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In short:
Big business is urging Environment Minister Tanya Plibersek to work with the Coalition and pass nature protection reforms rather than cut a deal with the Greens that they say could stymie wind and solar projects.
Environmental groups warn there is a "climate blind spot", with projects able to get environmental approval without consideration of their emissions.
What's next?
The Senate is holding an inquiry into Labor's plans to introduce an Environmental Protection Agency to police nature protection laws.
Big business is pressing federal Environment Minister Tanya Plibersek to effectively work with the Coalition and pass nature protection reforms rather than cut a deal with the Greens that it says could stymie renewables projects.
Ahead of a Senate inquiry on Friday into "nature positive" reforms, the Business Council of Australia (BCA) said it was "deeply concerned" Labor may be flirting with demands from green groups to make environmental approvals subject to a "climate trigger".
The BCA said the trigger would add cost and complexity to environmental approvals for everything from mines to new wind and solar investments.
The call comes after resources industry sources said they understood Ms Plibersek had been in talks with the Coalition over its plans to revamp the Environmental Protection and Biodiversity Conservation Act and introduce an independent Environmental Protection Agency watchdog.
However, there is now concern that Labor could push to pass the changes before the next election is called, increasing its temptation to work with the Greens who insist a climate trigger is non-negotiable.
BCA chief executive Bran Black said there was no need to include climate considerations in nature protection laws because emissions were already covered and regulated by Labor's safeguard mechanism reforms.
The safeguard changes were introduced last year to curb climate pollution from major industrial, resources and manufacturing sectors.
"We appreciate the government made an election commitment to deliver an EPA but that doesn't mean it should now include a climate trigger as a bargaining chip in the Senate," Mr Black said.
"The government ruled out adopting a climate trigger in 2022 as part of this reform and we believe it should hold to this commitment."
A spokeswoman for Ms Plibersek said Labor was "working methodically on sensible updates to national environment law".
"The legislation that recently passed the House of Representatives includes the establishment of a national independent Environment Protection Agency with strong new powers and penalties. It does not include a climate trigger," she said.
Environment groups argue emission reductions not sufficiently safeguarded
The Australian Conservation Foundation's submission to the Senate inquiry describes the current legislation as having a "climate blind spot", with projects able to get environmental approval without consideration of their emissions.
"This can be (fixed) by ensuring that all projects seeking approval under the EPBC Act are assessed for their contribution to climate change through emissions generated both in Australia and through the combustion of exported fossil fuels overseas."
In its submission to the Senate enquiry, the independent Climate Council of Australia said greenhouse gas emissions were "unquestionably within the remit" of national environmental laws.
"The role of Australia's national environment law is to protect nature from the major threats that it faces. Climate change is widely recognised to be one of these significant and escalating threats," the submission said.
One person familiar with negotiations between Labor and the Greens and environmental groups said business groups were "boxing at shadows" and that a climate trigger "was not even on the table" even though they would like it to be.
"(The business groups) are well ahead of where discussions are."
Labor has previously said climate change impacts are accounted for through other means, such as the Safeguard Mechanism that requires the biggest polluters to reduce their emissions in line with national targets.
Another person familiar with negotiations said Labor had shown no signs of shifting from that position.
Mr Black said Professor Graeme Samuel's review of the EPBC Act in 2020 specifically noted that the act should not duplicate the Commonwealth's framework for regulating emissions.
"The BCA strongly advocates for the net zero transition and more renewables, though a climate trigger, or incorporating climate considerations into the EPBC assessment framework, will simply increase bureaucracy and duplicate the already legislated Safeguard Mechanism."