From Voluntary to Enforceable: A Federal Framework for Community Benefit-Sharing in Renewable Energy

Luiza Dorfman Knijnik, University of Sydney, COP30 Fellow

Executive Summary

Community resistance to large-scale renewable energy projects is slowing Australia’s energy transition. Voluntary benefit-sharing schemes have been inconsistent and often fail to deliver fair or transparent outcomes, as highlighted by a NSW parliamentary inquiry and independent reviews. A national, enforceable framework is needed to strengthen public trust and ensure host communities share in project benefits.

This paper recommends a legally enforceable Community Benefit-Sharing (CBS) Code under the Renewable Energy (Electricity) Act 2000 (Cth), administered by the Clean Energy Regulator. The Code would apply to projects over 5 MW, requiring early engagement, council agreements, annual reporting, and compliance with minimum standards through a national public register. Implementation would cost $25 million over three years and $5 million annually thereafter, funded through contributions from accredited generators.

Although the reform may face initial industry resistance, administrative constraints, and coordination challenges with states, these risks are manageable through phased implementation and clear guidance. Overall, the policy is expected to improve trust, reduce approval delays, and deliver predictable benefits to host regions, supporting faster and more equitable infrastructure deployment.

Problem Identification

Australia’s energy transition is advancing rapidly, with approximately 12.4 GW of large-scale renewable generation and storage under construction or financially committed as of late 2025 (Clean Energy Council, 2025). Despite this investment, no national legal requirement obliges developers to share project benefits with host communities. CBS mechanisms, including landholder payments, neighbour agreements, and community benefit funds, remain voluntary, developer-led, and inconsistent across jurisdictions (SGS Economics & Planning, 2023).

Only 63% of operating wind farms have CBS mechanisms, with contributions ranging from $150 to $1,800 per MW per year (RE-Alliance, 2023). Across all projects, just $5.35 million is distributed annually through CBFs (RE-Alliance, 2023). Wind projects with benefit-sharing contribute an estimated $56.5–$61 million annually to regional communities through landholder and neighbour payments, though the share reaching broader communities remains unclear (Peacock, 2023). Negotiations are typically bilateral and confidential, lacking standards and producing uneven outcomes (Cass et al., 2022).

The Community Engagement Review (2023) identified low trust, limited transparency, and unclear compensation as major concerns when surveying regions where renewable energy projects were to be built. Similarly, Energy Charter (2023) research found 58% of landholders expect transmission infrastructure to reduce usable farmland and 60% anticipate interference with machinery. Without a consistent national CBS framework, these disparities risk delaying approvals and slowing deployment. Failing to promote consistent CBS mechanisms would do more than weaken community sentiment; it would erode the social licence needed to deliver renewable energy infrastructure at pace. Where local communities experience disruption, land-use impacts, and uncertainty over compensation without clear, transparent, and durable community benefits, projects are more likely to be perceived as unfair and extractive (Community Engagement Review, 2023). This can deepen mistrust, intensify opposition, increase consultation fatigue, and make future projects harder to progress. For host communities, the consequence is especially acute: they may bear the practical and social costs of development, including impacts on farming operations, local amenity, and community cohesion without securing the long-term economic and social legacy needed to leave the region better off.

Context

CBS refers to mechanisms through which renewable energy developers share economic, social, or environmental value with host communities, including landholders, First Nations peoples, and local councils (WALGA, 2022). These include 

• monetary contributions, such as payments, community funds, or infrastructure investment; and

• non-monetary benefits, such as training, employment, or restoration initiatives (New South Wales Government, 2024).

  
  

International evidence shows well-designed CBS frameworks strengthen trust, reduce conflict, and accelerate deployment (Howard, 2015). Australia, however, lacks a national standard linking CBS to federal incentives, leaving arrangements fragmented and outcomes uneven.

Federal policy landscape

The Renewable Energy (Electricity) Act 2000 (Cth) underpins the Renewable Energy Target through Large-scale Generation Certificates (LGCs). Each MWh of eligible generation earns one LGC issued by the Clean Energy Regulator after verification, and retailers must surrender LGCs annually to meet obligations (Clean Energy Regulator, 2023). Because LGC revenue is central to financing, accreditation strongly shapes project viability.

