New National Environmental Standards: Impacts for developers in NSW

A significant part of the large-scale overhaul of the EPBC Act, which began in late 2025 with staggered changes coming in early 2026, is the introduction of new National Environmental Standards. The Government is currently consulting on two of these standards – Matters of National Environmental Significance (MNES) and Environmental Offsets. When rolled out, these new standards will change the way projects are assessed and offsets delivered.

Ecology Practice Lead, Dr Cairo Forrest, explains the changes coming under the new standards and how this will impact developers in NSW.

Overview of the EPBC Act reform

The EPBC Act reforms aim to address the findings of the 2020 Samuel Review, balancing faster development approvals for industries like renewables and housing with stronger, more transparent environmental protections that arrest the continued biodiversity decline being seen under the current legislation settings that focus on “no net loss”.

Specifically, the EPBC Act reforms aims to achieve this above by prioritising “net gain” environmental outcomes, stricter offsetting requirements, and streamlined regional planning pathways (for designated development zones or mapped corridors).

Developers face higher compliance costs (via stricter avoidance, mitigation and offsetting requirements) and tougher approval tests (via stricter land clearing rules and stricter national interest exemption conditions), but a faster and less duplicative processes if projects align with new national standards.

National standards for the environment

The introduction of National Environmental Standards (NES) are at the heart of this wider reform and are presented as binding, legal benchmarks that the Environment Minister must ensure project approvals are consistent with. These standards are designed to provide clear, mandatory rules for protecting the environment, providing certainty to businesses, and ensuring fair decision-making.

Specifically the new Standards and reform package, contains the following:

• Binding Thresholds: Standards provide detailed, mandatory guidance on how to meet environmental protection requirements.
• “No Regression” Principle: A legal requirement that ensures new or amended standards cannot weaken existing environmental protections.
• Focus Areas: Standards set thresholds for:
  • MNES: Protection of threatened species, ecological communities, and world heritage areas.
  • Environmental Offsets: New rules requiring offsets to deliver a net gain for the environment, shifting from protection to improvement.
  • Restoration: Standards for actively repairing environmental damage.
  • Culture and Community Engagement: Standards for integrating First Nations ecological and cultural knowledge.
• Unacceptable Impacts: The reforms define specific types of harm that cannot be approved or offset (e.g., irreparable harm to critical habitat), unless in the national interest.
• Net Gain Requirements: Projects with residual impacts on MNES must now prove a “net gain” for the environment, rather than just avoiding a “net loss”.
• Stricter Offsets: Environmental offsets must be secured before impacts occur, using the Nature Repair Market, the Restoration Contribution Fund or existing state-specific schemes such as the Biodiversity Offsets Scheme (BOS) in NSW.
• Regional Forest Agreements (RFA) Changes: The automatic exemption for RFA forestry is removed, with a sunset period ending 1 July 2027, requiring forestry to comply with the new standards.
• Land Clearing Loopholes: The “continuous use” exemption is tightened, meaning land not cleared in the last 15 years, or within 50 meters of a watercourse in the Great Barrier Reef catchment, now requires approval.
• Streamlined Assessment: A single, consolidated assessment pathway replaces multiple older, fragmented processes, aimed at speeding up approvals for projects that meet the high standard, starting 1 July 2026.
• Bioregional Planning: Implementation of regional plans that map out “go/no-go” zones for development. Projects in approved bioregional plans may bypass individual, complex approvals.
• Climate and Emissions: Projects must disclose Scope 1 and 2 emissions if they exceed a threshold, but the reforms do not mandate reduction of Scope 3 emissions
• Expanded Ministerial Power: The Minister can declare national interest exemptions for projects, though they may also impose stricter unacceptable impact tests on others.
• Climate & Indigenous Considerations: Mandatory climate impact assessments are expected, and proactive consultation regarding Indigenous knowledge is now required.
• Enforcement: Substantially larger penalties apply, with fines of up to 10% of annual turnover, 50,000 penalty units ($16.5 million), or 3 times the benefit of non-compliance.

As part of the wider reforms, all of the above is being facilitated through the establishment of the National EPA (NEPA), a new, independent agency will monitor, audit, and enforce compliance, and Environment Information Australia, a new agency tasked with providing high-quality environmental data to inform decisions and monitor environmental trends.

