Senate Inquiry Into Environmental Offsets

Kathryn Kelly

9 April 2014

The Secretary Senate Standing Committee on Environment Inquiry into Environmental Offsets PO Box 6100 Parliament House Canberra ACT 2600

Senate Inquiry into Environmental Offsets

Thank you for the opportunity to submit the following to the Senate Inquiry into Environmental Offsets. My comments are written primarily using the Alpha coal mine project a case study. The Alpha coal mine is in the Galilee Basin, Central Queensland, north‐west of the town of Alpha. I was an objector to the Alpha coal mine project in the Land Court in Queensland and some of the information in this submission was derived through preparation and participation in that process. The Alpha case provides a valuable case study of the use of offsets as a justification for federal approval of a project. The judgement for the Alpha mine was delivered on 8 April 2014, giving approval to the mine conditional on the grant of a water license taking into account the precautionary principle.

I refer to the relevant terms of reference (in bold) which I will address with my comments, as follows: “The history, appropriateness and effectiveness of the use of environmental offsets in federal environmental approvals in Australia, including: • the principles that underpin the use of offsets; • the processes used to develop and assess proposed offsets; • the adequacy of monitoring and evaluation of approved offsets; • arrangements to determine whether promised environmental outcomes are achieved over the short and long term; and • any other related matters That in conducting the inquiry the committee consider the terms of reference in (1) with specific regard to, but not restricted to, the following projects: • Whitehaven Coal’s Maules Creek Project; • Waratah Coal’s Galilee Coal Project; • QGC’s Queensland Curtis LNG project; • North Queensland Bulk Port’s Abbot Point Coal Terminal Capital Dredging Project; and • Jandakot Airport developments.

I contend in my submission that offsets do not and cannot achieve their stated aim of compensating for residual (or non‐residual) adverse impacts on the environment from large‐

scale projects and that their fundamental premises are flawed for a number of reasons detailed in the submission.

Background

The federal approval for the Alpha mine was given by then Environment Minister, the Hon Tony Burke, on 23/8/12 under sections 130(1) and 133 of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) in relation to the following sections:  World Heritage (s12 & s15A)  National Heritage (s15B & 15C)  Listed threatened species and communities (s18 & 18A)  Listed migratory species (s20 &20A).

The World Heritage and National Heritage sections are relevant to the Alpha project, as the Alpha project included a 495km rail line from the project through the Bowen Basin and through the Caley Valley Wetlands at Abbot Point on the Great Barrier Reef. The Caley Valley Wetlands are a nationally significant wetland. The project is majority‐owned by Indian company GVK with Hancock Coal Pty Ltd (HCPL) the 21% minority owner. Sections 24D and 24E of the Act (the ‘water trigger’) were adopted as an amendment to the Act in June 2013 and were therefore not in place at the time of the Alpha project. If it goes ahead, the Alpha project would be equal to the largest coal mine in Australia at the present time and produce 30m tonnes of coal per annum. There is some question at this time as to whether the project is economically viable.

The EPBC Act approval for the Alpha project is deficient in that the Act does not take into account the impacts of global warming which is exacerbated by the coal produced and burned from these mines resulting in significant greenhouse emissions.

The natural state of coal at the mine is as a carbon stock. Destroying the carbon stock at coal mines inevitably leads to serious, widespread and irreversible harm globally and on the Australian environment. There is a direct causal relationship between mining black coal, that is, destroying the stable carbon stock, and the unavoidable release of greenhouse gas emissions to the atmosphere. This is not a question of where the emissions take place or where they are reported. It is the action of destroying the carbon stock which will inevitably lead to serious, widespread and irreversible harm, both in Australia and globally. The environmental impacts of largescale coal mines can in no way be considered residual ‐ this is a major consideration for the Inquiry.

I do not argue that offsets should be imposed to take account of this serious omission in relation to environmental conditions on the projects. Rather, I think these impacts are so serious that they should preclude the approval of new coal mines. There are alternative technologies and power systems now available to provide electricity for Australia and other countries, such that coal for power must be phased out. Ecological Ponzi scheme

Further, I argue that offsets are not appropriate in relation to the environmental impacts of large‐scale mining or CSG projects. I see offsets as an ecological Ponzi scheme, which borrows

from the future of our biodiversity, leading to a serious and irreversible situation of ‘extinction debt’1. International agreements and environmental policy relevant to this case study include: 1. The United National Framework Convention on Climate Change, which asks developed countries to shoulder the burden of reducing greenhouse emissions. 2. The United Nations Convention on Biodiversity, is a relevant international agreement which Australia has signed and ratified as is the Convention Concerning the Protection of the World Cultural and Natural Heritage (World Heritage Convention). 3. In Queensland, the Great Barrier Reef and the Wet Tropics are on the World Heritage list.

4. The National Strategy for Ecologically Sustainable Development The National The Core Objectives of the Australian government’s National Strategy for Ecologically Sustainable Development are:

• To enhance individual and community well‐being and welfare by following a path of economic development that safeguards the welfare of future generations • To provide for equity within and between generations • To protect biological diversity and maintain essential ecological processes and life‐support systems.

