Why is 350 working specifically with NSW councils?

350 Australia have conducted extensive analysis of the planning systems in each state and territory across the country. We’ve identified that councils in NSW are the only councils with the power to ban gas from new developments via their planning systems. In every other state and territory where councils have some role in the planning process, any changes to planning rules all require state government approval.

Calls to ban gas from new development by local councils are either refused or ignored by state/territory governments, other than in Victoria and the ACT where the respective state and territory governments have recently announced gas bans for new homes. By contrast, NSW councils can require all-electric, gas-free new buildings via their planning schemes without waiting for state government approval. Because of this particular context in NSW, 350 is urging NSW councils to take leadership by changing their planning rules to require all-electric, gas-free new development.

Going all-electric with Development Control Plans

NSW councils can require new developments be all-electric and gas-free by changing their Development Control Plans (DCPs).

DCPs are planning instruments that guide development outcomes like building heights, setbacks, landscaping, heritage, and sustainability outcomes. While DCPs sit below Local Environment Plans (LEPs) in terms of statutory weight, DCPs still have a direct impact on planning outcomes.

DCPs operate like a performance assessment, in that DCPs incorporate a range of objectives that a development should satisfy. While it’s true that not every provision within a DCP is in itself mandatory, including provisions that ban new gas connections, no individual provision of a performance assessment is mandatory. However, DCPs that include clear and unambiguous provisions, like bans on new gas connections, make it much harder for developers to obtain planning approval for development applications if they are assessed as not complying with the broad and specific objectives of a DCP.

In short, while the statutory weight of a DCP should not be overstated, the point is that DCPs can, and are, used by planning authorities like local councils, to influence development outcomes. Numerous councils have already included all-electric provisions within DCPs to reduce the number of new gas connections in new developments (discussed below).

The other important point regarding DCPs is that they do not require state government approval to be implemented – they just need a majority vote on council.

DCPs and NSW state planning policy

State Environment Planning Policy

The NSW state government sets the regulatory framework for planning and development via the State Environment Planning Policy (SEPP). Chapter 2.2 of the Sustainable Building SEPP explicitly prevents councils from imposing development controls that seek to reduce greenhouse gas emissions related to the use of a building, stating;

1. A competing provision of an environmental planning instrument or development control plan, whenever made, is of no effect to the extent to which the provision aims
   1. to reduce consumption of mains-supplied potable water or greenhouse gas emissions related to the use of—
      1. a building, or
      2. the land on which a building is located, or
   2. to improve the thermal performance of development
      (emphasis added)

The above section explicitly prevents councils from imposing regulations that would require new developments be all-electric and gas-free, due to the emissions reduction prohibition. This means that councils cannot impose regulations via DCP that ban gas using an environmental (emissions reduction) ground. However, there are no restrictions on councils banning new gas connections on other grounds, like health and economics (discussed below).

BASIX rating tool

The other state legislative requirement that councils must consider as part of the development approvals process is the BASIX sustainability rating tool. NSW’s state planning policy requires that new developments be assessed against BASIX, which requires new builds to reach certain sustainability benchmarks around thermal performance, energy and water use, and greenhouse gas emissions. According to legal advice obtained by 350 Australia, the BASIX rating tool does not explicitly ban or require that new developments be connected to gas.

The legal advice states that, on the one hand, gas appliances score reasonably well using the BASIX assessment, but that this assessment is based on outdated emissions intensity assumptions of gas versus electric appliances. The legal advice also notes that the harmful health impacts of unflued gas appliances are noted within BASIX practice materials, which is in line with current medical research showing that these harms are associated with all gas appliances when used indoors.

Therefore, councils that require new developments to be gas-free would not appear to be in breach of BASIX because BASIX is effectively fuel agnostic, according to 350’s legal advice.

It should be noted that BASIX was updated on 1 October 2023 to bring it inline with recent changes to the National Construction Code. While 350 is in the process of obtaining revised legal advice based on the updated BASIX tool, we firmly believe that the updated BASIX tool will not be changed from being fuel agnostic to either requiring or banning gas as part of the development assessment process. If BASIX were to either require or ban new gas connections, this would be a major policy decision of the state government which has not been announced and is unlikely to be implemented without a public announcement. In short, it’s our view that BASIX will continue to be fuel agnostic following the changes on 1 October 2023.

The importance of health and economic arguments for gas-free new builds

While the Sustainable Building SEPP prohibits councils from creating DCPs that ban gas based on environmental grounds alone, the SEPP does not preclude councils from banning gas from new development based on health or economic grounds.

Legal advice obtained by 350 Australia suggests that gas bans based on health grounds are a legally robust approach, given that BASIX acknowledges the health and safety issues related to unflued gas burners used in heaters and stoves. There are also no prohibitions in the Sustainable Building SEPP to stop councils regulating new developments based on health grounds. Councils could reference the overwhelming peer-reviewed scientific evidence demonstrating the health risks associated with indoor gas use in their health justifications.

350’s legal advice also suggests that gas bans that employ economic grounds also fall outside of the Sustainable Building SEPP and are therefore not a competing provision. For example, DCPs which prevent gas connections to new developments based on the cost savings to both developers and end users (tenants, occupants, customers etc) are unlikely to be interpreted as conflicting with the Sustainable Building SEPP, according to 350’s legal advice.

