Pathways to Net Zero: Redefining Australia’s approach to building social licence

The Pathways to Net Zero series offers context, insights and key questions on different aspects of Australia’s transition to net zero. It builds on the groundbreaking research of Net Zero Australia. You can read earlier editions in the series on our website.

Australia’s energy transition requires an unprecedented infrastructure build. According to the Net Zero Australia mobilisation report, this entails a footprint of up to 120,000 square kilometres, which is more than half the size of Victoria.

Achieving this goal is only possible with widespread public support. But governments, industry and renewable energy project developers are struggling to get traction. Community anxiety, fatigue and uncertainty have increased opposition to renewable developments. Many developers are unable to champion change for the net-zero transition due to their negative reputation. Their engagement with communities is too slow to get Australia where it needs to be.

The nation’s current approach disenfranchises communities and underrepresents key groups, especially First Nations Australians.

It is also limited by self-serving benefit-sharing arrangements that fail to consider community benefits beyond the narrow concept of employment. This is insufficient to generate social licence, especially when many communities know job opportunities will often not last beyond the build phase.

To generate the required momentum, governments and industry must focus on first understanding and then responding to community expectations. This place-based community-driven (as opposed to project-driven) approach is crucial to gaining social licence and supporting Australia’s net-zero transition at the pace required.

Source: Net Zero Australia

Developers, investors and governments are thinking deeply about the social licence challenge in Australia today. Much work is being done to develop best-practice community engagement approaches, standardise benefit-sharing arrangements and provide equity stakes in variable renewable energy developments.

But none of these will be sufficient in isolation. Rather, a paradigm shift is needed to achieve the speed and scale that the net-zero transition demands. In particular, we must reconceptualise how to think about benefits.

Nous has supported renewable energy developers, federal and state governments, investors and resource companies to reinvent community engagement and trust building. Here’s what our experts recommend:

1. Standardise engagement for related projects and report publicly on developers who do this well.

Engagement approaches should be co-developed by state and local governments, and implemented consistently across renewable development hubs and renewable energy zones (REZs). To reduce duplication, government should consider facilitating simultaneous engagement processes for projects being co-developed in a region.

State and local governments should also collaborate to develop a transparent and ongoing assessment of developers who engage well with communities. This will help ensure capability is encouraged and maintained in the industry.

2. Develop shared community benefit compensation schemes, administered by governments and paid for by project developers.

Protracted disputes about how to appropriately compensate communities tend to substantially slow the development process. One model, being pursued by EnergyCo in New South Wales, involves standardising payments for local communities based on technology (for example, a dedicated compensation arrangement per megawatt of onshore wind generation capacity).

States should also develop policy to facilitate fixed compensation payments from developers to local councils. This would be scaled, based on project size and expected revenue, and incorporated as part of development costs. Administered by councils based on their local regional development plan, it would complement additional compensation for land holders and others most directly affected.

3. Embed local champions to lead engagement and support negotiations.

It is important to bring local community representatives into the fold when considering projects or initiatives. Local context and understanding are vital in the early stages of project development. This helps to prevent missteps that shake community confidence. It also ensures that community perspectives influence design considerations, allowing communities to contribute to the plan, rather than being limited to commenting on it once developed.

4. Prioritise requests for shared ownership and equity, especially from First Nations communities.

Renewables development is both land- and capital-intensive. It is important that developers understand the value of this land to projects and consider associated equity options. Joint ownership models, in which First Nations communities share asset ownership on their land through Aboriginal Community Controlled Organisations (ACCOs), appropriately recognise the original custodians of the land. They have the potential to establish lasting benefits for those communities. These models will not necessarily work everywhere, given the complicated web of Indigenous land rights across Australia. However, they are a good starting point for developers in engaging with communities.

Federal government

• How can the government better support negotiations between communities and developers?
• What additional powers, mechanisms and resources are needed so the government can take a leading role in consultations and developing shared outcomes?
• What more can the government do to improve the public’s understanding of the energy transition's possible pathways, uncertainties, benefits and costs?

State governments

• What governance and reporting frameworks are needed for benefit-sharing in renewable energy zones (REZs) to streamline renewable development negotiations?
• What mechanisms can be put in place to assess and report on developers who engage effectively with communities?
• What is required to build community capability to negotiate transition agreements?

Project developers

• What do communities across Australia need to thrive, and how can developers better understand and support these goals?
• What value can developers add right now to build trust in communities they seek to engage with?
• How can developers partner with other stakeholders interested in launching projects in REZs to coordinate community consultation and negotiations?
• What additional support do developers require to achieve this and what forums or networks already exist to tap into?

First Nations communities

• What information or organisations exist already that will help visitors get up to speed on the local context?
• What ideas for bringing value can visitors test with communities?

Get in touch to discuss how these issues impact your organisation.

Connect with Rodney Williams, Richard Bolt, Al McCall and Eamon Ritchie on LinkedIn.