Two of the Guiding Principles are:

• Decision making processes should effectively integrate both long and short‐ term economic, environmental, social and equity considerations • Where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation

These Core Objectives and principles have particular relevance as biodiversity and the ecological processes and life support systems (such as habitat and water) which support biodiversity are a fundamental component of equity for future generations. If species become extinct, they are extinct forever. TOR: The appropriateness and effectiveness of environmental offsets in federal approvals:

• the principles that underpin the use of offsets; The Introduction to the Commonwealth’s Environment Protection and Biodiversity Protection Act 1999 Environmental Offsets Policy (October 2012) states “Offsets are defined as measures that compensate for the residual adverse impacts of an action on the environment”. However ‘residual adverse impacts’ are not defined. The climate change and biodiversity losses resulting from large‐scale coal mine projects can be in any way considered as ‘residual’. This is a fundamental flaw of the offsets policies, both at federal and state levels. Offsets will not

1 This is the concept that species become extinct because of human actions taken many years previously. http://theconversation.com/extinction‐just‐how‐bad‐is‐it‐and‐why‐should‐we‐care‐13751. 3

compensate for the (non‐)’residual’ adverse impacts (federal and state policy), nor ensure ‘no net loss’ of biodiversity (QLD policy). [The Qld Biodiversity Offset Policy (QBOP) purpose is:

The purpose of this policy is to increase the long-term protection and viability of the state’s biodiversity where residual impacts from a development, on an area possessing State significant biodiversity values, cannot be avoided. The policy provides the framework to ensure that there is no net loss of biodiversity. Overall the Qld policy provides seven policy principles which are similar to the Commonwealth principles – see Appendix B.] The Commonwealth policy provides 10 policy principles as follows:

Box 1: Offset Principles

Suitable offsets must: 1. deliver an overall conservation outcome that improves or maintains the viability of the aspect of the environment that is protected by national environment law and affected by the proposed action 2. be built around direct offsets but may include other compensatory measures 3. be in proportion to the level of statutory protection that applies to the protected matter 4. be of a size and scale proportionate to the residual impacts on the protected matter 5. effectively account for and manage the risks of the offset not succeeding 6. be additional to what is already required, determined by law or planning regulations or agreed to under other schemes or programs (this does not preclude the recognition of state or territory offsets that may be suitable as offsets under the EPBC Act for the same action, see section 7.6) 7. be efficient, effective, timely, transparent, scientifically robust and reasonable 8. have transparent governance arrangements including being able to be readily measured, monitored, audited and enforced. In assessing the suitability of an offset, government decision-making will be: 9. informed by scientifically robust information and incorporate the precautionary principle in the absence of scientific certainty 10. conducted in a consistent and transparent manner.

While these principles for environment protection are generally appropriate, they are not met by the adoption of offsets to compensate for environmental damage from a project.

In particular, for example:

No. 4. be of a size and scale proportionate to the residual impacts on the protected matter

Here the issue of ‘residual’ impacts is critical. The Critical Decade Report 2013 describes the risks to Australia’s biodiversity from global warming, especially to the Great Barrier Reef and the Wet Tropics, both of which are World Heritage areas. The impacts of increased water temperatures leading to coral bleaching and ocean acidification affecting species which grow spines or shells, are of such a scale that they threaten the very existence of the reef and species in the Wet Tropics. While the Alpha project clearly cannot be held responsible for global warming per se, the fact that CO2 emissions from the coal mined at Alpha would add significantly to the global greenhouse emissions load means that they should be avoided. Further, the port access for the coal at Abbot Point means that there would be damage to the reef from the port expansion (eg dredging) and there would be a significantly greater number 4

of ships transporting coal through the Great Barrier Reef, thereby posing increased risks of accident and damage to the reef. There are no offset conditions which could ameliorate the biodiversity impacts from climate change or from damage to the Great Barrier Reef. These impacts cannot be classed as residual. Offsets constitute a pretence of taking action in order to give approval to such projects.

Other impacts on biodiversity from the large‐scale 24km long open cut pits, the 495 km rail corridor and the rail line through the Caley Valley wetlands also constitute a significant loss of habitat for all the species using those areas and can also not be considered ‘residual’ impacts.

No. 5. effectively account for and manage the risks of the offset not succeeding

There was no indication that any consideration had been given in the Alpha case to effectively account for and manage the risks of the offsets not succeeding.

No. 7. be efficient, effective, timely, transparent, scientifically robust and reasonable

There is no indication that offsets can be effective, timely, scientifically robust and reasonable. It is also not clear how they would be ‘efficient’. Presumably to be effective, they also must be timely, transparent, scientifically robust and reasonable ‐ essentially these points need to be taken as a whole. These principles are addressed below.

Effective

Along with climate change, habitat loss is the other major threat to species survival. There will be significant permanent biodiversity and habitat loss from the Alpha mine site through clearing of around 22,000 ha of high value native vegetation and the massive wide pit stretching along 24 km creating an impenetrable east‐west barrier to land‐based movement of wildlife and gene flow.

A wildlife corridor stretches south east from the Cudmore National Park, to the Cudmore Resources Reserve, some of which is encompassed by the Kevin’s Corner mine, which then joins the Alpha coal mine on the Alpha northern border and then around 6 km to the south west of Alpha is the Bimblebox Nature Reserve. The loss of biodiversity habitat and corridors resulting from these two mines from the loss of the corridor between the Cudmore NP and the Cudmore RR to the Bimblebox Nature Reserve is therefore of major significance. It should be noted that federal and state approval has been given to Waratah Coal (China First) to mine over the Bimblebox Nature Reserve so that constitutes an additional cumulative impact from these mines.

The aerial photograph on the cover of Objector Paola Cassoni’s expert witness’ (Dr Gavin Mudd’s) report shows a significant amount of vegetation around the test pit site, with narrow corridors of vegetation joining other vegetated areas in the distance. Photographs I took personally at the site also show well‐vegetated habitat along the test pit road and at Lagoon Creek. Much of the surrounding areas are shown to be extensively cleared, so the vegetated habitat is clearly significant for native species in the area. Hancock Coal Pty Ltd (HCPL) witness, Dr Dique agreed that the area between Cudmore National Park to the north of the Alpha site to Bimblebox Nature Reserve to the south could serve as a wildlife corridor between the two. 5

The Wildlife Corridor Strategy conditioned in the state’s Draft Environmental Authority (DEA) is required to be submitted to the administering authority by 5 years from the grant of the DEA, however, there is no date specified by which the Strategy must be implemented.

It is hard to imagine that if significant construction had taken place prior to the recognition that biodiversity offsets were not able to be secured, or that a wildlife corridor was not able to be effectively implemented, that such a large project would come to a halt. It is clear that the loss of habitat and biodiversity loss from all the proposed mines (around 9 in all) in the Galilee Basin would be massive if either any were to go ahead or they were to go ahead collectively. Approved and proposed Galilee Basin mines extend over 300 km north‐ south and up to 40 km wide. Presumably all would have ‘strict’ offset conditions ‘imposed’ to justify their approval.

