The scheme was introduced to reduce salinity in the Hunter River. It ensures that Hunter River salinity targets are not exceeded due to saline discharges from facilities with environment protection licences. Participants may only discharge when the river is in 'high' or 'flood' flow and they must hold enough credits (in accordance with the scheme rules) to cover the amount of saline water they wish to discharge. If a participant wishes to discharge more than their credit holding permits, they must acquire credits from others who do not need to discharge into a particular discharge event.
The scheme was made permanent on 1 December 2002, via the Protection of the Environment Operations (Hunter River Salinity Trading Scheme) Regulation 2002. Under this Regulation, the NSW Government must auction 200 new salinity credits every two years to replace those that are about to expire. Auctions ensure that new participants are given access to credits and provide an ongoing incentive for industry to invest in strategies that reduce their need to discharge saline water. Auction proceeds are used to help pay for the operating costs of the scheme, particularly environmental and compliance monitoring costs.
Hunter River Salinity Scheme Credit Auction Information (PDF 852KB) explains the auction processes and rules.