Executive
summary
- The framework for the regulation of offshore renewable energy and
transmission infrastructure (collectively referred to as offshore
infrastructure activities) was established in November 2021 by the Offshore
Electricity Infrastructure Act 2021 (OEI Act)[1]
- The OEI Act applies to renewable energy resources
which may include energy derived from wind and air flow (that is, wind
turbines), wind‑generated waves, tide, and ocean currents (among other
things)[2]
- Offshore infrastructure activities may also require referral,
assessment and approval under the Commonwealth Environment
Protection and Biodiversity Conservation Act 1999 (EPBC Act). The
application of the EPBC Act will only be triggered if a proposed project
has, will have, or is likely to have a
significant impact on matters
of national environmental significance (including the Commonwealth marine
area, and listed threatened and migratory species)
- Offshore infrastructure activities are most likely to require
additional approvals in accordance with other Commonwealth and state and
territory laws. Some states are developing specific regulatory frameworks for
renewable energy projects within their coastal waters
- In August 2022, the Minister for Climate Change and Energy
Chris Bowen identified
6 areas for the potential development of offshore wind energy projects
and to date, 3 regions have been declared as offshore wind areas. Around
40 offshore wind projects have been proposed in Australia so far.[3] The government
sees offshore
wind developments as ‘pivotal’
in the transition to renewable energy and the legislated target of net zero
emissions by 2050.[4]
Introduction
While Australia’s onshore wind industry is
relatively mature, contributing 34.6% of renewable electricity generation
and 10.7% of total electricity generation in 2021–22,[5] Australia is yet to capitalise
on its ‘very
high quality and abundant offshore wind resources’ (p. 3). In
contrast, the offshore renewable industry is well established in major
economies such as Europe, the United States and China, and is growing around
the world. Total global offshore wind capacity was 64.3 gigawatts in 2022
and is expected to reach 447 gigawatts by the end of 2032.[6]
The Australian Parliament passed the Offshore
Electricity Infrastructure Act 2021 (OEI Act) in
November 2021, establishing a framework for the regulation of offshore
renewable energy and transmission infrastructure.[7] It applies to activities in
the offshore area, being those areas beyond the coastal waters of the states
and the Northern Territory.
In August 2022, the Minister for Climate Change and
Energy Chris Bowen identified
6 areas for the potential development of offshore wind energy
projects. Three offshore wind areas have been formally declared. Around
40 offshore wind projects have been proposed to date.[8]
In addition to regulation under the OEI Act, offshore
infrastructure activities may also require:
- referral, assessment and approval under the Commonwealth Environment
Protection and Biodiversity Conservation Act 1999 (EPBC Act)
- additional approvals under other Commonwealth, and state and
territory laws, such as other environmental authorisations, cultural heritage
approvals and native title agreements, land and seabed access, and connections
– via state and territory coastal
waters – ‘to onshore transmission/distribution infrastructure and
participation in the National Electricity Market’.[9]
There has been significant public interest in and concern
about the development of offshore renewable energy and its potential impacts.[10] This paper
provides an overview of the Commonwealth regulatory framework for offshore
renewable energy projects and associated environmental approvals. It describes
the key processes involved and outlines the roles of relevant Commonwealth
Ministers, the Offshore Infrastructure Registrar and the Offshore
Infrastructure Regulator. Some states are also developing specific regulatory
frameworks for renewable energy projects within their coastal waters. This
paper also provides a brief description of recently enacted or planned
legislation in relevant states.
Regulating offshore wind in
Australian waters
Management of Australian waters is divided between the
Commonwealth and states in accordance with legislation enacted to implement the
Offshore
Constitutional Settlement, an intergovernmental agreement reached
in 1979. The states and the Northern Territory have responsibility for
activities in coastal
waters (onshore and as far as 3 nautical miles seaward of the territorial
sea baseline).[11]
The Commonwealth has responsibility for those areas beyond 3 nautical
miles, the ‘Commonwealth
offshore area’.
Commonwealth offshore area
The OEI Act establishes the regulatory framework for
the declaration of areas as potentially suitable for offshore renewable energy
projects, and for the construction, installation, commissioning, operation, maintenance
and decommissioning of offshore infrastructure activities in the Commonwealth
offshore area.[12]
The framework is intended to cover the whole project lifecycle.