Most of the conditions imposed on the Alpha project to address loss of biodiversity are conditions requiring offsets to be secured. If offsets are ineffective the conditions to address biodiversity impacts are ineffective. Evidence was presented in the Alpha case which I believe establishes that offset conditions cannot be effective in addressing biodiversity loss. My argument is that the conditions did not (and can not) guarantee a “like for like” offset would be established without loss of biodiversity and that the illogicality of addressing biodiversity loss by using existing habitat for offsets is not acknowledged.

Another issue in relation to the offsets for the Alpha mine was that the location of the offsets was not known and the offsets were not legally secured at the time of the approvals, both federal and state.

My biodiversity witness in the Alpha case, a highly experienced ecologist, Mr Eric Vanderduys of CSIRO, expressed skepticism regarding “inadequate offsets plans” and he noted:

“there’s no content in the offset strategy as yet, so it’s very hard to comment on the likely efficacy of any offset plan if we have no details, because the devil is always in the detail with these things.” He referred to the “general failure of offsets as a rule”. Mr Vanderduys explained that the Alpha Biodiversity Offset Strategy referred to using existing ‘high value’ habitat elsewhere for offsets. This can in no way make up for lost habitat. Mr Vanderduys gave the example that if you have, for example, 100 ha of habitat overall and say, 10 ha is lost through a project, then you are left with 90 ha. That is a loss. It can’t be anything else. It is simple mathematics and has nothing to do with offset ratios. This logic in relation to offsets is fundamental, not generally acknowledged and points to one of the crucial flaws in the offsets concept.

HCPL’s biodiversity witness, Dr Dique, agreed with the proposition put by the authors in the article, The biodiversity bank cannot be a lending bank, that “Policies that allow habitat destruction to be offset by the protection of existing habitat are guaranteed to result in further loss of biodiversity”.2 [my emphasis] He also agreed that policies that allow habitat destruction to be offset by the protection of existing habitat, are guaranteed to result in further loss of biodiversity.

2 S Bekessey et The biodiversity bank cannot be a lending bank, Conservation Letters, Vol 3 Issue 3 (2010) 151‐ 158, Wiley 6

Eminent ecologists do not consider that offsets are effective. Professor Hugh Possingham, one of Australia’s most eminent ecologists has said, “show me somebody that reconstructed an ecosystem from scratch and it has a full complement of species. Nobody’s done that. Ever.”3

Protection, of another area, even if it were secure (which it is not, as evidenced by the Bimblebox Nature Reserve, established with contributions from both the federal and state governments, now being subject to a mining approval for Waratah Coal), does not equate to making up for lost habitat. Species will inevitably have less overall habitat.

In Bulga Milbrodale Progress Association Inc v Minister for Planning and Infrastructure and Warkworth Mining Limited (2013, NSW) and Everett v Hinchinbrook Shire Council and Department of Natural Resources and Water & Ors (2009), the lack of effectiveness of offsets was integral to the decisions to refuse the proponents’ applications for development, or in the case of Warkworth Mine, expansion. In both these cases, the offset proposals were detailed and specific, for example as to location, size and flora species for the offsets but it was judged that they would not take the place of the lost biodiversity. The Warkworth decision was appealed by Rio Tinto in the NSW Supreme Court and the appeal was lost (7 April 2014).

Scientifically robust

The most fundamental flaw is that the objectives of compensating for adverse effects and of ‘no net loss’ cannot be ensured when biodiversity offsets use existing habitat. In his expert witness report for the Alpha case, Mr Vanderduys stated:

The argument is simple: if you have 100 ha of habitat of a particular environmental attribute, and you wish to mine, say 10 ha, then on a one-to-one offset basis, it stands to reason that you would have to create 10 ha of new environmental attribute for that offset to work. Note that you cannot simply agree to preserve 10 ha of the existing environmental attribute, because that will result in a 10 ha loss. This is a net loss situation. This situation can be clearly seen in the wording of the Alpha Coal Project Biodiversity Offset Strategy.

“The shortfall for the Black-throated finch is for high potential offset habitat…an additional 11,962 ha of high potential habitat is required [for adequate offsetting]…modeling indicates that over 1,300,000 ha of high potential habitat is available in the region. This figure suggests that an additional offset for the species of 11,962 ha will be achievable.”

Thus, the 7,154 ha of high potential habitat affected by the mine alone will be lost to Black-throated finches, the only change being that 11,962 ha will be protected (for 60 years) versus 11,962 ha remaining unprotected.

The proposal in the Alpha Coal Biodiversity Offset Strategy is clearly to use existing habitat as an offset for the Black‐throated finch, which is only one of the 11 fauna species identified in the federal conditions to be offset. In order to create new habitat to meet the ‘no net loss’ principle, Mr Vanderduys’ report explains4 how habitat with the required environmental attributes would need to be established on cleared areas and sufficiently ahead of time in order to enable the development of appropriate habitat. This new habitat must have the

3 Prof Hugh Possingham on ABC Radion National Saturday Extra, 17/12/2005. Transcript at: http://www.abc.net.au/radionational/programs/saturdayextra/biodiversity‐banking‐part‐two/3311402 4 Alpha case Mr Eric Vanderduys expert witness report, p 5‐7. 7

necessary attributes, for example, tree hollows required for Little pied bats, a listed species found on the mine site, and Black‐throated finches. As an indication of the complexity of biodiversity at the site, some of the 94 fauna species seen on the Alpha site include Brolga, Kingfishers, the vulnerable Squatter Pigeon, Wedge‐tailed Eagle, mammals such as the Rufous Bettong, a very small species of kangaroo, sugar gliders, Stripe‐faced Dunnart, Koala, Echidna, 9 species of bats including the near‐threatened Little Pied Bat, reptiles including the Central Netted Dragon, Black Headed Python, Nobbi Dragon, Sand Goanna and geckos, to name just a few. There are also 4 regional ecosystems listed as “Of Concern” on the site. However, we should not just be concerned about ‘listed’ species – others require protection as well. There is no way that such a complex ecological system could recreate all the required essential ingredients for the survival of all these species, particular as the required essential ingredients are not known, as Mr Vanderduys explained in the Alpha case. (see Appendix A for further detail of the ecology of the site.)

