Nature conservation

Biodiversity Reform

How does the Biodiversity Offsets Scheme work?

The Biodiversity Offsets Scheme is a framework to avoid, minimise and offset impacts on biodiversity from development and clearing, and to ensure land that is used to offset impacts is secured in-perpetuity.

There are two key elements to the Biodiversity Offsets Scheme:

A.  Developers and landholders who undertake development or clearing, generating a credit obligation which must be retired to offset their activity 

B.  Landholders who establish a biodiversity stewardship site on their land, generating credits to sell to developers or landholders who require those credits, to securely offset activities at other sites.

Part A: Undertaking development or clearing and retiring credits 

There are five key steps to participating in the Scheme for developers or landholders (‘proponents’) who want to undertake development or clearing.

Step 1 – The proponent determines whether the Biodiversity Offsets Scheme applies

First, the proponent needs to determine whether the Scheme applies to their proposed activity in the early stages of the project.

The Scheme applies to:

  • Local development (assessed under Part 4 of the Environmental Planning and Assessment Act 1979) that is likely to significantly affect threatened species or triggers the Biodiversity Offsets Scheme threshold.
  • State significant development and state significant infrastructure projects, unless the Secretary of the Department of Planning and Environment and the Chief Executive of OEH determine that the project is not likely to have a significant impact
  • Biodiversity certification proposals 
  • Clearing of native vegetation in urban areas and areas zoned for environmental conservation that exceeds the Biodiversity Offsets Scheme threshold  and does not require development consent
  • Clearing of native vegetation that requires approval by the Native Vegetation Panel under the Local Land Services Act 2016  
  • Activities assessed and determined under Part 5 of the Environmental Planning and Assessment Act 1979 (generally, p13posals by government entities), if proponents choose to ‘opt in’ to the Scheme.

A navigator will be developed by OEH to support proponents to work through which assessment and approval pathway is likely to be relevant for their activity. This will be available soon. 

Further detail about when the Biodiversity Offsets Scheme threshold will be triggered is available here Entry Requirements into the Biodiversity Offsets Scheme.

Step 2 – An accredited assessor applies the Biodiversity Assessment Method and offsetting rules to the activity

If the Scheme does apply to a development or activity, the proponent must retain an accredited assessor  to apply the Biodiversity Assessment Method (BAM) to the proposal.

After applying the BAM, the accredited person will prepare  a Biodiversity Assessment Report (BAR) that sets out how the proponent has applied steps to avoid and minimise impacts on biodiversity, and setting out the number and type of ecosystem and species credits required to offset residual impacts of the activity on biodiversity (‘credit obligation’).  

In the application for the development or clearing, the proponent can propose to meet the credit obligation using the variation rules  rather than the like-for-like rules. The proponent must demonstrate that they have been unable to find like-for-like after completing  required reasonable steps (PDF 62KB).  The proponent may also seek to use ‘biodiversity conservation actions’ (PDF 72KB) as an alternative to retiring credits

Once completed, the proponent must submit the BAR to the relevant consent authority as part of their application.

Step 3 – The consent authority assesses the application and determines whether to approve or refuse the application

Once the application has been received by the consent authority, the consent authority must consider whether the proposal may have a ‘serious and irreversible impact’. For some approval pathways, if the consent authorities determines that the development will likely result in a serious and irreversible impact, this will mean that the development or activity cannot proceed. Proponents are encouraged to discuss any potential serious and irreversible impacts with the consent authority prior to making their formal application.

The consent authority then assesses the application against the requirements of the legislation that the application is being assessed under. The consent authority will determine whether to approve or refuse the application, including by considering the impacts on biodiversity, which is likely to be only one of multiple issues the consent authority considers.

For the impacts on biodiversity, the consent authority will assess the BAR against the legal and technical requirements of the Biodiversity Conservation Act 2016, Biodiversity Conservation Regulation 2017 and the BAM.

Step 4 – The consent authority determines the application and sets the offset obligation

If the consent authority approves the application, the credit obligation (and any other actions required) will be included as conditions of the relevant approval or consent.  The consent authority has the discretion to increase or decrease the credit obligation generated by the BAR. If the obligation is decreased, the consent authority may be required to publish reasons or seek OEH concurrence.

The consent authority can approve use of the variation rules, if the proponent demonstrates they have been unable to find like-for-like credits after completing reasonable steps, or funding of biodiversity conservation actions to meet the credit obligation. These should be set out in the conditions of consent.

Other conditions may also be imposed to secure commitments in the BAR that the proponent has made to avoid or minimise impacts on biodiversity.