The full suite of changes is slated to be in force by no later than 1 December 2026, with the first tranche (including some Information Sharing and National Interest provisions) having commenced in February 2026. Transitional Provisions will be applied as the reforms involve complex, staged rollouts.

Offsetting in NSW

In NSW, the Biodiversity Conservation Act (BC Act) contains the Biodiversity Offsets Scheme (BOS) and is underpinned by the famously rigorous Biodiversity Assessment Methodology (BAM).The Commonwealth has endorsed the BC Act and BOS via the Bilateral Agreement in recognition of this exemplary approach to biodiversity assessment.

Whilst it may appear obvious that the new Standards will significantly lift the environmental requirements for development in most other states where conservation legislation and offsetting frameworks are less well developed, NSW developers may wonder whether the bar could lift any higher than is currently expected under NSW’s BC Act? The answer to this question is yes.

Given the change to a net gain requirement for MNES, developers in NSW will likely face higher, more stringent, and more expensive assessment and offsetting requirements rather than merely additional stacked layers of credits.

Specifically, the key additional requirements that developers in NSW will need to prepare for can be classed under three main headings:

1. New “Net Gain” Standards & Tighter Rules

• Net Gain vs. No Net Loss: The EPBC Act reforms will require proponents to demonstrate a “net gain” for environmental conservation rather than just maintaining a “no net loss” standard. This means more credits or higher-value restoration activities will be required.
• Stricter “Avoid-Minimise-Offset” Hierarchy: The reforms embed the hierarchy in legislation, compelling developers to prove they have exhausted all reasonable efforts to avoid impacts before purchasing offsets.
• Prioritising Direct Offsets: The new standards aim to increase the use of “like-for-like” on-ground offsets over financial payments, potentially creating higher demand and costs in the biodiversity credit market.

2. Interaction with NSW Biodiversity Offsets Scheme (BOS)

The NSW Government has also reformed the NSW BOS, with most changes starting 7 March 2025.

• Alignment of Standards: NSW is aligning its systems with the new national standards. While this aims to reduce dual-assessment duplication, it ensures that the “higher standard” (whether State or Federal) prevails.
• Stricter “Like-for-like”: The reforms limit the use of “variation rules” (which allowed for lower-quality offsets) and encourage more rigorous, location-specific offsetting.

3. Increased Costs and Alternative Options

• Restoration Contribution Fund: The reforms introduce a new, higher-priced “restoration contribution” that can be paid if a direct offset cannot be secured. These payments are designed to be sufficient for the government to achieve a net positive result, likely making them more expensive than some current biodiversity credit options.
• Nature Repair Market: Certificates from the new Nature Repair Market will be eligible to meet offset obligations, providing an alternative but potentially higher-cost avenue.

The EPBC Act reforms, especially the Standards being introduced, provide both opportunity for developers that plan early and can make use of newly established tools and processes such as Bioregional Planning and Streamlined assessments. But there are risks too, for proponents who fail to avoid and minimise impacts to MNES, who will face higher offsetting costs and a lower likelihood of project approval.

Investment in robust preliminary studies of development sites as early in the project development cycle will be key to identify risks and begin designing appropriate avoidance and impact minimisation strategies so as to minimise residual impacts on MNES that will not be able to be simply offset under Bilateral Agreements, such as has been the case to date in NSW.

Expertise from assessment to offsets

Niche has a long and strong track record of identifying impacts to MNES across NSW on a variety of projects in a variety of land types and particular expertise on advising clients on how to best avoid and minimise residual impacts to the degree that is expected of the consent authorities.

Niche is also the industry leader in setting up Stewardship Sites to generate biodiversity credits for offsetting, which will continue to be a significant pathway for achieving offsetting requirements of MNES post the reforms, as well as providing industry leading Active Restoration Plans to achieve a “net gain” on these sites and on impacted land.

Niche’s is an early leader in the emerging Nature Repair Market, which will now be a new alternative avenue to offset under these reforms.

If you have a project in the design or concept phase and would like to take advantage of the opportunities of this significant reform and avoid potential impacts, please call us for a confidential chat.

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