Secondly, and crucially, even if we were to leave aside the issue of using existing habitat for offsets, Mr Vanderduys gave evidence that the detailed species knowledge required to develop the offsets habitat anew, for example, using degraded land, is not available. 5

…for the most threatened species, including the species involved in the Galilee Basin, I don’t think we have sufficient knowledge about what their needs are spatially and temporally in the landscape in order to – to accurately assess whether those, for example, three essential habitat factors are there, … if we don’t know enough about the species to know exactly what it needs, I don’t think we can define three essential habitat factors that will say yes, Black-throated Finches, or yes, Yakka Skinks, or yes, this other protected species, will use that offset area, so I think it’s – it’s trying to make decisions in a vacuum – a knowledge vacuum of – of the requirements of those species. The analysis provided by Mr Vanderduys establishes that there is insufficient information to ensure an ecological benefit to the Galilee Region by the offsets as proposed.

“Habitat” is a nuanced concept. It usually involves a great many variables and includes many species, as well as geophysical processes. Habitat is also a temporal concept. Some locations will be unsuitable at certain times of year, and critical at others. Some habitats for certain species may be relatively easy to offset...Terrestrial habitats for terrestrial species pose more significant problems. Soil type and structure, species in the tree canopy layer, shrub and ground vegetation layers, and microbial species in the soil strata are all vital components of any given habitat...To create Black-throated finch habitat in this area, we need to establish a wide variety of grass species on which they can feed, but we don’t know which species and in what ratios. We need to establish nesting trees and watering points that will be self-sustaining, but we don’t know how many for the given area, and we don’t know what the best species are. We do know that suitable hollow- bearing trees for nests will take many decades to establish. We have no guarantee that Black-throated finches will take up the offset as we intend them to do...The problem is there is no guarantee that they will come and we don’t know how long it will take, yet the mine is set to go ahead now, or within a few years - we are borrowing against something we can’t guarantee. Black throated finches only need to be extinct for a millisecond to be extinct forever.6

5 Eric Vanderduys Expert Report p. 5 and Transcript 9‐49 lines 25‐34 Evidence of Mr Vanderduys 6 Alpha case Expert Report of Mr Vanderduys p. 5‐7 8

Mr Vanderduys is a member of the QLD Black‐throated finch Recovery Team and hence has particular experience in relation to endangered species recovery strategies. Evidence of the scientific basis and therefore also effectiveness of offsets in protecting biodiversity has not been established. The Qld Galilee Basin Offset Strategy (QGBOS) states its ‘Priority 1’ as ‘Identification of conservation hubs that are areas of high conservation value and where there are limited mining interests’. This clearly envisages using existing ‘high value’ habitat for offsets and is constrained by considering only those areas ‘where there are limited mining interests’. Areas of high conservation value which are under mining tenements are apparently to be excluded from consideration for protection, potentially leading to significant loss of habitat of many listed species. The QGBOS also does not take into account the habitat loss from existing projects in the Bowen Basin, Central Queensland region.

HCPL’s witness, Dr Dique’s report relied on offsets and conditions to mitigate the Project impacts. In the joint report7 with Mr Vanderduys, he stated “that the level of scrutiny that is conditioned to reviewing and approving the development of field methodologies, preclearance survey results, the preparation of detailed Management Plans and Biodiversity Offset Plans (as outlined above), will likely result in a net ecological benefit to the Galilee Region…” [my emphasis]. However in the Alpha case, Dr David Dique agreed that the survey work undertaken for the EIS was inadequate to establish the presence or otherwise of endangered species, for example, Black‐throated Finch, on the site. So it is not known with any certainty which species are even present there. Such deficiencies of EISs are likely to be not uncommon.

Timeliness of offsets Alpha project conditions do not accord with the policy principle of minimising the time‐lag between impact and offset delivery. The federal Minister’s condition No. 4 states:

The Biodiversity Offset Strategy must identify land within the Galilee Basin region that has been acquired by the proponent and will be managed for environmental gain and protected by covenant until 2073. All offsets must be secured under relevant Queensland legislation within 3 years of commencement of construction. … The delay of up to 3 years after commencement of construction does not minimize the time‐lag between impact and offset delivery, particularly if offsets cannot be legally secured.

Mr Vanderduys’ quoted the Bekessey et al article: “schemes that allow trading the immediate loss of existing habitat for restoration projects that promise future habitat will, at best, result in time lags in the availability of habitat that increases extinction risks, or at worst, fail to achieve the offset at all”. 8

No. 8. have transparent governance arrangements including being able to be readily measured, monitored, audited and enforced.

Transparent governance arrangements should ensure that once offsets are established that the habitat be protected from future destruction. I refer to the case of Oosen v Australian

7 Alpha case Joint report of Mr Vanderduys and Dr Dique, p.4 (g) 8 Bekessey et al, ibid 9

Wildlife Conservancy and Chief Executive, Department of Environment and Heritage Protection [2013] QLC 25 heard by Cochrane WL,9 where a Mining Lease and Draft Environmental Authority was granted over a nature reserve. The Australian Wildlife Conservancy came to an agreement with the applicant (Oosen) due to lack of resources to pursue the case. This was a smaller mining project over 10 years, but the case indicates that a nature reserve which has conservation status as required by offsets policy, does not have protection from future destruction by mining projects.

Similarly areas which are currently protected, such as the Bimblebox Nature Reserve in the Galilee Basin which is part of the National Reserve System, should not be able to be destroyed by mining projects, as is foreshadowed by the Waratah Coal approval.

