Community benefit sharing can transform large-scale projects into social and economic equity catalysts, ensuring that local communities impacted by infrastructure development can thrive throughout the project process.

2023 was a year of profound change in the Australian energy system. The $4.9 billion in new financial commitments to large-scale energy storage—a 158% increase from 2022 investment—and 5.9 gigawatts of renewable capacity added [1] hint at a strong outlook showing no signs of abating.

Australia’s abundant, low-cost renewable energy resources are a significant comparative advantage on the world stage. If Australia moves quickly to capture ‘an outsized share of the economic boom presented by the global decarbonisation race’, the additional export revenue of $250-300 billion per annum would far outweigh the $120-220 billion received from coal and gas exports [2].

Community benefit sharing has taken on a broader significance in this context of major economic transition and infrastructure development. Community benefit sharing refers to the strategies and mechanisms that distribute the financial and non-financial benefits of infrastructure projects or natural resource developments to the communities directly or indirectly affected by them [3]. Community benefit sharing asserts a long-term view of the dynamics between ‘consumer’ and ‘provider’ and how the interaction of social, economic and environmental factors and histories continually shapes this dynamic. It recognises the need for a long-term approach to balancing the interests of communities and developers shaped by social, economic, and environmental factors.

The case for community benefit sharing in Australia

A strong community benefit sharing model guards against the cycles of decline or disinvestment of poorly managed economic transition. It ensures that broader communities that may experience external issues like environmental impacts, construction disruption, or loss of productive lands also see benefits from projects, not just individual landowners. This can prevent contestation, agitation or conflict and help bring the entire community together toward achieving net-zero emissions. Regional communities set for major energy infrastructure developments need support to harness population and labour market shifts and the increased demand for services and social infrastructure. This support ensures they remain attractive and cohesive places to live and do business.

In other words, renewable energy developments should aim to provide a new economic engine for regional areas [4]. Community benefit sharing could further improve project impacts by ensuring financial and social gains are distributed locally and regionally with a long-term view. Integrating community benefit sharing into spatial industry policy would strengthen the renewable energy sector and improve its contribution to the green economic transition [5].

The growing investment in the clean energy sector presents an opportunity to address inequalities related to population growth, skills and employment, liveability, productivity, and public policy outcomes. A coordinated approach to community benefit sharing could help “rebalance the nation” [6] by redistributing these benefits more equitably. Recent SGS projects highlight the need for early identification of workforce and skills barriers in the Renewable Energy Zone regions to inform tailored policies [7] and that clear pathways for worker transitions between declining to emerging industries are paramount to a region’s future prosperity [8].

A coordinated approach to benefit sharing usually involves elements of:

• Community Co-Ownership: Local communities may own a stake in the project, allowing them to receive profits or dividends directly and have a say in investment priorities.

• Legacy Funds: Funds are established to provide long-term financial support for community projects, infrastructure, or services.

• Local Employment and Procurement: Projects prioritise building local skills, hiring local workers and using local businesses to stimulate the local economy and improve supply chain resilience.

• Community Benefit Funds: Financial contributions are made to community funds to support local development projects.

• Capacity Building and Education: Training and educational programs are provided to upskill and reskill local residents.

• Infrastructure Development: Investment in local infrastructure such as roads, schools, or healthcare facilities as part of the project’s community benefit commitments.

• Environmental Stewardship/Offsets: Initiatives aimed at preserving or improving local ecosystems to compensate for the project's environmental impact.

Setting standards and metrics

As community benefit sharing becomes more widely adopted, benchmarks around employment quotas, financial distribution, and the establishment of community funds will likely become standard practice. First Nations employment in the energy transition is critical to securing an inclusive and equitable shift to renewable energy. An SGS and UTS report highlights 12 key recommendations to increase First Nations employment in the clean energy sector. These recommendations include mandating compliance with minimum Aboriginal procurement policies, setting employment targets in renewable energy transition agreements, and establishing a First Nation Clean Energy Cadetship Program [9]. In New South Wales, projects bidding for a long-term energy supply agreement from the state government must comply with the Indigenous Procurement Policy, which requires a minimum 1.5 per cent Aboriginal workforce and 1.5 per cent contracts value awarded to Aboriginal businesses [10].