The OEI Act principally provides for the declaration of
areas as suitable for offshore infrastructure activities and then provides for
the establishment of a licensing scheme, with much of the detail of that
scheme provided in Regulations. This regulatory
process map provides an overview of the offshore electricity infrastructure
framework.
Role of the Minister and
new statutory positions
The Minister for Energy (the Minister) makes area
declarations and grants licences. The Minister may give remedial directions to
a licence holder (or former licence holders) requiring them to do certain
things, including make good any damage to the seabed or subsoil or other
environmental damage.
The OEI Act also establishes 2 new statutory
positions:
-
Offshore
Infrastructure Registrar.[13]
The Registrar administers the licensing scheme (including receiving and
assessing applications for licences and ongoing licence compliance), maintains
a Register of Offshore Infrastructure Licences, and provides advice to the
Minister.
The General Manager of the
National Offshore Petroleum Titles Administrator (NOPTA) (established under the
Offshore
Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act)) has
been appointed as the Offshore Infrastructure Registrar.[14]
-
Offshore Infrastructure
Regulator.[15]
The Regulator is responsible for the regulation of work health and safety,
infrastructure and integrity and environmental management for offshore
infrastructure activities. Notably, the Regulator will be responsible for
assessing and approving management plans, which will be required to address
matters including environmental management and the maintenance and removal of
offshore infrastructure (see below for more information).
The functions of the Regulator
are carried out by the National Offshore
Petroleum Safety and Environmental Management Authority (NOPSEMA) (also
established under the OPGGS Act).
Declaring offshore areas as
suitable for offshore infrastructure activities
The process for declaring offshore areas as suitable for
offshore infrastructure activities is prescribed in Part 2 of
Chapter 2 of the OEI Act. In summary:
- if the Minister proposes to declare an area, the Minister must
initiate a public consultation process, providing at least 60 days for
submissions[16]
- when making a decision to declare an area, the Minister must have
regard to a range of matters including ‘the potential impacts of the
construction, installation, commissioning, operation, maintenance or
decommissioning of offshore renewable energy infrastructure in the area on
other marine users and interests’, public submissions, the advice of the
Minister for Defence and the Minister for Infrastructure and Transport,[17] Australia’s
international obligations in relation to the area, and Australia’s greenhouse
gas emissions reduction targets[18]
- a declaration may be subject to any conditions that the Minister
considers appropriate.[19]
What about
existing marine uses?
Before the Minister proposes to declare an area, the
Department of Climate Change, Energy, the Environment and Water (DCCEEW) will
consult with relevant Commonwealth departments and state agencies to identify
other marine uses and any potential issues. Existing marine use stakeholders
will be able to provide feedback to consultation processes associated with the
proposed declaration of an area, assessment of management plans, and assessment
of environmental impacts under the EPBC Act (where required). However, the
framework is based on the ‘principle of shared use of the marine environment’
and, while areas will not be declared ‘where uses are considered incompatible’,
it will be the responsibility of licence holders to manage interactions between
marine users.[20]
Proposed and
declared areas
At the time of writing, the Minister has declared
3 offshore wind areas, the Gippsland
offshore wind area (comprising 3 divisions), the Hunter
offshore wind area, and the Southern
Ocean region off Victoria offshore wind area. All 3 areas were reduced in
size following the public consultation process to address concerns raised by
the community and industry stakeholders. These concerns were related to
environmental impacts, visual impacts, and interactions with recreational fishing
and commercial shipping. The proposed Southern Ocean region area was also
adjusted to address concerns raised by First Nations groups. Each declaration
includes specific conditions relating to ongoing consultation with relevant
stakeholders and, in the case of the Hunter offshore wind area declaration, a maximum height
for offshore renewable energy infrastructure.
The consultation process has also been completed for
proposed offshore wind areas located in the Illawarra
(New South Wales) and in Northern
Tasmania. The consultation period for the proposed Indian
Ocean off the Bunbury Region (WA) offshore wind area will close on 3 May
2024.
Licences
The OEI Act prohibits the construction, installation,
commissioning, operating, maintaining and decommissioning of offshore
infrastructure activities without a licence.[21]
The Act’s licensing scheme provides for 4 different
types of licences.[22]
It sets out the purpose of each licence, the activities that may be authorised
by the licence, the merit criteria for the making of a decision to grant a
licence, the conditions that may apply to a licence, and the term of a licence.