Conditions in the Alpha case did not detail the monitoring or auditing mechanisms for those offsets which were to be established. Importantly, no areas had been secured by the proponent at the time the approvals were given. The state conditions allowed for payments to substitute for offsets if decided by the proponent and the federal conditions were such that it was unclear of the outcome if the offset areas were not secured.

In assessing the suitability of an offset, government decision-making will be: No. 9. informed by scientifically robust information and incorporate the precautionary principle in the absence of scientific certainty

The requirement for scientifically robust information for assessing the suitability of offsets is addressed above and demonstrated to be unable to be met. The nature of a mining project of the scale of the Alpha mine means that the risks are not hypothetical, based on conjecture or speculative and they are not residual. Offset policies indicate that the precautionary principle should be applied, but it is obvious that where impacts are significant, as in the case of large-scale mining or in coal seam gas projects, that the precautionary principle has not been applied and recognition not given that the environmental impacts from these projects are not ‘residual’. The Everett v Hinchinbrook Shire Council and Department of Natural Resources and Water & Ors (2009) case involved the clearing of around 9 ha and the destruction of habitat of two endangered species and a much smaller overall area of impact than the Alpha mine Project. Judge Durward SC DCJ said (108):

“If the conditions imposed were unable to be implemented for reasons either not anticipated in the formulation process or by events out of the control of the parties or the court or indeed by the impossibility of performance (since we are dealing here with matters over which nature has the primary control) then the approval process would be thwarted and the intent that might accompany any preliminary would fail to be achieved. In that sense, the approval process would be irreversibly flawed.” He concluded (111 & 113):

“I am not satisfied that even a less than optimal achievement of a viable offset is able to be achieved at all and most certainly within the time frames referred to in the evidence. Even at its best, it is unlikely that the offset vegetation would become essential habitat in less than 20 years, hence the conservation of this regional ecosystem would be significantly affected. The risk of a loss of biodiversity and the

9 http://www.landcourt.qld.gov.au/documents/decisions/MRA883‐12_EPA884‐121.pdf accessed 20 August 2013. 10

threat to maintenance of ecological processes is so significant that I do not think it can be addressed by the process advocated by the appellant….Above all it seems to me that this is a case where the precautionary principle should be applied and that finally persuades me that the appellants should not succeed on the appeal”. The main point I seek to make through these examples is the complexity of development of offsets. In both court cases above, considerable weight is attached to whether the offsets will be provided with certainty, their timeliness in relation to when habitat destruction will occur, their ecological viability and their adequacy. It was judged that they would not be effective in counteracting biodiversity loss. Giving consideration to the overall context of the ESD Core Objectives ‘to provide for equity within and between generations’ and ‘to protect biological diversity and maintain essential ecological processes and life‐support systems,’ requires that full weight be given to the precautionary principle and a recognition that offsets are not an effective means of addressing biodiversity loss from large projects.

No. 10. conducted in a consistent and transparent manner.

Most project approvals do not take into account the cumulative impacts from existing and proposed projects and in this respect are not consistent and transparent. If one were to look at the cumulative impacts of all the existing coal mines in Central Queensland (Bowen Basin), as well as those proposed in the Galilee Basin, the habitat and biodiversity loss is such that no offsets plan could hope to compensate for the biodiversity losses. It is therefore not surprising that the habitat range of species such as the Black‐throated Finch has contracted significantly over recent decades and where it was once found from northern NSW northwards, it is now not seen in NSW and southern Queensland and rarely seen in central Queensland (Bowen and Galilee Basins) and is now mainly concentrated around Townsville. This is a prime example of ‘extinction debt’ in operation.

The Alpha Coal EIS examination of cumulative impacts identified 12 existing projects (Table G‐ 4) and 8 proposed projects relevant for the cumulative study.10 This in no way encompasses the total projects in the Bowen Basin which should have been considered in terms of cumulative impacts. Further, Table G‐6 identifies 21 existing and potential projects ‘not relevant to the study’ as they are in early stages or on hold. Clearly there are an extraordinary number of projects in the general region impacting on the local ecosystems. A Qld Galilee Basin Offsets Strategy map of just the 10 Galilee Basin proposed projects shows a near continuous strip of potential coal mines extending over nearly 300 km north‐south and up to 40 km wide.

Habitat loss and habitat fragmentation is agreed as one of the main threats to species survival. Given the habitat losses which have already occurred from existing projects in the Central Queensland region, further habitat loss from the Alpha project and others such as the Kevin’s Corner Project and the Waratah Galilee Project, which have also received federal and state approval, represents increased risk of species extinction. The cumulative impact study undertaken for the Alpha project was cursory and lacked detail of the cumulative and combined biodiversity impacts of relevant projects over time and land area. The mine site impact on Nature Conservation (including fauna) was assessed as ‘low’

10 Alpha EIS Vol 4 Appendix G Cumulative Impacts. 11

while that of ‘surface water’ was assessed as ‘high’.11 As surface water is a critical habitat value this assessment appears illogical. Assessment of the cumulative impacts across the range of impacts and across time of the existing and proposed mines was not undertaken.

While there is clear evidence of significant impacts on biodiversity caused by the Alpha project alone and in combination with existing, planned and potential projects in the region, survey work was inadequate to properly characterise or assess the risks and the impacts. In the absence of full scientific certainty, this requires a precautionary approach to be taken. Offsets conditions not rigorous The Alpha conditions provide leeway such that the offsets may not have to be implemented, and can be substituted with payments which will not offset the biodiversity loss in the region. The federal approval Condition No 4 provides the option of submitting an alternative Biodiversity Offset Strategy if legally secured offsets cannot be achieved.

If the approved Biodiversity Offset Strategy cannot be implemented because of failure of arrangements to secure the necessary area of private land, then the proponent must notify the Minister of failure to secure and then submit for the Minister’s approval an alternative Biodiversity Offset Strategy.