Yet accreditation assesses only technical generation and compliance. Developers are not required to disclose or deliver CBS commitments (SGS Economics & Planning, 2023), meaning projects can access LGC-driven finance without guaranteeing community returns. Federal policy instead relies on the voluntary Clean Energy Council Code of Practice encouraging engagement and reporting (Clean Energy Council, 2025). Participation is optional, producing wide variation in benefits. Proposed CER disclosure reforms reflect growing recognition of this gap (DCCEEW, 2023; (Hall et al., 2020). In practice, the absence of federal standards has left CBS largely governed by state policy, which varies significantly in legal force, timing, and design, as illustrated by New South Wales and Queensland.

State Approaches

New South Wales

NSW operates a state-led but largely voluntary CBS system. The Benefit-Sharing Guideline 2022 recommends that developers pay $1,050 per MW for wind, $850 per MW for solar, and $150 per MWh for rural-zone batteries, typically through voluntary agreements. The Strategic Benefit Payments Scheme provides $200,000 per kilometre over 20 years to landholders hosting transmission infrastructure, supplementing compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). The REZ Community and Employment Benefit Program committed $128.4 million over four years to regional initiatives (NSW Parliament, 2025).

However, implementation concerns remain. For example, in the Central-West Orana REZ, the program has funded affordable housing for key workers in Mudgee, critical water infrastructure upgrades in Warrumbungle and Upper Hunter, and the Renewable Energy Awareness and Career Training (REACT) Centre in Dubbo to help locals access renewable energy jobs. 

However, the NSW Inquiry (2025) found REZ consultation was often perceived as “one-way” or “secretive,” when conducted by developers. Compensation issues were also reported, including easement valuations up to 50% lower than expected, payments taxed at up to 48 cents in the dollar, and losses of up to 16% of arable land during construction. Distributional concerns arose where grants flowed to larger centres such as Mudgee and Dubbo rather than smaller affected communities. These findings indicate challenges in implementation and distribution rather than the absence of CBS instruments.

Queensland

Queensland’s Planning (Social Impact and Community Benefit) and Other Legislation Amendment Act 2025 establishes Australia’s most prescriptive CBS regime. Developers must complete a Social Impact Assessment and negotiate binding Community Benefit Agreements before lodging applications.

Stakeholders argue the timing may create barriers. The Clean Energy Council (2025) states early CBA requirements increase complexity, extend timelines, and deter investors; no new large-scale applications have been lodged since February 2025. Industry submissions suggest early negotiations may create unrealistic expectations if projects do not proceed. Councils may also face capacity constraints negotiating multiple agreements (RE-Alliance, 2025), and low thresholds risk capturing small projects. These concerns suggest Queensland’s framework may impose obligations prematurely despite strong accountability features.

Comparative Insight: Denmark

Denmark demonstrates the advantages of a coherent national CBS framework. Its Promotion of Renewable Energy Act requires developers to offer at least 20% project equity to local residents, mandates compensation for nearby homeowners, and establishes a national levy funding municipal projects (The Australian Institute, 2023). These measures have strengthened acceptance and reduced disputes, contributing to renewables supplying 64% of electricity in 2023 (IEA, 2023; Gavard, Göbel & Schoch, 2025). Evidence also shows fiscal benefits for municipalities.

Overall, Australia’s voluntary approach has produced a patchwork system privileging developer discretion over consistent community outcomes. Without national coordination, meaningful benefit-sharing remains the exception.

Policy Options

Option 1: Amend the Renewable Energy (Electricity) Act 2000 (Cth) to Condition LGC Eligibility on Binding Community Benefit Mechanisms

The Australian Government should amend the Renewable Energy (Electricity) Act 2000 (Cth) (the Act) so that eligibility for LGCs is conditional on binding community benefit-sharing (CBS) obligations. Section 18 of the Act, which presently governs the accreditation of power stations as eligible renewable energy generators, should be amended to require developers to submit a Community Benefit-Sharing Plan (CBSP) at accreditation, including evidence of consultation, proposed models such as co-ownership or indexed local fund contributions, and a compliance plan. Section 20, which currently requires accredited generators to provide generation returns and supporting information to the Clean Energy Regulator, should be amended to mandate disclosure of CBS contributions by recipient, value, and form.

