How the Biodiversity Offsets Scheme works

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 2 key elements to the Biodiversity Offsets Scheme

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

Part 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 5 key steps for participating in the Scheme for developers or landholders (‘proponents’) who want to undertake development or clearing.

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

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, Industry and Environment and the Environment Agency Head 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, proposals by government entities), if proponents choose to ‘opt in’ to the Scheme.

More information about when the Biodiversity Offsets Scheme threshold will be triggered is available at Entry requirements into the Biodiversity Offsets Scheme.

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 Ancillary rules: Reasonable steps to seek like-for-like biodiversity credits (PDF 58KB). The proponent may also seek to use Ancillary rules: Biodiversity conservation actions (PDF 69KB) as an alternative to retiring credits

Once completed, the proponent must submit the BAR to the relevant consent authority as part of their 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 authority 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 before 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 Biodiversity Assessment Report against the legal and technical requirements of the Biodiversity Conservation Act 2016, Biodiversity Conservation Regulation 2017 and the Biodiversity Assessment Method.

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 Biodiversity Assessment Report (BAR). If the obligation is decreased, the consent authority may be required to publish reasons or seek Department 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.

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 Biodiversity Offsets and Agreement Management System (BOAMS). For example, credits could be found by using the 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 the credit obligation, and transfer this amount to the Biodiversity Conservation Fund via the 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 4 key steps for landholders to participate in the Biodiversity Offsets Scheme by establishing a biodiversity stewardship site and selling the credits generated.  

First, the landholder needs to establish that:

In the early planning stage, it is recommended that a landholder seeks advice from an accredited assessor to identify the likely types of credits that will be generated on their site. Brokers and/or the Biodiversity Conservation Trust 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 banks, or mining lease holders.

At this early stage, landholders may also want to advertise their site on the Expression of interest register to identify potential purchasers of credits, before they proceed with making a formal application.

The landholder must retain an accredited assessor to apply the Biodiversity Assessment Method (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. When the BSSAR has been prepared, the landholder submits their application (including the BSSAR) to the Biodiversity Conservation Trust via the BOAMS, together with the relevant fees.

The Biodiversity Conservation Trust assesses the landholder’s application against relevant legal and technical requirements and agrees on the terms of the Biodiversity Stewardship Agreement (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 help with this process.

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

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

The landholder will then:

  • Sell the credits to either the Biodiversity Conservation Trust or a private purchaser such as a developer. The sale will be recorded in the register.
  • Transfer the Total Fund Deposit to the Biodiversity Conservation Trust’s Stewardship Payments Fund using the Biodiversity Offsets and Agreements Method System (BOAMS)
  • Transfer ownership of the credits to the buyer using BOAMS 

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

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

  • The landholder becomes responsible for carrying out the management actions specified in the management plan that is attached to the Biodiversity Stewardship Agreement (BSA), and
  • The Biodiversity Conservation Trust (the Trust) will begin making 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 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 Biodiversity Assessment Method (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. Landholders may be subject to auditing and other compliance activities by the Trust or Department of Planning, Industry and Environment.

More information: Biodiversity Conservation Trust