Key Takeaways

• State significant development or infrastructure that is a priority infrastructure project, REZ network infrastructure project, generation, storage, network or related infrastructure in a REZ or infrastructure to which an LTES agreement applies is eligible.
• Under a SODA, the Environment Agency Head agrees to meet a proponent’s offsets obligations by retiring like-for-like biodiversity credits or funding conservation actions targeted at species or ecological communities impacted by the development, consistent with the Biodiversity Offsets Scheme.
• The change aims to mitigate potential delays in the roll out of renewable infrastructure that could be caused by constraints in the supply of biodiversity credits.

Background

A panel of independent experts lead by Dr Ken Henry conducted a review of the Biodiversity Conservation Act 2016 and published its report in August 2023 (Final Report – Independent Review of the Biodiversity Conservation Act 2016) (Report).

The Report found that large projects, including renewable energy projects, are driving demand for biodiversity credits, but that there is insufficient supply of the types of credits needed for these projects. The Report stated that, unless alternative approaches are found, such projects may need to pay into the Biodiversity Conservation Fund, delaying restoration activities needed to offset the impacts of those projects and potentially making offsets unaffordable.

The Report recommended that the Biodiversity Conservation Regulation 2017 be amended to provide an option to enter an agreement with the Minister for the Environment to deliver an offset obligation.

The amendments made to the Biodiversity Conservation Regulation 2017 on 9 May 2025 implement this recommendation.

Who is eligible to enter into a SODA?

An applicant or proponent of ‘major project development’ is eligible to enter into a SODA with the Environment Agency Head.

A ‘major project development’ is State significant development or infrastructure under the Environmental Planning and Assessment Act 1979 that is:

– a priority transmission infrastructure project or REZ network infrastructure project within the meaning of the Electricity Infrastructure Investment Act 2020, or

– generation, storage, network or related infrastructure in a renewable energy zone within the meaning of the Electricity Infrastructure Investment Act 2020, or

– infrastructure to which an LTES agreement within the meaning of the Electricity Infrastructure Investment Act 2020 applies.

What is a SODA?

A SODA is an agreement with the Environment Agency Head, under which:

• the  Environment Agency Head agrees to meet a proponent’s offsets obligations by retiring like-for-like biodiversity credits or by funding conservation actions targeted at species or ecological communities impacted by the development, consistent with the Biodiversity Offsets Scheme; and

• the proponent agrees pay for those credits or actions.

A SODA can only be entered into after the relevant planning approval has been granted. A SODA must also specify the number and class of biodiversity credits that would otherwise have been required under the relevant planning approval for the development. As a result, the biodiversity impacts assessment processes for the planning application must still be followed – but a proponent will have an additional mechanism available to offset or compensate for the assessed impacts of the development.

The Environment Agency Head must not enter a SODA unless they are satisfied that the benefit to biodiversity values of the actions required to be undertaken under the SODA matches or exceeds the benefit to biodiversity values of the retirement of the relevant biodiversity credits.

Any conservation actions to be undertaken under a SODA must also be carried out in a way that is consistent with the ‘conservation investment strategy’, which is the published strategy that sets out the State’s priorities for actions to be undertaken in a specified region under a SODA.

Where to from here?

The Environment Agency Head must publish a notice of their intention to enter into a SODA at least 28 days before entering into a SODA. The first such notice was published on the same day that the Biodiversity Conservation Regulation 2017 was amended. That notice relates to a proposed agreement with the Energy Corporation of NSW in relation to the Central West Orana Renewable Energy Zone Transmission project.

Proponents of other eligible projects should also consider whether entry into a SODA would be a suitable option to deliver their offset obligations.

Published on 21 May 2025.