Tying CBS to LGC access would create a strong financial incentive for compliance and provide communities with predictable benefits. The Clean Energy Regulator (CER) would oversee eligibility, disclosure, and audits using its existing administrative infrastructure. Assuming a median contribution of $1,500 per MW per year across the 40 GW pipeline, cumulative transfers to communities would be around $1.2–$1.5 billion over 20 years of full operation, rising gradually as capacity is built. Administration would add about $3–5 million for IT upgrades and $2–4 million annually for monitoring, comparable to registry expansions undertaken for the NGER scheme. This option directly addresses the transparency and fairness concerns identified by the NSW REZ Inquiry (2025), reduces local opposition, and accelerates project approvals.

Option 2: Establish a legislated Community Benefit-Sharing Code under the Renewable Energy (Electricity) Act 2000 (Cth)

A national CBS Code under the Renewable Energy (Electricity) Act 2000 (Cth), administered by the CER, would replace the current patchwork of voluntary and state-level approaches. The Code would set minimum CBS standards for all large-scale generation, storage, and transmission projects, requiring early consultation, selection of an appropriate benefit-sharing model, and annual compliance reporting.

Unlike Option 1, which applies only to projects seeking LGC accreditation, the Code would also apply to projects already operating, raising baseline standards and addressing legacy gaps. It would align with the more structured approach seen in NSW while avoiding the inflexibility and investment delays experienced under Queensland’s CBA regime.

Based on NSW’s Strategic Benefit Payment rates, transmission operators alone will contribute about $800 million over 20 years for 4,000 km of new lines. Extending similar obligations nationally to all large-scale projects at $1,500 per MW per year would total about $1.5 billion over 20 years. Administration by the CER would cost an estimated $100–$150 million, comparable to REZ program coordination in NSW.

This option provides national consistency, closes delivery gaps for existing projects, and strengthens trust, though it entails higher compliance costs and potential resistance from developers.

Option 3: Expand CER reporting obligations to include CBS disclosure

The Australian Government could require developers of large-scale renewable projects to report their CBS commitments under an expanded CER reporting framework, modelled on the public disclosure regime of the Modern Slavery Act 2018 (Cth). Developers would disclose the type, scale, timing, and verified outcomes of CBS measures in a publicly accessible register managed by the CER.

This option improves transparency and reputational accountability without new legislation, leveraging the CER’s existing systems. It would promote competition among developers to offer higher-quality CBS packages and reassure communities about promised benefits.

The compliance burden would be modest, comparable to the Modern Slavery reporting framework, which imposes an average annual cost of about $21,950 per reporting entity (Department of Home Affairs 2018), and would have little extra cost to government.

While less interventionist than Options 1 and 2, this approach relies on public scrutiny rather than enforceable obligations, and thus may have limited impact on projects unwilling to provide meaningful benefit-sharing.

Policy Recommendation

Option 2, to introduce a legally enforceable Community Benefit-Sharing (CBS) Code under the Renewable Energy (Electricity) Act 2000 (Cth), is recommended as the most effective and equitable reform to ensure all large-scale renewable-energy projects deliver consistent, transparent, and enduring benefits to host communities. It addresses the persistent problems identified by the Community Engagement Review 2023: low trust, opaque bilateral negotiations, and inconsistent compensation. It builds on the lessons from state schemes such as the NSW Benefit-Sharing Guideline 2022 and the Queensland CBA model.

The CBS Code should be inserted as a new Part of the Act, with consequential amendments to sections 20 and 24A because these provisions already regulate the core compliance architecture of the scheme. Section 20 governs the obligation of accredited generators to provide generation returns and supporting information to the Clean Energy Regulator, making it the appropriate mechanism for mandating annual disclosure of CBS contributions. Section 24A establishes civil penalty provisions for non-compliance with regulatory requirements under the Act, and therefore provides the existing enforcement framework through which CBS obligations could be monitored and enforced without creating a parallel penalty regime. Amending these sections would integrate CBS requirements into the Act’s existing reporting and compliance structure rather than layering 

The Code would apply to all generation, storage, and transmission projects above a 5 MW threshold, including new and existing accredited projects.  The 5 MW threshold targets projects large enough to generate material community impacts while avoiding disproportionate regulatory burdens on small or community-scale developments.

