Hydrogen

Promoting the development of a Green Hydrogen Industry – the Hydrogen and Renewable Energy Bill

The South Australian Government is set to introduce its proposed ‘world first’ stand-alone hydrogen and renewable energy legislation into Parliament in September 2023.  As part of a bold push to make South Australia a green hydrogen industry centre, the Hydrogen and Renewable Energy Bill 2023 (HRE Bill) proposes legislation to open up State owned land and waters to competitive tender for development of renewable energy infrastructure and commercial hydrogen generation and establishes a “one window to government” framework for licensing and regulation of renewable and hydrogen projects in SA.

Key Objectives of the Bill

The Bill looks to provide investment certainty for project proponents by making State owned land available for development and introducing a stand-alone licensing process. A competitive tender process and provisions to facilitate multiple land uses are proposed to ensure land owners, Aboriginal traditional owners, mining tenement holders and others with an interest in the land  are appropriately considered and compensated. The Bill also looks to secure ongoing financial benefit to the State for the use of State-owned land and waters for renewable energy facilities.

These are explained in a little more detail below.

Hydrogen and Renewable Energy Infrastructure Licences

The Bill will, if passed, establish a new licensing regime for renewable energy and green hydrogen[1] generation projects. Renewable energy projects using solar, wind and hydropower will all be regulated by the legislation. All stages of a renewable energy project will be licensed from feasibility studies through to decommissioning and rehabilitation. The Bill will establish the following licence categories:

  • Hydrogen Generation Licence (HGL) authorises the construction and operation of a facility to generate hydrogen;[2]
  • Renewable Energy Feasibility Licence (REFL) authorises exploration and investigation to assess the feasibility of generating renewable energy;[3]
  • Renewable Energy Infrastructure Licence (REIL) authorises the construction and operation of renewable energy infrastructure, such as wind turbines and solar panels;[4]
  • Renewable Energy Research Licence (RERL) authorises the research, testing and data collection for renewable energy technologies;[5] and
  • Special Enterprise Licence (SEL) authorises hydrogen and renewable energy projects considered by the government to be a major significance to the economy of the State.[6] This is expressed by the government to be a licence of last resort where the other licence categories are not able to appropriately facilitate the project. The Bill proposes a range of extraordinary powers in order to facilitate a project under an SEL, including the grant of a right to enter and use freehold land for the project without an agreement with the landowner.

All licence applications must address the requirements for an application set out in Part 3, Division 3 of the Bill.

Applicants who are refused a licence or who are dissatisfied with the conditions upon the grant of a licence will have a right of appeal against the decision.[7]

‘Unlocking’ Crown Land for renewable infrastructure development (Release Areas)

The Bill is proposed to apply to renewable projects on any land within South Australia, including freehold land. However, the Bill aims to focus investment in new renewable energy projects on land owned by the State.

The Minister will have power to declare areas of pastoral land, other State owned land or State waters (defined as ‘designated land’ under the Bill), suitable for the operation of renewable energy infrastructure to be a release area.[8]  This process will facilitate the development of renewable energy projects including wind and solar (but not hydrogen generation facilities) on State owned land and waters.

Once a release area is declared, new licence applications may only be made in response to an invitation from the Minister for renewable energy feasibility licences on that land.[9] Applicants must address the requirements for an application for a licence under clause 25, any specified criteria under clause 8, and any other information the Minister considers relevant. The Minister must have regard to the criteria to be prescribed in the regulations[10]  for the purposes of selecting a preferred applicant.

Successful applicants will be publicly announced and, subject to the Minister being satisfied that an indigenous land use agreement registered under the Commonwealth Native Title Act 1993 authorising the grant of a licence is in place, granted a Renewable Energy Feasibility Licence with an exclusive right to undertake to undertake feasibility studies and exploration activities for the purposes of exploiting a specified renewable energy resource. Licences will be granted for a 3 year period with one right of renewal for a further 3 years.

Once feasibility studies and exploration are successfully completed under the REFL, the licence holder is then entitled to apply for a Renewable Energy Infrastructure Licence for the implementation and operation of the renewable resource project on the land.

Aboriginal traditional owners – Native Title

Licences over land comprising native title land will not be granted unless, in the case of land that is the subject of a native title declaration or registered claim under the Native Title Act, a registered indigenous land use agreement (ILUA) that authorises the grant of the licence is in place. Where there is no native title declaration or registered claim, the Minister must before granting a licence be satisfied that the grant of licence will be valid under the Native Title Act.

Land Access

Renewable energy feasibility and infrastructure licence holders on designated land will need to have an access agreement in place with the holder of a pastoral lease or a mining tenement over land in the licence area.[11] The Act provides a process for mediation by the Minister and ultimately court determined resolution of the terms of an access agreement where the parties cannot reach agreement on terms. [12]

Hydrogen generation licences will authorise the specified activities subject to the licence holder acquiring from the landowner a right or interest in respect of the land comprising the proposed licence area sufficient to undertake the proposed operations.

