Assessing Scope 3 Emissions: An analysis of the implications of Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd [2025] NSWCA 163 (the Mount Pleasant decision)

Introduction

On July 24, 2025, the New South Wales Court of Appeal (NSWCA) delivered a landmark ruling in Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd [2025] NSWCA 163, overturning the approval of a significant coal mine expansion at Mount Pleasant, near Muswellbrook. The decision, the result of a legal challenge from the Denman Aberdeen Muswellbrook Scone Healthy Environment Group (Denman), has far-reaching implications for mining companies submitting development applications in New South Wales (NSW). This article examines the key aspects of the ruling and its impact on the mining industry, particularly regarding the assessment of greenhouse gas (GHG) emissions in development applications.

Background

In 2022, the NSW Independent Planning Commission (IPC) approved MACH Energy Australia Pty Ltd's application to extend the Mount Pleasant coal mine's operations from 2026 to 2048, increasing its annual production from 10.5 million tonnes to 21 million tonnes. This expansion would result in an additional 406 million tonnes of coal extracted, contributing approximately 876 million tonnes of CO2 emissions, with 98% classified as Scope 3 emissions (emissions from burning exported coal overseas).

Denman, a community group advocating for environmental protection, sought judicial review of the determination in the NSW Land and Environment Court (NSWLEC), arguing that the IPC failed to adequately consider the climate impacts of the expansion, particularly Scope 3 emissions. The NSWLEC initially upheld the IPC's approval on 19 August 2024.¹ Denman then appealed that decision to the NSWCA, which overturned the decision of the NSWLEC, finding that the IPC had failed to consider mandatory environmental impacts under section 4.15(1)(b) of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act).

Key Findings of the NSWCA

The judgment centred on two main issues:

1. Failure to Consider Local Climate Impacts: The court found that the IPC did not adequately assess the local environmental impacts of Scope 3 emissions, as required by section 4.15(1)(b) of the EP&A Act. This section mandates that consent authorities consider the likely impacts of a development, including environmental, social, and economic effects, on the locality. President Ward of the NSWCA held that the essential matter with which section 4.15(1)(b) is concerned is the impacts of the proposed development on the locality of the development and that a causal enquiry as to the impacts of Scope 3 emissions on the locality was required.²
2. Consideration of Scope 3 Emissions Conditions: Denman argued that the IPC failed to consider imposing conditions to minimise Scope 3 emissions, as required by clause 2.20 of the State Environmental Planning Policy (Resources and Energy) 2021 (NSW) (Resources SEPP). The NSWCA rejected this argument, finding that the IPC had considered Scope 3 emissions by noting they were "accounted for" under international frameworks like the Paris Agreement. The court held that the IPC was not obligated to impose specific conditions, only to consider whether they were necessary.

The NSWCA remitted the case to the NSWLEC to determine whether the approval could be validated with conditions under sections 25B or 25C of the Land and Environment Court Act 1979 (NSW). If validation is not possible, the approval will be deemed invalid, requiring the project to return to the planning stage.

Implications for Mining Companies

The NSWCA's decision establishes a significant precedent for mining companies submitting development applications, particularly for projects with substantial GHG emissions. Below are the key implications:

1. Enhanced Scrutiny of Local Climate Impacts

Mining companies must now ensure that their Environmental Impact Statements (EIS) comprehensively address the local environmental impacts of their projects, including those arising from Scope 3 emissions. General references to global climate change will no longer suffice. Proponents will be required to:

• Identify specific climate-related risks to the locality, such as increased bushfire risks, water scarcity, or impacts on local biodiversity.
• Provide detailed assessments of how their projects contribute to these localised impacts.
• Engage with local communities to understand and incorporate their concerns about climate change effects.

Failure to address these local impacts could result in refusal of consent, or render a development consent invalid.

2. Robust Environmental Impact Assessments

The ruling underscores the need for thorough and specific environmental impact assessments. Mining companies should:

• Include detailed climate impact analyses in their EIS, focusing on both direct (Scope 1 and 2) and indirect (Scope 3) emissions.
• Clearly outline mitigation strategies to address local climate impacts, even if these emissions occur outside Australia.
• Ensure compliance with section 4.15 of the EP&A Act by explicitly addressing how the project aligns with NSW's emissions reduction targets under the Climate Change (Net Zero Future) Act 2023 (50% reduction by 2030, 70% by 2035, and net zero by 2050).

3. Increased Community Engagement

The NSWCA emphasised the importance of considering local community views in the approval process. Mining companies must:

• Actively engage with local stakeholders to address concerns about environmental and climate impacts.
• Document how community feedback has been incorporated into the EIS and decision-making process.
• Be prepared for heightened community activism, as groups like Denman have demonstrated the power of collective action in challenging approvals.

4. Potential for Stricter Regulatory Oversight

The decision aligns with broader trends in NSW, where regulators, including the Department of Planning, Housing and Infrastructure, and the Environment Protection Authority (EPA), are increasing scrutiny of GHG emissions. The EPA's NSW Guide for Large Emitters³ and proposed requirements for Climate Change Mitigation and Adaptation Plans signal a shift toward stricter standards. Mining companies should:

• Anticipate conditions in development consents, such as the preparation of Greenhouse Gas Management Plans or periodic reviews of abatement measures.
• Proactively align their projects with state and national climate goals to avoid delays or rejections.

5. Legal and Financial Risks

The ruling exposes mining companies to greater legal and financial risks. Judicial review proceedings, as seen in this case, can delay projects, increase costs, or lead to the invalidation of approvals. Companies must:

• Invest in robust legal and environmental expertise to ensure compliance with regulatory requirements.
• Account for potential litigation costs (the NSWCA ordered MACH Energy to pay Denman's appeal costs).
• Prepare for the possibility that approvals may be remitted to the IPC or NSWLEC, requiring additional assessments or conditions.

6. Broader Implications for Fossil Fuel Projects

The decision has been hailed as "groundbreaking" by environmental advocates,⁴ as it sets a precedent that climate harm, including Scope 3 emissions, must be specifically considered when evaluating mining projects in NSW. This could:

• Deter approvals for new mining projects, particularly those with significant Scope 3 emissions.
• Encourage a shift toward renewable energy and sustainable industries in regions like the Hunter Valley.
• Influence other Australian jurisdictions to adopt similar standards for assessing climate impacts.

Conclusion

The NSWCA's ruling in Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd [2025] NSWCA 163 raises the bar for mining companies seeking development approvals. Companies must prioritise comprehensive environmental assessments, robust community engagement, and alignment with climate goals. Failure to do so risks legal challenges and project delays.

Footnotes

¹ Denman Aberdeen Muswellbrook Scone Healthy Environment Group Incorporated (INC2200560) v MACH Energy Australia Pty Ltd[2024] NSWLEC 86.
² Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd [2025] NSWCA 163 at 109.
³ See: EPA NSW (2025) 'NSW Guide for Large Emitters' at NSW Guide for Large Emitters | EPA.
⁴ Law Society Journal, "Climate change concerns lead court to overturn Mount Pleasant coal mine expansion," July 25, 2025.

For further information please contact:

Dr. Matthew Cole, Partner
Phone: + 61 2 9777 8371
Email: mxc@swaab.com.au

Aaron Boz, Associate
Phone: + 61 2 9777 8318
Email: aeb@swaab.com.au

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.