious national emissions reduction target of 62-70% below 2005 levels by 2035 (compared to the current target of 47% below 2005 levels by 2030), closing this gap considerably.
Overview of the reforms
The reforms comprise three parts:
the Climate Change Licensee Requirements which phase in a number of new climate-related requirements to qualifying EPLs over the next few years (Climate Change Licensee Requirements, March 2026);
the CCMAP Requirements which set a requirement for operators of licensed premises that emit more than 25,000 tonnes of CO2-e (scope 1 and 2) in any of the previous three financial years to prepare and publish CCMAPs (Emissions Reporting and Climate Change Mitigation and Adaptation Plans, March 2026); and
the Coal Mine Guide which sets out a number of prescriptive mitigation measures that the EPA expects coal mine operators that meet the prescribed emissions thresholds to implement (Greenhouse Gas Mitigation Guide for NSW Coal Mines, March 2026).
Copies of the final documents are available at this link.
Principal requirements from the reforms
The EPA is phasing in a number of new climate-related requirements to EPLs over the next few years, starting from 2027.
To begin with, this includes a requirement for qualifying licensees to submit an annual climate change emissions report to the EPA detailing their emissions data from the most recently concluded financial year. First annual emissions reports are due from all qualifying facilities by 31 March 2027. This reporting timeframe is different to the timeframe first proposed which provided for a staggered implementation beginning as early as 28 February 2026 for qualifying Safeguard Mechanism Facilities and coal mines. The EPA has said the amended reporting timeframes are designed to better align with reporting timelines under NGERs.
Qualifying licensees will also be required to prepare and publish CCMAPs. For qualifying Safeguard Mechanism Facilities and coal mines, the first CCMAP will be due 31 March 2027. For all other qualifying facilities, the first CCMAP will be due 31 August 2027. All qualifying licensees will be required to submit their first CCMAP updates by 31 March 2030.
A CCMAP must include reporting on actual scope 1 and scope 2 (and optionally scope 3) emissions, existing and planned mitigation measures to avoid or mitigate GHG emissions (as well as contingency plans), absolute net emissions goals (scope 1 and 2) for the years 2030, 2035 and 2050, and how the licensee plans to achieve those goals. CCMAPs must be reviewed and updated at least every three years.
Notably, the EPA has decided against requiring qualifying licensees to also submit 10-year emissions projections to the EPA every three years following responses received during public consultation. Instead, noting the dynamic reality of changing and emerging mitigation technologies, licensees will be required to describe in their CCMAP the mitigation actions they intend to take over the next five years. The CCMAP can also describe additional mitigation opportunities that will be investigated over the subsequent six to 10 years.
The EPA has also decided against mandating continuous monitoring of methane from underground mine ventilation from 31 October 2026. Instead, the EPA has said it will work with individual licensees and place specific emissions measurement requirements on EPLs where warranted.
The EPA has published a specific guide for the coal mining industry setting out a number of mitigation measures that the EPA expects operators of coal mines that exceed the applicable emissions thresholds to implement. The EPA expects to release similar guides for other high-emitting sectors in the future.
Likely to be the most controversial of the measures, the Coal Mine Guide requires ventilation air methane (VAM) abatement to be installed at certain operational underground mines. Specifically, underground mines that have consistently greater than 0.20% VAM concentration, are operating after 2030, are located outside of the Western coalfields, and which emit more than 100,000 tonnes of CO2-e/year. The measure is to be phased as follows:
- underground mines that emit more than 1 million tonnes of CO2-e/year must have VAM abatement in place on at least one shaft by 1 July 2030, and abate at least 75% of VAM emissions annually from 1 July 2032.
- underground mines that emit less than 1 million tonnes of CO2-e/year must have VAM abatement in place on at least one shaft by 1 July 2032, and abate at least 75% of VAM emissions annually from 1 July 2034.
Interestingly, the EPA has decided not to proceed with its proposals to introduce low carbon fuel requirements for the coal mining sector and electrification requirements for mining machinery and vehicles. The EPA has indicated it will review these measures in the future.