The alternative Biodiversity Offset Strategy must provide at least an equivalent environmental outcome to those specified in this condition. The approved alternative Biodiversity Offset Strategy must be implemented. (p.5)

Similarly the state Draft Environmental Authority (DEA) conditions for Alpha provided for unspecified ‘alternative approaches’ to be approved by the administering authority. This lack of rigour in the conditions does not represent a consistent and transparent process.

Legally securing offsets does not afford protection – the process therefore lacks transparency Legally securing offsets (QBOP principle 7) does not ensure their protection from future mining or other destructive activities. Federal and state approval has been given for the Waratah Coal mine (China First) which is just 6km south west of the Alpha mine and which extends over land currently protected under Covenant ‐ the Bimblebox Nature Reserve. An affidavit from one of the owners of the Bimblebox Nature Reserve, Ms Paola Cassoni, detailed the Commonwealth and State Agreements establishing the Nature Reserve, to which the Commonwealth contributed $314,600. If all approvals for that project are given, and if a nature reserve can be taken over for a coal mine, that does not give confidence that land which is legally acquired “for environmental gain and protected by covenant until 2073” (federal condition no. 4) will have any surety in protecting biodiversity.

Designation as a National Park under the Nature Conservation Act 1992 provides a higher level of protection.

17 Management principles of national parks (1) A national park is to be managed to—

11 Alpha EIS Appendix G, p.G‐31 Table G‐14 12

(a) provide, to the greatest possible extent, for the permanent preservation of the area's natural condition and the protection of the area's cultural resources and values; and (b) present the area's cultural and natural resources and their values; and (c) ensure that the only use of the area is nature-based and ecologically sustainable.

(2) The management principle mentioned in subsection (1)(a) is the cardinal principle for the management of national parks.

(3) Subject to subsections (1) and (2), a national park, or a part of a national park, that is also an indigenous joint management area is to be managed, as far as practicable, in a way that is consistent with any Aboriginal tradition applicable to the area, including any tradition relating to activities in the area.

If offsets were to be used in the future (and I don’t think they should be), at the least they should be designated as National Parks.

Overall, it is clear that the principles supposedly governing the use of offsets are not being implemented in an effective way and some of them, because of the nature of offsets, are in fact not logically able to be implemented. Overall habitat is lost and there is insufficient scientific species knowledge to develop new habitat, and they cannot be developed in a ‘timely’ manner.

TOR the processes used to develop and assess proposed offsets;

The Commonwealth provides very complex documentation for assessing when offsets should be used, for showing how to use offsets and how to assess land area ratios for offsets. All this supposedly scientific documentation could give the impression that offsets provide a rigorous process for compensating for the ‘residual’ adverse impacts of projects.

However, as the fundamental premise of the whole concept of offsets for major projects is flawed, then no matter how complex the process appears, it will not achieve the objective of compensating for adverse environmental impacts.

The concept of offsets is fundamentally flawed because using existing habitat for offsets inevitably decreases the amount of available habitat for species when a project takes an area of habitat (the project site) out of use.

Other major flaws of the concept of offsets are that: • if degraded land were to be used to develop habitat, the species information to develop usable habitat for all the species needing to be catered for (in the Alpha case at least 94 fauna species and an unspecified number of flora species) does not exist; • if degraded land were to be used (and even if sufficient species information were available for a species), the offsets would not be usable in time for species to transfer to that site (if that were possible), eg trees hollows will take many decades or even centuries to develop, thereby creating extinction debt for many species; • it has been demonstrated that areas which have been set aside as reserves are not secure and there is no certainty that areas set aside as offsets will be secure in the decades ahead;

• in most cases offsets are only put in place for endangered or listed species, leaving other species unprotected with loss of habitat and likely to move closer to listing.

Evidence is clear that the offsets proposed for the Alpha project do not meet the objective of ensuring ‘no net loss of biodiversity’. The offset ratios designated for the various species (maximum 8:1) are considerably less than the 19:1 ratio, which was demonstrated as necessary in one of the few studies undertaken of offset habitat reconstruction.12 If the offsets are not effective, and there is more expert opinion that they will not be than that they will, the Project will result in significant risks to species on the site and to those which use the site intermittently.

The Commonwealth offsets policy has accompanying complex guidelines on how to develop offsets and offset rations. However, no amount of supposedly scientific complexity in the development process can make up for fundamental illogicality of the concept of offsets.

TOR: the adequacy of monitoring and evaluation of approved offsets; TOR: arrangements to determine whether promised environmental outcomes are achieved over the short and long term; I worked for a total of around 10 years in the federal environment portfolio in areas such as Murray‐Darling Basin programs, water quality, environmental impact assessment of industrial proposals and the National Pollutant Inventory. I was working on the development and implementation of the National Pollutant Inventory program as the Director of that section before and at the time I left the public service in 2002. In my experience, the monitoring and evaluation of programs and arrangements to determine environmental outcomes from programs is a major shortcoming of the federal environmental management of programs and is rarely resourced adequately. I have not heard of any improvements to program management which would suggest that this shortcoming does not still exist and with current cutbacks to funding for departments, it is likely to be exacerbated. Further a report released recently by the Qld Audit office indicated that :

• "the department did not know whether a third of resource projects were complying with legislation. In some cases, projects had shut down without the department's knowledge. It only learned of the closures after trying to recover outstanding fees and charges. The report revealed that despite an almost 600% increase in environmental complaints ‐ largely driven by the expansion of the coal seam gas sector ‐ inspections increased by just 43%." • "EHP does not do periodic or systematic risk assessments or inspections of those sites that have standard conditions applied or standard conditions with variations. It inspects such sites only if it receives a complaint or incident notification. It does not know whether the actual risk posed by the majority of these sites has changed from the original determination" • "It does not report the number or percentage of its inspections that detected non‐compliance and we found little evidence to demonstrate that EHP is effective in detecting non‐compliance, other than in response to public complaints or industry reported incidents" • There are a large number of overdue annual returns that companies are supposed to make to report on their EAs, hampering compliance: "While the number of outstanding annual returns reduced from 10 per cent of all environmental authorities in 2010 to five per cent in 2012, a consequence of holders not submitting annual returns is that valuable information to guide monitoring and compliance planning decisions is not available to EHP."