While the framework is set out in the OEI Act, additional details have
been prescribed in Part 2 of the Offshore
Electricity Infrastructure Regulations 2022 (OEI Regulations).
The 4 types of licence are:
-
feasibility licence – this allows a licence holder to
assess, over a period of up to 7 years, the feasibility of an offshore
infrastructure project that the holder proposes to carry out under a commercial
licence, and to then apply for a commercial licence
-
commercial licence – this allows a licence holder to carry
out, for a period of up to 40 years (with a possibility of extension), an
offshore infrastructure project for the purpose of exploiting renewable energy
resources
-
research and demonstration licence – this allows a licence
holder to carry out an offshore infrastructure project to conduct research on
the feasibility and demonstrate the capabilities of a technology, system or
process, or to conduct research relating to the exploitation of or exploration
for renewable energy resources
-
transmission and infrastructure licence – this allows a
licence holder to assess the feasibility of storing, transmitting or conveying
electricity or a renewable energy project in or through the licence area, or to
store, transmit or convey electricity or a renewable energy product in or through
a licence area.
The maximum area for a feasibility licence or a commercial
licence is 700 square kilometres.[23]
There may therefore be multiple feasibility or commercial licences granted for
a declared area.
The merit criteria for granting a licence include that the
eligible person has (or will have access to) the technical and financial
capability to carry out the project, that the project is likely to be viable,
and that the eligible person is a suitable person.[24] Additional criteria,
including a requirement that ‘the proposed project for the licence is in the
national interest’, are prescribed in the OEI Regulations.[25]
The Act provides a process to address overlapping
applications for feasibility licences, research and demonstration licences, and
transmission and infrastructure licences. In the case of feasibility licences,
this involves the Minister determining that there are overlapping
application groups and inviting applicants to revise and resubmit their
applications.[26]
If overlaps remain, the Minister may determine financial offer groups
and invite overlapping applicants to submit financial offers for feasibility
licences.[27]
The Minister may then make a decision in respect of the applications having
regard to merit criteria specified in the OEI Act and the matters set out
in the OEI Regulations.[28]
Only particular specified licensing decisions (such as a
decision not to grant a commercial licence other than a feasibility licence)
can be challenged in a merits appeal to the Administrative Appeals Tribunal.[29]
Given that the development of an offshore renewables
industry is in its early stages, only applications for feasibility licences for
the declared areas are currently being accepted. In August 2023, the
DCCEEW released an updated Guideline:
Offshore Electricity Infrastructure Licence Administration – Feasibility
Licences to aid understanding of the application process.
Licence fees and cost
recovery
The regulatory framework imposes substantial licence
application and associated administrative fees.[30] For example, the application
fee for a feasibility licence is $300,000.[31] In addition, the costs of
administering the offshore electricity infrastructure industry will be fully
recovered through an offshore electricity infrastructure levy which is imposed
on licence holders in accordance with the Offshore
Electricity Infrastructure (Regulatory Levies) Act 2021. The levies are
set out in the Offshore
Electricity Infrastructure (Regulatory Levies) Regulations 2022.
Management plans
The holder of a feasibility licence is required to prepare
and submit a management plan to the Regulator for approval. A management plan
is required to ‘contain all measures to support compliance with OEI Act
requirements, as well as demonstrate that the manner in which activities are to
be undertaken is in accordance with relevant conditions and requirements
related to EPBC Act approvals, DNP [Director National Parks]
authorisations and other legal requirements’.[32]
An approved management plan must be in place before
feasibility licence activities can commence, and before a feasibility licence
holder can apply for a commercial licence.
The DCCEEW has foreshadowed releasing Regulations addressing
management plans in 2024.
Financial
security
The OEI Act requires the holder of a licence for which
a management plan is in force to pay a financial security to the Commonwealth.[33] The financial
security must be sufficient to pay for any costs, expenses and liabilities
arising in connection with:
- the decommissioning of licence infrastructure
- the removal of equipment and other property from a licence area
or a vacated area
- the remediation of the licence area and vacated area, or any
other area affected by the activities carried out under the licence.
