Consistent with best practice regulation, the establishment of an environmental liability management policy will support the management of risk related to environmental rehabilitation liability that may arise from activities licenced under the Hydrogen and Renewable Energy Act 2023.

There is a risk that end of life, or uneconomic hydrogen and renewable projects may be abandoned, leaving South Australian taxpayers or landholders liable for project decommissioning and rehabilitation costs. To protect tax payers from these outcomes and to ensure that the licensees meet their civil, statutory and environmental rehabilitation liabilities, a robust environmental liability management policy and financial assurance framework is required.

An independently-based, standardised assessment of operational, solvency and liquidity metrics of the licence applicant or licensee will be undertaken to determine the relevant financial rating.

A risk-based model is proposed as it links financial assurance requirements to the risk of a need to drawdown on a licensee’s bond to undertake decommission and or rehabilitation work and is reflective of the progressive disturbance of projects.  The development of the proposed risk-based model has been informed by a review of financial assurance frameworks for the hydrogen and renewable energy sectors in select best practice jurisdictions.

The model has been informed by bonding requirements in select best practice jurisdictions internationally as well as a broader financial assurance review undertaken by the department across the energy and mining sectors. The model provides a pathway to stepping up bond requirements as the level of project risk increases progressively through its operating life, acknowledging the potential capital constraints on proponents in the early phases of project development.