The ACT government is pushing for changes to environmental offset laws, after bushfire destroyed millions of hectares across eastern Australia last summer.
Projects that could accelerate climate change should also trigger a more rigorous assessment, the government has argued.
In a submission to a once-in-a-decade review of the Environment Protection and Biodiversity Conservation Act, the territory government said the 20-year-old laws were not well placed to deal with the growing threat of climate change or the aftermath of the bushfires.
The laws did not recognise the cumulative impact of developments on species and habitats, despite a marked decline in Australia's biodiversity.
The scheme also allowed developers to buy offsets to make up for habitat loss, which often degraded over time due to a lack of perceived lack of personal or corporate responsibility.
However many areas of national significance that were or could have been offsets were destroyed in the fires between September 2019 and February 2020
There was already a lack of potential offset areas within the ACT for future major projects, the government said.
For example, the second stage of light rail cuts across golden sun moth habitat however the territory is having trouble identifying a suitable offset.
Given that climate change is widely recognised as a major threat to biodiversity and natural and cultural heritage conservation, a climate change trigger could be appropriate.ACT government submission
High-level mapping of the Molonglo more than 10 years ago had locked the ACT government into buying offsets for developments in areas of box gum woodland, even though some areas were marked as habitat in error.
"In light of the 2019-20 bushfire season and the devastating and ongoing impact on many areas within Australia, the ACT government is concerned that an offset scheme designed over 20 years ago that does not take into account the changing climate and its impact would adversely affect not only existing approvals, but future offset areas," the submission said.
"For a jurisdiction like the ACT, better environmental offsets could be achieved by looking at overall conservation gains from identifying more viable, connected offsets with benefits across a range of protected matters rather than species/community specific offsets."
The government suggested land that was already protected in Canberra's "large" reserve network could be recognised as an offset under the EPBC Act.
"The EPBC Act could allow for measures already taken to protect an area to be readily recognised in EPBC assessments, such as the establishment of a comprehensive parks and reserve system prior to the development of areas and EPBC referral," the submission said.
Climate change was another "major gap" in environmental laws.
"Currently, the word 'climate' appears only once in the EPBC Act," the government said.
"Given that climate change is widely recognised as a major threat to biodiversity and natural and cultural heritage conservation, a climate change trigger could be appropriate."
The NSW Land and Environment Court last year blocked the development of an open cut coal mine on the mid-north coast of NSW, in part because of its greenhouse gas emissions.
The trigger could be the level of carbon emissions a project would create, such as the area of vegetation that would need to be cleared or the amount of material that would be processed over the life of the development, the ACT suggested.
The Orroral Valley bushfire south of Canberra in January and February was one of the worst ecological disaster's in the ACT's history.
It burnt more than 80 per cent of the Namadgi National Park - 82,700 hectares - and 22 per cent of Tidbinbilla Nature Reserve (1444 hectares).
Around 5.4 million hectares was lost in NSW, including 2.7 million hectares of national park (37 per cent of the NSW park system).
It was been estimated more than one billion animals perished in the fires.
It comes as the Royal Commission into Natural Disaster Arrangements is set to begin hearings on Monday.
The initial round of hearings will focus in part on the changing global climate and natural disaster risks, with experts from the Bureau of meteorology, CSIRO and Geoscience Australia due to give evidence.