Australia’s carbon pricing train is picking up speed after the independent review into the integrity of the Australian Carbon Credit Unit (ACCU) scheme found that it was essentially sound but required more than a dozen tweaks to strengthen its integrity.

These changes include putting an end to the much-criticised “avoided deforestation” methodology which had allowed landholders to claim credits by promising not to cut down trees that they might not have intended to cut down in the first place.

That’s good. It was a silly idea.

It also called for landfill gas project credits to become stricter over time and for tougher oversight of the regeneration of forests by humans to ensure it achieves the permanently storing carbon.

The review – led by former chief scientist Professor Ian Chubb – was launched following allegations by former chair of the scheme’s watchdog, professor Andrew Macintosh, that serious and unresolved flaws in the methodologies used to issue ACCUs called a large part of $5.4bn in carbon offsets into question.

Those claims were dismissed by the review, though it didn’t reveal the reasons behind its decision

The Australian Government – whose planned cap on emissions of the circa 215 largest industrial emitters to help meet its target of reducing emissions by 43% (2030), is expected to increase demand for credits, .

It accepted in principle all 16 recommendations of the independent panel with Energy and Climate Change Minister Chris Bowen saying that the recommendations will help ensure Australia’s carbon crediting scheme has the highest integrity, and contributes to achieving Australia’s emission targets.

The Carbon Market Institute agreed broadly with the findings that the framework was sound and agreed that new measures on transparency and governance were needed to have greater investor and community confidence in the framework.

 

Unanswered questions

Not everyone agrees with the findings of the panel and for good reason.

The Climate Council said the review did not address the biggest issue, which was allowing big emitters to continue polluting as usual rather than making real progress in avoiding and reducing emissions by purchasing ACCUs.

It noted that instead of carbon offsets being used only as a last resort for the small share of emissions that cannot be avoided through process, technology and other operational changes, paying for ACCUs has become the first and only thing many businesses are doing about their harmful emissions.

“Cheap and easy offsets on paper do little to tackle the climate crisis, which is already harming Australians through worsening extreme weather, floods and fires. The only lasting solution is genuine and deep cuts in emissions,” Climate Council head of advocacy Dr Jennifer Rayner said.

“Big polluters shouldn’t be able to keep polluting as usual by offsetting much or all of their emissions under the Safeguard Mechanism.

“This will simply result in more pollution as usual and worsening climate damage. For the Safeguard Mechanism to work, and drive down emissions, there must be tight restrictions on the use of offsets.”

Likewise, Greenpeace Australia said the continued use of Human-Induced Regeneration would allow big emitters to keep polluting by buy carbon offsets to avoid and delay actually reducing or removing harmful greenhouse gas emissions in their own operations.

Low integrity, hard to fathom

In an article on The Conversation, Australian National University professor of law Andrew Macintosh said the panel’s conclusion that the scheme remained largely sound was hard to fathom and was bewildered by the panel’s decision not to reference the findings of a review it commissioned from the Australian Academy of Science.

This review had found numerous flaws in the methods and governance processes. Like the risk the human-induced regeneration method is crediting vegetation change brought on by, y’know, nature and rainfall.

Or that the baseline used to calculate carbon abatement for landfill gas didn’t account for other financial and regulatory incentives offered to operators for capturing and combusting methane.

Macintosh had previously indicated that between 70% and 80% of Australian credits issued did not represent real and additional abatement.

That’s a lot. Possibly too much but I’m not a scientist.

The Australia Institute added that its concerns about low-integrity credits remained unassuaged and that they would continue to be used in the upcoming safeguard mechanism.

Meanwhile research and advisory firm RapuTex Energy reckons (contrary to the belief restoring integrity to the ACCU market will lead to a reduction in supply and a sharp increase in prices) the potential reductions in crediting are expected to be offset by the annual growth profile of ACCU issuance.

It added that the “avoided deforestation” methodology that looks set to be ended was already nearing the conclusion of its crediting period and was already assumed to cease crediting within its business-as-usual expectations.

Meanwhile, the Australian Conservation Foundation wants an audit of existing projects using this methodology, saying the carbon credits previously approved under the method did not represent real abatement and are essentially junk credit.

 

Carbon credit concerns worth another look

While some might be inclined to ignore critique arising primarily from the green lobby, it is worth a closer look at their concerns given that ACCUs will play a key role in the Albanese Government’s carbon pricing plans.

Ensuring that Australia’s emissions reduction plans are based on a credible foundation will be essential going forward.

Likewise, the Climate Council’s stand that ACCUs should be a tool of last resort is sound. Real emissions abatement requires active efforts to reduce or remove emissions, not avoiding the hard work by buying carbon credits.

While actively reducing or removing emissions might be initially costly, they provide a base for companies to progress more cost effectively in the future rather than endlessly buying ACCUs and exposing operations to a carbon market.

This is especially true when considering that this might be the year for companies in environmentally unfriendly industries to transition towards a cleaner future.

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