Regulations under the OEI Act may prescribe acceptable
forms of financial security.
Obligation to maintain and
remove offshore infrastructure
All licence holders have an obligation to:
- maintain in good condition and repair all structures, equipment
and other property that is in the licence area and used in connection with the
activities authorised by their licence
- remove all structures, equipment and other property that is not
or is no longer used in connection with the activities authorised by their
licence.[34]
The Minister must be satisfied that all structures,
equipment and other property have been removed from the licence area (or other
acceptable arrangements have been made), and that the licence holder has made
good any damage to the seabed or subsoil, or any other environmental damage, in
the Commonwealth offshore area before accepting the surrender of a licence.[35]
Safety and protection zones
The OEI Act allows the Regulator to declare
2 types of temporary zones to protect against interference with offshore
renewable energy infrastructure or offshore electricity transmission
infrastructure, associated structures or vessels, equipment on associated
structures or vessels, or activities being carried out on, by or in connection
with structures or vessels.
The zones are:
- safety zones – the Regulator may, by notifiable instrument,
declare a safety zone of up to 500 meters around eligible safety zone
infrastructure[36]
- protection zones – the Regulator may, by legislative instrument,
determine that a specified area in the Commonwealth offshore area is a
protection zone.[37]
A range of offence and civil penalty provisions apply to
breaches of the zones or interference with offshore infrastructure.
State and territory coastal
waters
While some states (such as Western Australia) are assessing
proposals under existing planning and environmental assessment laws, others are
developing or have passed new Acts that establish specific frameworks for
renewable energy projects in their coastal waters.
South Australia
In November 2023, the Hydrogen
and Renewable Energy Act 2023 (HRE Act) was enacted in South
Australia (SA).[38]
The HRE Act ‘introduces
a “one window to government” licencing and regulatory system for the
lifecycle of large‑scale hydrogen and renewable energy projects’,
including wind farms in coastal waters. This is similar to SA’s approach to
mining and other energy resource activities.[39]
The HRE Act allows the SA Minister to declare ‘release
areas’, including in coastal waters, as suitable for the operation of renewable
energy infrastructure. Potential projects would then be assessed and awarded
through a competitive tender process. The HRE Act provides for
3 types of renewable energy licences: feasibility, infrastructure
(equivalent to commercial licences under the OEI Act), and research. It
also provides for a hydrogen generation licence and a special enterprise licence
(to support the construction of inputs such as wind turbines and solar panels).
Victoria
At the time of writing, Victoria is the only state to have declared
offshore wind targets. In March 2024, these targets were legislated by the
Victorian Parliament.[40]
In addition, the Victorian Government has foreshadowed the introduction of
amending legislation in the first half of 2024 to address land tenure
issues in coastal waters and update electricity safety legislation.[41]
Offshore Wind Energy Victoria was established to coordinate
the development of the state’s offshore wind energy sector, and in
December 2023, it released its third Offshore
Wind Implementation Statement. VicGrid is
coordinating the identification of connection point(s) for offshore wind
developers, and the state government has allocated funding to establish a Wind
Worker Training Centre.
The Victorian Government had identified the Victorian
Renewable Energy Terminal[42]
at the Port of Hastings as a suitable site to support the development and
servicing of offshore infrastructure activities. On 9 October 2023,
the proposed project was referred to the Federal Minister for the Environment
for assessment and approval under the EPBC Act.[43] However, on
18 December 2023, the Minister for the Environment determined that
the proposed action was ‘clearly unacceptable’ due to potential significant
impacts on the Western
Port Ramsar Wetland.[44]
The Victorian Premier, Jacinta Allen, has expressed disappointment with this
decision and the state government and Port of Hastings are continuing to assess
the Minister’s decision and whether it may be possible to resubmit a revised
referral.[45]
Consideration of environmental
impacts
Proposed offshore renewable infrastructure projects are
likely to require referral, assessment and approval under Australia’s primary
national environmental law, the Environment
Protection and Biodiversity Conservation Act 1999 (EPBC Act).