Renewable Energy Licences over freehold land will be subject to the licence applicant obtaining a right or interest in the land in the same way as is currently the case. A special enterprise licence has exceptional provisions to facilitate access to freehold land where the landowner is unwilling to agree.

Entry to and use of land will be subject to the requirement to notify landowners and mining tenement holders in accordance with the terms of an access agreement, and to notify other users of the land (captured by the definition of “owner” under clause 4 of the Bill) in accordance with Part 4 of the Bill.

Compensation

Owners of land over which a renewable energy or hydrogen generation licence is granted will be entitled to compensation for any economic loss, hardship or inconvenience suffered by them in consequence of authorised operations. The Bill proposes a process for negotiation of compensation and ultimately determination of appropriate compensation by the ERD Court where parties are unable to agree.

Environmental Impact Assessment

The Bill establishes a process for the assessment of environmental impacts to be undertaken after a licence is granted. Activities authorised by the licence may not commence until the licence holder has:

  • prepared an environmental impact report (EIR);
  • prepared a statement of environmental objectives (SEO) informed by the EIR and approved by the Minister;
  • prepared an operational management plan (OMP) informed by the SEO and approved by the Minister.

Consultation and public notice

After receiving an application for a hydrogen generation licence or a renewable energy licence, the Minister must give notice to an owner of land comprised in the proposed licence area and to the council of the relevant area.[13]

The Minister is required to consult the Minister responsible for administering the Pastoral Land Management Act before declaring pastoral land ‘released’ for development, and again before granting a renewable energy licence.

If an application for a licence is granted, the prescribed information must be entered on the register.[14]

Benefits and Protections for the State

The Bill provides a range of provisions to ensure licensed projects are implemented safely and without financial or environmental risk to the State and to deliver a financial benefit to the State for the use of its land. Licence holders:

  • will be subject to extensive ongoing reporting requirements;
  • may be required by the Minister to enter into a bond in such sum as the Minister considers necessary to ensure any civil or statutory liability that may be incurred, or the present and future obligations in relation to the rehabilitation of land disturbed by authorised operations, and to provide such security for satisfaction of the bond as the Minister thinks fit[15];
  • will pay rent in respect of any licence held over designated land or any special enterprise licence[16];
  • will be required to hold public liability insurance indemnifying the licence holder in relation to any action arising out of the operations undertaken under the licence[17];
  • will be prohibited from transferring, assigning, mortgaging or otherwise dealing with a licence without the consent of the Minister[18];
  • will be prohibited from changing shareholders with more than 20% or more of the voting rights of the licensed entity without the consent of the Minister.[19]

The Bill proposes a range of enforcement tools to secure compliance with the legislation in the event of a breach by a licence holder, including civil enforcement and criminal prosecution proceedings in the Environment Resources and Development Court.

Existing Renewable Energy Applications and Approvals

In early August 2023 the government released proposed transitional arrangements for existing renewable energy licence applications and approvals for consultation. It proposes:

  • Projects approved under the PDI Act and either operating at the time of commencement of the HRE Act or yet to commence operations will continue to have the right to operate lawfully under the PDI Act approval and will have a right to apply for extensions and variations to that approval for a period of 3 years, and a right to be granted a Renewable Energy Infrastructure Licence or Hydrogen Generation Licence subject to obtaining approval for an operational management plan under the HRE Act.
  • Projects the subject of a development application under the PDI Act will have the right to have that application determined under the PDI Act and to be granted an approval under the PDI Act, together with a right to be granted a Renewable Energy Infrastructure Licence subject to obtaining approval for an operational management plan under the HRE Act.
  • Projects which have obtained or are seeking to obtain Crown sponsorship to be assessed under the PDI Act Crown development process but which have not yet lodged an application will have a right to be assessed and licensed under the HRE Act (i.e. they will not need to compete under the tender process for a licence).

Consultation on the transitional arrangements has now closed. The proposed Bill is scheduled to be tabled in Parliament in September 2023.The government has indicated that draft Regulations supporting the Bill will be prepared and made available around the time that the Bill is tabled.

If you have any questions about the draft HRE Bill or if you would like assistance preparing a submission you can contact Ali Field on 0418 568 954 or at asf@bllawyers.com.au, James Levinson on 0407 050 080 or jal@bllawayers.com.au,  or Rosie Jervis on 0487 005 538 or rhj@bllawyers.com.au.

[1] Green hydrogen is hydrogen produced by electrolysis of water using only renewable energy.
[2] Clause 11 and 12
[3] Clause 13 and 14
[4] Clause 15 and 16
[5] Clause 17 and 18
[6] Clause 20
[7] Clause 91
[8] Clause 7
[9] Clause 8
[10] Clause 8
[11] Clause 32
[12] Clause 32
[13] Clause 26(2)
[14] Clause 29(4); the hydrogen and renewable energy register established and maintained by the Minister pursuant to clause 92.
[15] Clause 33
[16] Clause 35
[17] clause 38
[18] clause 39
[19] clauses 40 and 41