New South Wales – No Shortcuts on Scope 3: High Court Puts Scope 3 Emissions Back on the Table for Resource Projects
On 7 October 2026, the High Court of Australia handed down its decision in MACH Energy Australia Pty Ltd v Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc [2026] HCA 35, confirming how New South Wales (NSW) planning authorities must deal with Scope 3 greenhouse gas emissions (GHG) when assessing development applications for resource and energy projects. By a 3:2 majority, the Court dismissed MACH Energy Australia Pty Ltd’s (MACH Energy) appeal and confirmed that the Independent Planning Commission of NSW ’s (Planning Commission) approval was invalid. The decision makes clear that consent authorities cannot discharge their obligations to consider the impact of development on climate change by considering only Scope 1 and Scope 2 emissions.
BACKGROUND
In January 2021, MACH Energy sought development consent to extend the operational life of the Mount Pleasant coal mine located in the Hunter Valley for a period of 22 years, enabling the extraction of an additional 406 million tonnes of coal. The development constituted state significant development in accordance with section 4.36 of the Environmental Planning & Assessment Act 1979 (NSW) (EPA Act). On 6 September 2022, the Planning Commission approved the application subject to conditions. The development application was the subject of significant objection, including by the Denman Aberdeen Muswellbrook Scone Healthy Environment Group (Healthy Environment Group). The Healthy Environment Group challenged the consent in the Land and Environment Court of NSW, arguing that the Planning Commission had misapplied the EPA Act. The primary judge dismissed the challenge, but the Court of Appeal allowed it on appeal, declaring the consent “invalid for failure to consider a mandatory consideration”. The matter before the High Court was an appeal brought by MACH Energy to challenge the conclusions of the Court of Appeal.
HIGH COURT OF AUSTRALIA
The majority of the High Court, Gordon J, Edelman and Beech-Jones JJ, each independently concluded that the Planning Commission failed to consider imposing conditions to minimise Scope 3 emissions to the greatest extent practicable, as required by clause 2.20(1)(c) of the State Environmental Planning Policy (Resources and Energy) 2021 (NSW) (Resources SEPP), and that the appeal should be dismissed, upholding the invalidity of the development consent. Gageler CJ and Jagot, in a joint judgment, dissented and supported the allowance of the appeal.
Three issues were central to MACH Energy’s appeal:
- Whether the Court of Appeal misconstrued section 4.15(1)(b) of the EPA Act as requiring the Planning Commission to consider the likely impacts of the development in the locality;
- Whether the Court of Appeal was correct to find that the Planning Commission took into consideration clause 2.20(1)(c) of the Resources SEPP, as required by section 4.15(1)(a)(i) of the EPA Act; and
- Whether climate change is capable of being construed as an environmental impact in the locality of the development for the purposes of section 4.15(1)(b) of the EPA Act, a question which, by reason of the first issue, did not ultimately need to be determined.
Issue 1: Consideration of “In the Locality”
Gordon J, with Edelman and Beech-Jones JJ in agreement, held that the Court of Appeal had incorrectly treated the words “in the locality”, appearing at the end of section 4.15(1)(b) of the EPA Act, as applying to the whole paragraph. Properly construed, the provision requires a two-stage analysis; the consent authority must first identify the “likely impacts” of the development and must then “take into consideration” those likely impacts. The phrase “likely impacts of [the] development” contains no geographic limit and the examples following the first comma are nonexhaustive. In noting the practical concerns of the legislation, Gordon J held that a construction of section 4.15(1)(b) requiring the consent authority to identify and expressly consider every possible impact of a development, at the level of specificity advocated for by the Healthy Environment Group, would be administratively unworkable. The fact that there was evidence before the Planning Commission about the impact of greenhouse gas emissions and climate change on the local area did not ultimately transform this into a separate mandatory consideration.
Issue 2: Consideration of Scope 3 Greenhouse Gas Emissions
The second issue concerned the proper construction of section 4.15(1)(a) of the EPA Act, and whether, as that section directs, the Planning Commission took into consideration clause 2.20(1)(c) of the Resources SEPP. By majority, the Court held that the Planning Commission’s approval was invalid because it was required to consider whether to impose conditions to minimise all greenhouse gas emissions, including Scope 3 emissions, to the greatest extent practicable, but fell short in considering Scope 3 emissions. The majority observed that the language of clause 2.20(1)(c) of the Resources SEPP recognises that the imposition of conditions to ensure greenhouse gas emissions are minimised to the greatest extent practicable will not always be possible or desirable. However, this does not change the fact that the Planning Commission must still consider imposing such conditions in order to comply with its obligations.
The Planning Commission’s approach in this case was contrasted with its earlier consideration of the Narrabri Gas Project in Mullaley Gas and Pipeline Accord Inc v Santos NSW (Eastern) Pty Ltd (2021) 252 LGERA 221, where the Planning Commission expressly considered imposing conditions to minimise Scope 3 emissions, even though it ultimately decided not to impose them.
Going forward, there will be greater pressure on development proponents to propose conditions addressing Scope 1, 2 and 3 greenhouse gas emissions in their environmental impact statements, as required under the EPA Regulations, but this does not relieve the Planning Commission from its own obligation to consider imposing such conditions.
WHAT THIS MEANS GOING FORWARD
For the Mount Pleasant coal mine, the High Court’s decision means the matter will be remitted to the Land and Environment Court of NSW, which will reconsider the validity of the development consent. More broadly, the judgment will likely see more stringent consideration of GHG emissions and the resulting climate change impacts of proposed resource and energy development projects. For Scope 3 emissions, which for Australian-produced coal generally arise overseas, consent authorities will be required to turn their minds to whether conditions need to be imposed to minimise those emissions and whether doing so is practical and workable.
Please contact a member of our planning and environment team to discuss how this decision may affect current or proposed resource development projects, particularly where Scope 3 emissions form a material part of the project’s likely impact.
The authors would like to thank graduate Juliette Petro for her contributions to this legal insight.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Any views expressed herein are those of the author(s) and not necessarily those of the law firm's clients.