 To gain and retain accreditation to build large scale developers would be required to: 

• Undertake early-stage consultation with affected communities, at least 12 months before the final investment decision, using recognised best-practice standards for transparency and participation.

• Submit a Benefit-Sharing Plan to the CER as part of the accreditation process. This plan must include:

  •  evidence of consultation

  • a signed Community Benefit-Sharing Agreement with the relevant local council(s) outlining the level of contributions benchmarked against the NSW guideline ($1,000–$2,000 per MW per year, adjusted for inflation)

  • the delivery mechanism (for example, a community fund, neighbour payments, or local infrastructure investment)

  • clear milestones for disbursement and reporting.

  • Report annually to the CER on CBS contributions, including value, recipients and local outcomes. These reports would be subject to independent audit and published in a national online register maintained by the CER.

    
    

The requirement for signed agreements with local councils ensures that CBS commitments are binding, transparent and aligned with local priorities, addressing the lack of enforceability criticised by the NSW Parliamentary Inquiry into Renewable Energy Zones (2025) and the Better Practice Social Licence Guideline Review 2024.

Compliance would be enforced through a graduated penalty regime administered by the CER:

• initial warnings and enforceable undertakings for minor breaches;

• civil penalties for ongoing non-compliance; and

• suspension of LGC eligibility for serious or repeated breaches.

  
  

Implementation would require an estimated $25 million over three years for the CER to establish the national register, develop compliance guidance, and staff a dedicated CBS unit, with ongoing costs of about $5 million per year for audits and enforcement based on the coordination costs of NSW’s REZ program (Hicks & Mallee, 2023, p. 30). These costs would be recovered through a modest annual levy on accredited generators, ensuring the burden is shared proportionally by those benefiting from federal incentives.

A national evaluation should be conducted three years after commencement and every five years thereafter, led by the DCEEW. Success should be measured by:

• 100% compliance with CBS reporting and agreement requirements among eligible projects

•  at least a 50% increase in total CBS flows to host communities by 2028;

• a one-third reduction in objections at the planning-approval stage by 2030; and

• measurable improvements in trust and satisfaction in biennial host-community surveys compared to the baseline in the Community Engagement Review 2023.

  
  

By embedding enforceable agreements into federal law and linking compliance to LGC accreditation, this policy would replace fragmented state approaches with a coherent national framework. It would ensure predictable, transparent and locally accountable benefit-sharing, reduce disputes and delays in project approvals, and strengthen public support for Australia’s renewable-energy transition.

Barriers and Risks

Barriers

A key technical barrier is the capacity of the Clean Energy Regulator (CER) to expand its current accreditation and LGC compliance functions to include CBS plan assessment, agreement verification, and audits. The CER would need to recruit and train staff with expertise in community engagement, infrastructure valuation, and compliance auditing. This is manageable within the proposed $25 million start-up and $5 million annual compliance budget. 

A second barrier is the limited negotiation capacity of regional councils, which often lack expertise to assess and negotiate benefit-sharing agreements. Evidence from the NSW Inquiry (2025) and RE-Alliance (2025) shows that smaller councils in Renewable Energy Zones struggled to secure equitable terms or access grants. Addressing this will require funded technical assistance and model agreements to standardise expectations and reduce transaction costs.

A third barrier is ensuring consistent reporting and data verification across hundreds of projects, requiring compatible accounting and disclosure systems. The regulatory burden is manageable: under the Modern Slavery Act 2018 (Cth), average compliance costs were about $21,950 per reporting entity per year (Department of Home Affairs, 2018). Early investment in a national CBS register and streamlined reporting templates will be critical for transparency and comparability across states and technologies.

Risks

The main social and political risk is developer resistance due to increased compliance costs. While the proposed levy is modest relative to project revenues, industry lobbying could delay implementation or weaken standards. This is offset by growing public demand for transparency and equitable benefit-sharing, noted in the Community Engagement Review (2023) and Better Practice Social Licence Review (2024).

A regional economic risk is that rigid CBS requirements could render marginal projects unviable in remote areas with weak grid access or high construction costs. To mitigate this, the Code should allow flexible delivery, such as in-kind contributions or pooled regional funds, while maintaining minimum standards. 