In the United States, Community Benefit Plans are mandatory for funding recipients of clean energy grant programs [11]. These plans require the disclosure of metrics such as starting wages, the proportion of certified workers, and hours spent on health and safety training [12]. The Scottish Government has also set ambitious targets for community and locally-owned renewable energy projects, aiming to have at least 2 GW of renewable energy in the hands of communities by 2030 and proposing that developers provide 10-20 per cent co-ownership in renewable energy projects [13]. In Scotland, 214 onshore renewable energy projects have provided £15.8 million in community benefits in 2019 alone [14].

Benefit sharing regulation

Benefit sharing is regulated through a combination of federal, state, and local government policies and industry standards and guidelines. In Victoria, the Community Engagement and Benefit Sharing Guide, introduced in 2017, outlines best practices for ensuring that local communities benefit from renewable energy projects, such as through community consultative committees and local economic development initiatives [15]. The upcoming NSW Draft Benefit Sharing Guidelines (2023), to be finalised in late 2024, will provide six policy principles to guide the design and management of community benefit sharing initiatives. These principles promote benefit sharing that is standard, collaborative, transparent, community focused, proportionate, and delivers a net-positive outcome [16].

Benefit sharing with Indigenous communities is a legal requirement in some countries. Canada’s National Benefits-Sharing Framework (NBSF), for instance, has four pillars—Capacity, Inclusion, Partnerships, and Economic Benefits [17]—that address barriers for Indigenous Peoples to fully benefit from the natural resources sector development.

Impact and Benefit Agreements (IBAs), aligned with the NBSF, have become common practice between project developers and Indigenous communities[18]. In some provinces, like Ontario, IBAs have led to regulations mandating local content in renewable energy projects. For instance, large-scale wind turbines must now include at least 50 per cent local content, ensuring that both economic and employment benefits flow to local communities [19].

Case studies in action

The evolution of community benefit sharing in Australia has accelerated in the past decade, particularly in the renewable energy sector. Wind energy projects alone contribute between $56.5 million and $61 million annually to regional communities through various channels, including “landholder payments, neighbour payments, community enhancement funds and community co-ownership” [20]. Community benefit sharing models in renewable energy vary, with some projects offering up to $413 million in benefits over a 25-year period [21].

Other examples include:

• Hepburn Wind Project (Victoria): Australia’s first community-owned wind farm, operational since 2011, provides dividends, environmental programs, and educational initiatives to the community [22]. It operates on a small scale but has a significant local impact.
• Golden Plains Wind Farm (Victoria): This 1,330 MW wind farm in regional Victoria offers grants to local programmes and organisations in a wide range of sectors, including aged care, education, sports and recreation and environmental protection. Rebates for electricity costs are also available to people living within 3km of a constructed turbine [23].
• Scotland’s Community Benefit Funds: Large-scale wind farm projects in Scotland often set aside funds to be managed by local communities, supporting a wide range of community-led initiatives, from infrastructure to social services.
• Equinor’s Offshore Wind Projects (various countries): These projects, which operate on a large and international scale, include provisions for local employment, training, and environmental conservation efforts [24].
• Climate, Community and Biodiversity Standards (CCB standards): The CCB standards are a set of internationally recognised criteria used to assess land-based carbon projects (such as wind or solar energy developments), ensuring that they not only contribute to climate change mitigation but also provide significant benefits to local communities and biodiversity [25].

Embedding community benefit sharing

For community benefit sharing to be impactful, it should be embedded at various stages of a project’s life cycle—from the planning stage to the investor prospectus, construction, and implementation [26]. For example, in the Victorian Renewable Energy Target (VRET) projects, early community consultations identified desirable benefits such as job creation, education programs, and infrastructure improvements. Developers can build trust and ensure long-term, meaningful outcomes by involving communities from the beginning.

Community benefit sharing is more than just a corporate responsibility—it’s a pathway to creating lasting, equitable change in regions that might otherwise be overlooked. Through careful planning, collaboration, and transparent processes, community benefit sharing can ensure that development benefits are shared fairly, leaving a positive legacy for future generations.