The EPA is still considering new licence requirements to impose hard limits on GHG emissions as conditions of EPLs, but this is expected to be a longer-term requirement, subject to emission measurement, sector-based GHG budgets and CCMAPs being in place.
Key insights: the reforms mean more work for licensees
Whilst there has been a considerable pulling back of the reforms following public consultation, the reforms nevertheless represent a significant change to climate change mitigation practices for existing licensees in NSW. No longer will compliance with the Federal regimes established under the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER Act), the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Cth) (Safeguard Mechanism) and individual development consents be sufficient. The EPA is expecting its highest emitting licensees to go beyond this.
Of course, these reforms come at a time of increased climate-reporting more broadly. Corporates are now subject to the newly mandated climate-related financial disclosures required by the Australian Accounting Standards Board's Australian Sustainability Reporting Standard AASB S2 Climate-related Disclosures 2024 (AASB S2). It goes without saying that all of these measures combined will mean a considerable amount of additional work for licensees.
We highlight below some key challenges and considerations that licensees should be alive to as these reforms come into effect:
- The reforms are seeking to drive more ambitious emissions reductions than is mandated by the Federal regimes. Licensees will need to consider how their current emissions pathways align with these targets and the feasibility of maintaining operations going forward (both from a technical perspective and a costs perspective).
- Licensees may need to reconsider their mitigation strategies to ensure they are sufficient to meet the EPA's more ambitious requirements. For coal mines, this means considering how to adapt mitigation strategies to comply with the prescriptive mitigation measures set out in the Coal Mine Guide. Further, where offsets form part of a licensee's mitigation strategy, licensees should be aware that the EPA is requiring licensees to prioritise NSW based carbon offsets. This has potential ramifications for the price and supply of offsets.
- There is considerable overlap between the reforms, particularly the CCMAP Requirements, and existing reporting frameworks (e.g. the NGER Act, the Safeguard Mechanism and AASB S2). Licensees will need to take care to align their reporting across these different regimes, both from a substantive perspective and logistically. Any misalignment in reporting may give rise to inconsistencies or potential errors which in turn creates a compliance risk and an increased risk of public or third-party scrutiny and/or challenge. While the EPA has suggested licensees will be able to rely on reports prepared for other schemes to minimise duplication, this is only in so far as the other schemes are "comparable". This alone creates uncertainties. We remain sceptical that this ability to rely on or cross-refer to other reports will deliver the efficiencies the EPA hopes.
- Licensees will need to make sure they have clear communication and reporting procedures in place (both internal and external) for the business to follow when making climate-related disclosures. It may be that different parts of the business are subject to different reporting requirements so these procedures should ensure appropriate internal lines of communication are maintained to achieve consistency of reporting externally. Given the increasing public interest in climate related reporting, particularly by high-emitting industries, any inconsistencies are at risk of being identified and weaponised against the reporting entity.
- Licensees should be cognisant to the sensitive nature of some of the information that the EPA is expecting to be reported or disclosed. Public disclosures of key project information such as emissions data, emissions projections and mitigate measures may expose a licensee to reputational risks. Changes have been made to the reforms following public consultation to address concerns raised about the disclosure of commercially sensitive information including, for example, refining the CCMAP Requirements so that licensees are not required to publicly disclose commercially sensitive details of their offset strategies and removing the requirement to publish 10-year future estimate emissions. However, there remains no general exemption or discretion to allow licensees to withhold information that is considered commercially sensitive. All of this will need to be considered when seeking to satisfy any disclosure or reporting requirements.
- Licensees should be aware of the possibility that any information provided to the EPA may inform the EPA's future determinations of GHG emissions limits. The expectation is that these future GHG emission limits will be informed by comprehensive emissions monitoring across sectors, but it is possible that reporting on future emissions projections, GHG emission reduction goals, and other relevant reporting information could inform the EPA's thinking.
What next?
The reforms introduce new emissions reduction and reporting obligations from 2027. Licensees should begin readying themselves for these reforms to take effect.
We are well placed to advise on the reforms so please reach out to a member of the Planning, Access and Environment Team if you would like to know more about the reforms.