Finally, there is a political coordination risk: states may view the national Code as encroaching on planning powers. Early collaboration with state governments will be essential to prevent duplication and conflict.

References

Centre for Policy Development. (2023). Regional benefit-sharing: Opportunities for equitable outcomes from clean energy transition. https://cpagency.org.au/wp-content/uploads/2023/10/Regional-benefit-sharing-paper-2023.pdf

Clean Energy Council. (2025). Best practice charter 2025: A summary of best practice social performance from across the clean energy industry. https://cleanenergycouncil.org.au/getmedia/38729138-a3dd-4fc2-b761-73c31ab55ba3/best-practice-charter_summary-report_2025.pdf

Clean Energy Council. (2025). Clean Energy Council says passage of Queensland renewable reforms disregards industry feedback. https://cleanenergycouncil.org.au/news-resources/clean-energy-council-says-passage-of-queensland-renewable-reforms-disregards-industry-feedback

Clean Energy Council. (2025). Quarterly investment report: Large-scale renewable generation and storage (Q3 2025). https://cleanenergycouncil.org.au/getmedia/0093826a-d933-4024-adfb-61c03a0e67b4/quarterly-investment-report_q3-2025.pdf

Clean Energy Regulator. (n.d.). Large-scale generation certificates – Renewable Energy Target. https://cer.gov.au/schemes/renewable-energy-target/large-scale-renewable-energy-target/large-scale-generation-certificates

Department of Climate Change, Energy, the Environment and Water. (2023). Community engagement review: Report to the Minister for Climate Change and Energy. https://www.dcceew.gov.au/sites/default/files/documents/community-engagement-review-report-minister-climate-change-energy.pdf

Energy Charter. (2023). Unlocking better practice in social licence. https://www.theenergycharter.com.au/unlocking-better-practice-in-social-licence/

Gavard, C., Göbel, J., & Schoch, N. (2025). Local economic impacts of wind power deployment in Denmark. Environmental & Resource Economics, 88(6), 1679–1717. https://doi.org/10.1007/s10640-025-00982-2

Hall, N. L., Hicks, J., Lane, T., & Wood, E. (2020). Planning to engage the community on renewables: Insights from community engagement plans of the Australian wind industry. Australasian Journal of Environmental Management, 27(2), 123–136. https://doi.org/10.1080/14486563.2019.1670742

Howard, T. (2015). Olivebranches and idiot’s guides: Frameworks for community engagement in Australian wind farm development. Energy Policy, 78, 137–147. https://doi.org/10.1016/j.enpol.2014.12.026

Jayasuriya, S., Weerasooriya, D., Yang, R., & Bond, C. (2025). A systems thinking approach to address social acceptance challenges in Australia’s renewable energy transition. Sustainability, 17(21), 9812. https://doi.org/10.3390/su17219812

Planning (Social Impact and Community Benefit) and Other Legislation Amendment Act 2025 (Qld).

RE-Alliance. (2024.). How community benefit funds from renewable energy projects support local outcomes: Building stronger communities. https://assets.nationbuilder.com/vicwind/pages/3164/attachments/original/1705557869/Building_Stronger_Communities_%E2%80%93_Community_benefit_funds.pdf

RE-Alliance. (2025). Queensland community benefits. https://www.re-alliance.org.au/qld_new_comm_benefits

SGS Economics & Planning. (2025, July 31). Community benefit schemes for renewable energy: Planning framework. https://sgsep.com.au/publications/insights/community-benefit-schemes-renewable-energy

Renewable Energy (Electricity) Act 2000 (Cth).

The Australia Institute. (n.d.). Community-owned wind: Lessons from Denmark. https://australiainstitute.org.au/report/community-owned-wind-lessons-from-denmark/

Western Australian Local Government Association. (2022). Renewable energy community benefits and engagement guide. https://walga.asn.au/getmedia/ea947a1a-fc88-460f-966b-7e55f511d3a2/WALGA_Renewable-Energy-Community-Benefits-and-Engagement-Guide.pdf

The views and opinions expressed by Global Voices Fellows do not necessarily reflect those of the organisation or its staff.