Step 5 – The proponent satisfies its credit obligation and can begin the approved activity

Once the consent authority has issued the approval or consent that includes the final credit obligation, proponents have two primary ways that they can satisfy this obligation:

  1. They can identify and purchase the required ‘like for like’ credits in the market and then retire those credits via OEH BOAMS. For example, credits could be located by using the OEH registers or by retaining a broker to locate credits for them.
    OR
  2. They can use the Offsets Payment Calculator  to determine the cost of its credit obligation, and transfer this amount to the Biodiversity Conservation Fund via OEH BOAMS. The Biodiversity Conservation Trust is then responsible for identifying and securing the credit obligation.

Proponents may also be able to use biodiversity conservation actions or mine site rehabilitation.

When the proponent has completed these steps  for all credits that the proponent is required to retire, they can proceed with their activity in accordance with their approval. The consent authority is responsible for ensuring compliance with credit obligations, and any other conditions of the consent or approval.

Part B: establishing a biodiversity stewardship site and selling credits

There are four key steps for landholders to participate in the Biodiversity Offsets Scheme by establishing a biodiversity stewardship site and selling the credits generated.  

Step 1 – The landholder determines whether they meet relevant eligibility criteria

First, the landholder needs to establish that:   

It is recommended that a landholder seeks early advice from an accredited assessor to identify the likely types of credits that will be generated on their site, in this early planning phase. Brokers and/or the BCT may also provide assistance. It is also recommended that a landholder consults with any property interest holders at this stage. Property interest holders may include a bank, or mining lease holders.

At this early stage, landholders may also wish to advertise their site on OEH’s ‘expression of interest register’ to identify potential purchasers of credits, before they proceed with making a formal application.

Step 2 – An accredited assessor applies the Biodiversity Assessment Method to generate credits

The landholder must retain an accredited assessor to apply the BAM to their site. The assessor will produce a Biodiversity Stewardship Site Assessment Report (BSSAR) that will set out:

  • The type and number of credits generated by placing a Biodiversity Stewardship Agreement (BSA) on the site, and
  • A proposed management plan for the site, which will be included in the biodiversity stewardship agreement.

The Biodiversity Conservation Trust is responsible for entering into BSAs with landholders. Once the BSSAR has been prepared, the landholder will submit their application including the BSSAR to the Biodiversity Conservation Trust via the BOAMS, together with applicable fees.

Step 3 – The landholder enters into a biodiversity stewardship agreement with the Biodiversity Conservation Trust and sell credits

The Biodiversity Conservation Trust will assess the landholder’s application against relevant legal and technical requirements and agree on the terms of the BSA. The BSA will include a management plan that sets out proposed annual management actions and the cost of those actions over a 20 year period, and the ongoing maintenance costs. The total costs are called the Total Fund Deposit. A broker may be able to assist with this process.

Once the BSA is agreed and entered into by the Biodiversity Conservation Trust and the landholder, the agreement and credits will be registered on OEH’s registers. The agreement will also be registered with Land and Property Information.

The landholder may then include their credits on the OEH expression of interest register, if no prior arrangements for selling the credits have been made, or alternatively find a purchaser for the credits directly (potentially with the assistance of a broker).

The landholder will then:

  • Sell the credits (to either the Biodiversity Conservation Trust or a private purchaser such as a developer), which will be recorded in OEH’s register  
  • Transfer the Total Fund Deposit to the Biodiversity Conservation Trust’s Stewardship Payments Fund via BOAMS
  • Transfer ownership of the credits to the buyer via the BOAMS 

The landholder is likely to only sell the credits at a price that enables them to recoup the full Total Fund Deposit amount.

Step 4 – Receive annual payments and manage biodiversity stewardship site

When a landholder has sold sufficient credits to generate 80% of the Total Fund Deposit, active management of the biodiversity stewardship site will commence. This means:

  • The landholder becomes responsible for carrying out the management actions specified in the management plan that is attached to the BSA, and
  • The Biodiversity Conservation Trust will commence making its annual payments to the landholder, as per the terms of the BSA.

The landholder is obliged to transfer 100% of the Total Fund Deposit. Any additional money that is made from the sale of credits beyond this amount can be retained as a profit by the landholder.

The Trust will make these annual payments to the landholder over the 20-year period, and the landholder is required to report annually to the Trust.  After the 20-year period, the landholder may re-apply parts of the BAM to renew the active management plan or continue to receive payments to maintain the BSA site.

The Trust is responsible for ensuring landholders comply with their obligations, and landholders may be subject to auditing and other compliance activities by the Trust or OEH. 

Further detail can be found at the Trust website.

Page last updated: 22 September 2017