12 Evans M. and Maron M. Can we offset biodiversity losses?, The Conversation, 4 May 2013 http://theconversation.com/can‐we‐offset‐biodiversity‐losses‐13805 14

• EHP does not assess or audit annual returns routinely to determine the accuracy of the information provided • As of 31 January 2014, EHP are owed an estimated $6.12 million in annual fees for EAs more than 90 days overdue. • "While EHP’s planning processes have improved since 2011, it remains constrained by the quality of its own data, which are unreliable, inaccessible and often incapable of providing timely and quality information to inform decisions" • Their risk assessment tool for evaluating Environmental Authorities for resource projects is not "fully effective" because its not consistent or coordinated with other agencies.13

It is clear that monitoring of conditions and projects after initial commencement is one of the major shortcomings of both federal and state administration.

CONCLUSION

The evidence provided above indicates that offsets are both logically and practically unable to compensate for biodiversity losses from large‐scale projects. Habitat will be lost, new habitat if it is developed from degraded land will be unlikely to have all the characteristics necessary for all the species required as the scientific knowledge is lacking. Further, the extensive time needed to develop any habitat would inevitably mean that habitat is lost in the mean time.

Offsets should have been demonstrated to be effective before they were adopted, but to my knowledge no large‐scale offsets have been established and shown to be effective. During the Alpha case in 2013, the Qld register for biodiversity offsets did not have any areas registered.

All the evidence points to the use of offsets as a pretence of addressing biodiversity losses from large‐scale projects, rather than the offsets having any possibility of being effective. An ecological Ponzi scheme seems to be the best analogy for them.

13 Full report - Environmental regulation of the resources and waste industries https://www.qao.qld.gov.au/report-15-:-2013-14

ATTACHMENT A

THE PROJECT’S ECOLOGICAL ENVIRONMENT

To evaluate whether offsets could ever make up for biodiversity loss from a project, it is important as a starting point to have data re the scale of the project and also a picture of the complexity of the environment on the project site. The Alpha site is described in this section and demonstrates the impossibility of reconstituting the floral habitat, as well as the habitat needed for all the fauna species which would be affected by the large‐scale mine project. The elements described below also do not constitute the complete habitat required to be replaced, as a lot of the detail of the habitat requirements of various fauna are not known, as Mr Vanderduys noted in his expert witness statement to the Alpha case. The information below is from the Alpha Coal EIS and Supplementary EID documentation.

The Alpha Coal Project EIS14 states:

The Project [mine] site is an area of high biodiversity, with the scale and range of the habitat types (encompassed within the study area) key contributing factors. The ‘high’ level of significance is determined by a number of criteria, including:

• The DERM’s Biodiversity Status of Regional Ecosystems;

• The presence of poorly conserved Regional Ecosystems within the area; and

• The presence of significant wetlands and areas of national importance, such as World Heritage Areas and Ramsar listed wetlands [catchment extremities of Coongie Lakes and Shoalwater and Corio Bays area fall within 100 km of the Project site]. …. • Floodplain wetlands and gilgia (ephemeral depressions in soil that hold water for prolonged periods of time) are present on the site and are generally associated with the Brigalow woodland community and adjacent non-remnant areas on clay soils. These areas contain significant frog populations and provide habitat for migratory birds. • Riparian habitat is in good condition across much of the Project site but grazing pressures have caused bank erosion and siltation of some of the more accessible areas…some small watercourses (where Brigalow and Gidgee dominate the tree layer and grow on less permeable clays) exhibit deeper waterholes that provide a source of water into the dry season. The EIS reported that “many bird species were observed using watercourses located within the Project site.”15 A total of 162 native fauna species were identified on the project site during the surveys. These species comprised 94 birds, 32 mammals, 27 reptiles and 9

14 Alpha Alpha case Alpha Coal Project EIS Vol 2 s.9.1.2. p.9‐4. 15 Alpha case ‐ EIS Vol 2 p. 9‐34. 16

amphibians. There are also 418 flora species and 11 remnant vegetation communities on the mine site.16 Known significant ecosystems, flora and fauna An Endangered Regional Ecosystem (ERE 10.3.25 – Eremophila Mitchellii) under the DERM Biodiversity status is located on the project site. The Coordinator General’s (CG) Evaluation report17, identified 4 other DERM listed ‘Of Concern’ regional ecosystems (RE) within areas to be cleared on the mine site.

Two state‐listed threatened fauna species, the vulnerable squatter pigeon and the near‐ threatened little‐pied bat were recorded on the mine site. 18 The Black‐throated Finch has been recorded nearby.19 Dr Dique agreed that the level of effort required to establish the presence or otherwise of a species on the site was not done.20

The Federal Environment Minister’s approval conditions21 (which are included in the CG’s conditions and which apply to both the mine site and rail corridor)22 require measures to be taken to protect the following federally listed flora and fauna species and communities: Brigalow Semi-Evergreen Thickets of the Brigalow Belt and Nandewar Bioregions Natural Grasslands of the Queensland Central Highlands and the northern Fitzroy Basin Black-throated Finch Squatter Pigeon Star Finch Red Goshawk Australian Painted Snipe Northern Quoll Greater Long-eared Bat Retro Slider (reptile) Yakka skink Ornamental Snake Brigalow Scaly-foot (reptile) Dichanthium Queenslandicum (Flora) Dicanthiium setosum Eucalyptus raveretiana Croton magneticus

Environmental Values – Flora23

The following vegetation community-specific environmental values apply to the Project site: • The Fringing Riparian Woodland [on banks of creeks] provides refuge for fauna in the form of water, shade and mature, hollow-bearing tree species;