The EPBC Act establishes an environmental impact
assessment and approval regime for actions (referred to as ‘controlled
actions’) that have, will have, or are likely to have, a significant
impact on matters
of national environmental significance (referred to as ‘protected
matters’). The protected matters are listed in Part 3 of the
EPBC Act. The 6 matters that are most relevant to offshore renewable
energy projects are:
The referral, assessment and approval process all involve
the following steps:
- A project proponent identifies that the proposed project has,
will have, or is likely to have a significant impact on a protected matter and
refers the proposal to the Minister for the Environment (the Minister).
- The Minister (or their delegate) determines whether or not the
proposed project is a controlled action; that is, the proposed project has, may
have, or is likely to have a significant impact on a specific protected matter.
- The Minister (or delegate) determines the type of assessment
required to assess the potential impacts of the proposed project on the
specific protected matter; this can range from an assessment based on
preliminary information provided in the referral document to a full
environmental impact assessment.
- The project proponent (as required, and to the level of detail
required by the assessment approach) undertakes a range of environmental
studies to identify and assess the potential impacts of the proposed project on
the protected matters and identifies ways in which these potential impacts can
be avoided or mitigated.
- The project proponent submits this information to the Department,
which prepares an assessment report for the Minister.
- The Minister determines whether to approve or not approve the
project, and whether any conditions should be attached to the approval.
The process includes 2 formal opportunities for public
consultation, firstly, on the submission of the referral and secondly, on the
submission of the completed assessment information.
In July 2023, the DCCEEW released guidance
on key environmental factors ‘to provide consolidated information to
offshore renewable energy proponents on the key environmental factors for
consideration when developing projects in the Australian marine environment
under the EPBC Act’.[46]
Project proponents will need to consider these factors if preparing
environmental impact assessments. The guidance identifies 13 environmental
factors for sources of impact, such as underwater noise, turbine interactions,
seabed disturbance, and underwater cultural heritage. For each environmental
factor, it:
- summarises potential sources of impact
- lists key statutory documents, management principles and other
relevant EPBC Act information sources
- describes good practice management to minimise, or monitor and
mitigate, potential impacts.
In November 2023, the Offshore Infrastructure Regulator
released guidance on Offshore
renewables environmental approvals. The guidance notes that commercial
offshore wind farms, and potentially also initial feasibility studies,
investigations and surveys, constitute activities requiring environmental
assessment. It includes the clarification that ‘licences issued under the
OEI Act are separate to approvals under the EPBC Act and state and
territory requirements and approval under one Act does not guarantee approval
under another’.[47]
To date, several proponents have submitted referrals under
the EPBC Act in relation to preliminary geophysical, geotechnical and
marine studies associated with proposed offshore windfarms.[48] These have generally been
determined to be not controlled actions, if undertaken in a particular manner.
The particular manner conditions include adherence to a range of policy
statements and guidelines, including:
Additional Commonwealth approvals may be required, depending
on the location and nature of activities.[49]
For example, if a proposed project is located in, or may have an impact on:
The Australian Government has also indicated that it is
considering mechanisms to streamline environmental assessment processes.[50] This may include regional
plans or strategic
assessments, whereby an assessment could occur across a declared area and
negate the requirement for individual environmental approvals, provided the
project is implemented in accordance with the approved regional plan or
endorsed program, policy or plan under the strategic assessment.
The Australian Government is currently progressing reforms
to the EPBC Act, which may result in changes to the processes outlined in
this paper.[51]
Further resources
- Australian Government, Offshore
renewables environmental approvals, Revision 2, November 2023
- Department of Climate Change, Energy, the Environment and Water, Key
environmental factors for offshore windfarm environmental impact assessment
under the Environment Protection and Biodiversity Conservation Act 1999,
(Canberra: Australian Government, July 2023)
- Leah Ferris and Liz Kenny, ‘Offshore
Electricity Infrastructure Bill 2021 [and] Offshore Electricity Infrastructure
Regulatory Levies) Bill 2021’, Bills Digest, 27, 2021–22, (Canberra:
Parliamentary Library, 21 October 2021)
- C. Briggs, M. Hemer, P. Howard, R. Langdon, P. Marsh, S. Teske
and D. Carrascosa, Offshore
wind energy in Australia, Final Project Report, (Launceston: Blue
Economy Cooperative Research Centre, 2021)
Acknowledgements: the author thanks Clare Murdoch, Dr
Stephen McMaugh, Dr James Prest and Dr Hunter Laidlaw for discussions and
comments on an earlier version of this paper.