According to the Department of Lands, Planning and Heritage, there are 489 pastoral leases covering approximately 86 million hectares or 34 percent of the entire mainland of WA.  This means that 34 percent of mainland WA is not available for large scale renewable energy projects.

However, this is set to change.  On 24 March 2023, the WA government assented to Land and Public Works Legislation Amendment Act 2023 (WA) (“the Act”).  The Act seeks to amend the Land Administration Act 1997 (WA) in several ways, including to give pastoralists the ability to become involved in the renewables market.

Under the amended Land Administration Act, pastoralists can surrender all or part of their leased land and enter into a diversification lease.  A diversification lease enables a range of concurrent land uses, including carbon farming, wind farming and livestock grazing. 

The conversion of a pastoral lease to a diversification lease will not be mandatory.  Rather, developers of renewable energy projects will need to approach pastoralists to negotiate the surrender of pastoral leases in favour of the new diversification lease. 

It is imperative that pastoralists seek legal advice at a very early stage of negotiations.  Not only are the arrangements usually complex and long-term, but pastoralists will need to ensure that their interests are protected and that there is clarity in any agreement reached by the pastoralist and the renewable energy developer.

The following are some key aspects that should be given particular attention by pastoralists when considering negotiating with a renewable energy developer:

• Whether the conditions of the pastoral lease permit due diligence enquiries to be carried out by the renewable energy developer on the land;

• If not, the effect of surrendering all or part of a pastoral lease in favour of a diversification lease. Any land that is not surrendered must still comply with the requirements of a pastoral lease, that is, the land must be capable of supporting an economically viable and ecologically sustainable pastoral business;

• Market rent will apply to diversification leases as determined by the Valuer-General and will be based on the income likely to be earned from the proposed use or uses of the land. The renewable energy developer must be required to pay the rent attributable to the income likely to be earned from the project; and

• If the project is not viable or ends, the land the subject of a diversification lease cannot be used for the sole purpose of grazing livestock. This may mean that a pastoralist will have to reapply for a pastoral lease.