16 Alpha case ‐ EIS Vol 1 Executive Summary p.0‐11 17 Alpha case Coordinator General’s Evaluation Report p. 33 Table 5.3 18 Alpha case ibid p. xii 19 Transcript 9‐70 lines 1‐2 20 Transcript 6‐37 lines 26 ‐40 21 Alpha case federal approval p.2‐3 22 Alpha case Coordinator General’s Evaluation Report, Appendix 2 p.294 23 Alpha case EIS Vol 2 Section 9 p. 9‐24 17

• Floral diversity was considered relatively high in most communities, in particular the Fringing Riparian Woodland, Silver-leaved Ironbark Woodland, Weeping Bottlebrush Heath and Queensland Yellowjacket Low Open Woodland. These communities provide a high diversity of floral structure therefore adding value to the regional integrity of each community; • Landscapes such as floodplains (in particular the Poplar Box Open Woodland, RE 10.3.27), skeletal hills (represented by the Lancewood Woodland RE 10.7.3) and tertiary sand plains (represented best by the Queensland Yellowjacket Low Open Woodland, RE 10.5.1) are intact and relatively devoid of degradation by grazing; and • The relatively intact patches of Poplar Box Open Woodland, Gidgee Open Woodland, Fringing Riparian Woodland and Thozet’s Box Open Woodland are listed as ‘Of Concern’ under DERM’s Biodiversity Status and have the potential to contribute to the overall preservation of threatened ecosystems.

Environmental Values – Fauna24

The faunal environmental values that are associated with the Project site include the following: • Suitable habitat for threatened species. Fallen timber within the Brigalow Open Woodland and Gidgee Open Woodland has the potential to provide a distinct microhabitat for certain fauna, including the listed Yakka Skink (Egernia Rugosa) and Brigalow Scaly Foot (Paradelma Orientalis). A permanent water source with open woodland and surrounding grassland has the potential to provide habitat for the Star Finch (Neochmia ruficauda ruficauda) and Black-throated Finch (Poephila cincta cincta); • Small and medium sized mammals are well represented on the Project site. The abundance of these species are low, which is normal due to the decline in this weight range following the introduction of pest fauna such as the Feral Cat (Felis catus), Dingo (Canis lupus dingo) and Red Fox (Vulpes vulpes); and • The avian species recorded on the Project site are mostly typical woodland birds and represent a healthy population and diversity of species within the region.

The EIS notes that “Diversion of defined watercourses for Lagoon Creek, Sandy Creek and Spring Creek will be required in order to gain unimpeded access to coal reserves”.25 The water courses constitute vital water sources for local and migratory species. Mr Vanderduys indicated that the near‐threatened Little Pied bat lives in riparian (creek‐side) tree hollows.

Fauna species which were found on the site included: the vulnerable Squatter Pigeon, the near‐threatened Little Pied Bat, the Ornate Burrowing Frog, the Green Tree Frog, the Desert Tree Frog, Zebra and Double‐barred Finches, Brolga, Pelican, Wedge‐tailed Eagle, ‘several Duck species,’ Forest Kingfisher, ‘nine microbat species,’ the Sugar Glider, Rufous Bettong, Koala, Echidna, Sand Goanna, Central Netted Dragon, ‘eight skink species.’ This is just some of the 162 fauna species seen on the site.26 The Queensland near‐threatened ‘Little pied bat’ found on the mine site is not mentioned in any of the biodiversity conditions for the Project.

24 Alpha case EIS Vol 2 Section 9 p. 9‐37‐8 25 Alpha case EIS Executive Summary, mid p. 0‐12. 26 Alpha case EIS Vol 2 S9 pp 9‐34 to 9‐37. 18

Rail Corridor The EIS27 identifies 53 species of “Threatened Fauna known from the Region Not Observed on the Project Site”. Some of these species are Black‐throated Finch, Brigalow Scaly‐foot, Yakka Skink, Northern Quoll, Northern Hairy‐nosed Wombat, Western Quoll, Dunmall’s Snake, and Red Goshawk. Appendix F similarly lists 68 flora threatened species known in the region but not identified on the site. While there has been no suggestion that a large number of these species do inhabit the rail corridor or mine site, the inadequate survey effort gives no confidence that all threatened species which may inhabit the Project site have been detected. These are long lists of threatened flora and fauna species in the region and the cumulative impacts of loss of habitat from existing projects and the added impact of the Alpha, Kevin’s Corner and Galilee projects, must be considered significant.

This list referenced above, along with the total list of species recorded on the mine site, represents a significant number of species which will be affected by the project, not including the Caley Valley impacts at the port of Abbot Point.

The consequences if pre‐clearance surveys identify significant species or habitats are not defined except for the Ornamental Snake: “the ornamental snake has very restricted habitat. This species will be identified and relocated prior to clearing of this habitat, thus avoiding any contribution to cumulative impacts on the ornamental snake”.28 To where and how many of these species will be ‘relocated’ is not indicated. This species is on the Project rail corridor, which as noted above, is included in the EPA definition of ‘mining activity’ (s 147 (c )).

27 Alpha case ‐ EIS, Vol 5, Appendix F of Appendix E1 28 Alpha case EIS Vol 4 Appendix p. G‐39 19

ATTACHMENT B

QUEENSLAND BIODIVERSITY OFFSET POLICY

The Queensland Biodiversity Offsets Policy provides seven principles, which are similar in many respects to the Commonwealth policy.

The QBOP policy has seven principles for biodiversity offsets in Queensland.

Principle 1: Offsets will not replace or undermine existing environmental standards or regulatory requirements, or be used to allow development in areas otherwise prohibited through legislation or policy.

Principle 2: Environmental impacts must first be avoided, then minimized, before considering the use of offsets for any remaining impact.

Principle 3: Offsets must achieve an equivalent or better environmental outcome.

Principle 4: Offsets must provide environmental values as similar as possible to those being lost.

Principle 5: Offset provision must minimize the time-lag between the impact and delivery of the offset.

Principle 6: Offsets must provide additional protection to environmental values at risk, or additional management actions to improve environmental values.

Principle 7: Offsets must be legally secured for the duration of the offset requirement.