Environment law is one of those practice areas that seems to expand its reach with each passing year. Traditionally, environmental law meant matters such as contaminated sites, EPA-related work and licences, but because of the rise of environmental regulation and awareness amongst both companies and consumers, environmental law is blurring with other aspects of a firm’s practice – for instance M&A and IP can often have an environmental aspect or even be environmentally driven.
Another key trend Johnson Winter and Slattery partner Fiona Melville commented on was that environmental practices were breaking up into traditional lawyers and “carbon lawyers” – that is, lawyers who concentrate on emissions-based work. For these carbon lawyers in particular, it has been a turbulent year. “This time last year, clients were actively bringing together teams across their organisation to come up with an effective carbon strategy that encompassed energy efficiency, carbon trading and other issues,” Melville says. “That all changed around April.”
Market driving low emissions advice
The Rudd government has infamously pushed its timeframe for implementing an ETS back to 2013 in a move which may prove to be its political undoing. However, this has not meant that device work on the ETS has dried up altogether. Many contracts in the energy and resources sector are long ones – for example, electricity supply agreements may run for five years or more and accordingly, clients are still turning to lawyers for advice on the likely impact a future ETS will have on the deals they’re doing. It is anticipated that a run of “carbon contract” work will still happen either later this financial year or next, in the lead up to a scheme actually being implemented.
In the meantime, Fiona Melville is observing growth in low emissions advice work which isn’t being driven by compliance with an ETS or necessarily any other government measure, but instead is driven by the marketplace or even by companies themselves. “Although the ETS suffered a major blow, I generally get the feeling from different sectors that lowering emissions and alternative forms of electricity are on the agenda,” she says. As an example of this, Melville says she has been working on a deal between GridX and Qantas concerning a trigeneration plant to supply electricity and chilled and hot water at Sydney Airport. Melville also cites the City of Sydney’s recent announcement that it would be incorporating more renewable energy capacity into Sydney’s properties as part of an ambitious target to reduce the city’s carbon emissions by 70% by 2030, as part of the same push towards renewable energy outside of a federal government framework.
Adelaide-based Finlaysons partner Suzanne Dickey has also noticed an increasing number of her clients seeking advice around voluntary measures for carbon emissions reporting. While she also attributes some of this to long term contracts, Dickey told ALB that voluntary carbon accounting is still strong. Among her client base are a number of wine producers whose need to show environmental responsibility, particularly in overseas markets, is essential to market success. “Just because the Australian government has postponed its scheme doesn’t means businesses don’t have to respond to what’s happening in the rest of the world,” she says.
Federal requirements still need to be met
Clients still need to meet some federal requirements even without the ETS in place. DLA Phillips Fox partner Charmian Barton told ALB that the past year was the first in which clients needed to report under the National Greenhouse and Energy Reporting Act. She also says that this is likely to be a growth area over the next 12 months. “The threshold for reporting for a corporate group has decreased,” she told ALB. “More businesses will be caught this year. We are likely to see more work in this area as the NGER registration deadline approaches in August.”
Another area which most lawyers expect to be a fertile source of work is the Renewable Energy Target, designed to deliver on the government’s commitment to ensure that 20 per cent of Australia’s electricity supply will come from renewable sources by 2020. Barton says that it will continue to drive investment in renewable energy projects. Both she and Melville also cited the federal government’s decision to split the RET into large-scale and small-scale energy projects as a likely driver of future work. Melville also mentioned that the government’s decision to stabilize the price of Renewable Energy Certificates (RECs) will give further impetus to future large scale projects, particularly for wind farms and similarly high costing large-scale renewable energy projects.
Local regulation still a driver
There is, of course, more to environmental law than Commonwealth initiatives and lawyers report that state and local government measures were still strong drivers of work to their practice. In Dickey’s case, the South Australian government has recently introduced site contamination legislation, significantly increasing the amount of advice work in that area. She also says that the State’s environmental protection agency is actively enforcing the provisions of the new legislation so that litigation work is likely to follow in the near future. Meanwhile, Dickey says that apart from the odd project like the Glenelg to Parklands pipeline, water-related work has declined. This is partly because of increased rain over the last year or so but also partly because legislation has helped people better secure their water rights.
Fiona Melville says that Johnson Winter and Slattery has been advising the New South Wales Treasury around aspects of privatising the State’s electricity assets and she believes that the process (which has currently stalled in the ACCC) may continue to generate work for a number of firms, particularly towards the end of this financial year. In Queensland, HopgoodGanim partner James Ireland told ALB that the State government was increasingly intervening in the environmental aspects of property development. Ireland cited the government’s draft coastal plan and koala planning regulations as evidence of this trend.
The two speed economy?
One thing all lawyers ALB interviewed agreed on was that most of the environmental work is coming from a few key industries and in a few key areas. For instance, there seems to be no shortage of work for firms who, like HopgoodGanim, manage to have a solid base in Australia’s resilient resources sector. “The resources sector has been incredibly busy,” James Ireland told ALB. “And while there’s a bit of uncertainty over the new resources tax it really hasn’t affected workflows to date.”
Interestingly there also seems to be a reasonable amount of advice work in relation to large scale projects and developments, which Baker & McKenzie partner, Andrew Beatty, believes may have “come out of hibernation” after the GFC. At the same time, small and medium-sized developments are still struggling – something lawyers attribute to the difficulty smaller businesses are still encountering in obtaining finance.
New Zealand perspective
Chapman Tripp partner Catherine Somerville says her Auckland-based practice has a lot in common with Australian environmental practices right now. “Small to medium-sized developers are struggling,” she says. “But we’re still seeing a lot of new development work from large corporates. One of the benefits of the GFC is that building work is cheap now and a lot of clients are taking advantage”. Like Australia, the New Zealand government’s shelving of its broad ETS (there is a limited ETS in place) also meant that the wave of anticipated advice work never eventuated. However, Somerville’s practice has benefited from a huge government investment in infrastructure, including the commitment of NZ$1bn to upgrading the country’s roads.
Somerville also told ALB that the ongoing reform of the Resources Management Act was also generating a lot of work, particularly as the government was now looking at ways of making the notoriously bureaucratic legislation easier for companies to negotiate. There was also ongoing reform of the method in which matters are handled by the country’s EPA, so that solicitors and clients will take first hearings more seriously, rather allowing the dispute to degenerate into a series of lengthy appeals.
Somerville also told ALB that she expects workflows to be affected when local governments in the Auckland area are soon merged into one body to create a “super city” of Greater Auckland. “Work will disappear from individual councils and someone will get a big lump of work,” she said. “It will also make things quite difficult for whichever firm does get the Auckland Council’s work because they will end up with a lot of conflicts. They will be turning work away.”