Councils that have already banned new gas connections via DCP

There are many NSW councils that have either started the process or implemented requirements for all-electric, gas-free new developments via DCPs. There have been no appeals to the below council initiatives. Each council has used a slightly different approach. Here’s a summary of the councils that have now implemented or started the process of implementing requirements for all-electric new development via DCP.

Councils that have implemented gas bans via DCP

Parramatta Council

In December 2022, this council banned gas in all new development (commercial and residential) within the Parramatta City Centre. The DCP states:

“C.01 All new buildings are to use only electricity (grid provided and on‐site renewables) for all energy requirements associated with normal operations.

The stated objectives of the above provision are:

“All electric buildings also reduce construction and operating costs through the elimination of gas pipes and metering and ongoing connection and usage charges, as well as providing enduring health benefits to occupants.

O.01 Reduce the combustion of fossil fuels through electric only connected new buildings, that benefit from the progressive greening of grid supplied electricity in NSW.

O.02 Reduce indoor air pollutants associated with the onsite combustion of gas to improve air quality for occupants.

O.03 Operational cost savings to occupants through the avoidance of gas connection and ongoing connection charges.”

Based on 350’s legal advice, the inclusion of the health ground (indoor air pollution under O.02) and the financial/economic ground (construction and occupant cost savings under O.03), mean that the provision is not in conflict with the Sustainable Building SEPP, as the SEPP only precludes councils from banning gas based on environmental (emissions reduction) grounds, not health or economic grounds. 350 would recommend not including environmental grounds such as that described in point O.01.

Further, in the event that the above provision was challenged in the Land and Environment Court, the defendant (council) would likely be able to point to the overwhelming evidence that shows the negative health impacts associated with indoor gas use, and the cost savings to developers and occupants associated with all-electric, gas-free buildings.

Waverley Council

In December 2022, Waverley Council passed a new DCP that prohibits the installation of indoor gas appliances (stoves, cooktops and space heaters) in all new residential development applications across the entire municipality. The new DCP states:

“Gas cooktops, gas ovens or gas internal space heating systems are not permitted in any residential development. Instead, electric systems should be installed and clearly marked on DA (development application) plans”

The council justified this provision based on the health impacts of indoor gas use, which explains why the council excluded gas hot water from the gas ban, as hot water units tend to be located outside the building, making the health argument more complex. 350 suggests that hot water units can be included in council-led gas bans if the council also includes an economic case for no new gas connections (discussed below).

Councils in the process of implementing gas bans via DCP

Sydney Council

On 21 August 2023, Sydney Council passed a motion to begin the process of changing its planning laws to require all-electric, gas-free new residential and non-residential developments. The successful motion states:

“(C) the Chief Executive Officer be requested to investigate the opportunities and challenges with amending the City of Sydney’s planning controls to require all new residential developments, and development not captured by the City’s new Net Zero planning controls, to be all electric and report back to Council via the CEO Update, including next steps, as soon as possible.”

In other words, this council is now exploring the potential to ban gas from new residential and non-residential developments across the entire municipality.

Canada Bay

On 19 September 2023, this council passed a motion very similar to City of Sydney’s, calling for a report to ban gas from all new residential and commercial buildings across the entire LGA.

City of Ryde

On 22 August 2023, Ryde Council passed a motion to begin the process of requiring all-electric, gas-free new residential development across its council area.

City of Canterbury-Bankstown

Canterbury-Bankstown is currently in the process of changing its planning rules to require all-electric appliances to new residential and commercial buildings in the Campsie and Bankstown city centres. These changes are at the masterplan stage and will be translated into new planning rules soon (exact timing unknown).

Analysis

Based on legal advice obtained by 350, detailed research and analysis, plus in-depth conversations with numerous local government practitioners, it is 350’s view that councils can pursue gas bans that combine both the Parramatta and Waverley approaches.

Waverley Council’s gas ban is geographically broader than Parramatta’s, as Waverley’s DCP applies to the entire municipality compared with Parramatta’s city centre application. However, Waverley’s DCP is more restricted in the types of development that it applies to, being residential and not commercial. The DCP also excludes gas hot water from the gas ban, which is a significant exclusion, in 350’s view, given that hot water heating accounts for 52% of NSW residential gas use.

Parramatta’s approach, by contrast, is geographically restricted, as it applies to the City Centre only, not the whole municipality. However, this DCP applies to a broader range of building types; namely, residential and commercial, and encompasses all appliances, including hot water heating.

Councils can achieve all-electric, gas-free requirements in all new residential and commercial buildings by combining the Waverley and Parramatta approaches.

The way to achieve this is to create DCPs that ban gas connections from all new residential and commercial development applications across the entire municipality by employing both a health and economic justification. If a gas ban depends solely on a health rationale, there’s a risk that the gas ban can only be applied to indoor gas appliances that impact human health, which would likely exclude gas hot water units, as in the Waverley approach.

The inclusion of an economic justification which references the empirical evidence showing the infrastructure cost savings to developers and energy savings to tenants/end users, would allow the council to expand the application of the gas ban to both residential and commercial buildings, and to all gas appliances, including hot water units.

350 sees no impediment to this type of gas ban being applied to a council’s entire municipality, rather than the more geographically restricted approach that Parramatta has pursued for its City Centre.

The City of Sydney and City of Canada Bay’s approach to potentially banning gas in both residential and commercial new builds across their entire municipalities, is the ideal policy pathway, in 350’s view.