An independent review of the government’s carbon credit scheme rejected suggestions that it was fundamentally flawed, but made a series of recommendations to improve its transparency and integrity.
the main points:
- The review found the scheme to be “essentially” well designed when it was first introduced
- The committee recommended that data related to appropriations be made public
- Critics say it is confusing that the report believes the scheme is working but has recommended significant changes to governance
The scheme works by awarding a carbon credit, officially called the Australian Carbon Credit Unit (ACCU) for every tonne of greenhouse gases avoided or stored by registered projects.
These credits are bought by the government and go towards achieving emissions reduction targets, but a growing number are being sold on a private market to companies that want to offset their own emissions.
In the past year, a number of criticisms have been leveled at the scheme, including by former industry insiders who claim it has become a “rat” and some industry players who have argued that the rules have not incentivized any further emissions cuts.
The review committee, chaired by former chief scientist Ian Chubb, noted that the safety of the system was in question.
“It has been argued that the level of mitigation has been overstated and therefore the ACCUs are not what they should be and therefore the policy is not effective,” the report said.
The authority does not share this view.
“Despite the criticisms presented, the panel concluded that the ACCU scheme was fundamentally well designed when it was presented.”
The report argues that one reason for the conflict is due to a lack of transparency around the system’s data and crediting decisions.
It recommended that “the default should be for data to be released to the public, including carbon estimate regions” and that the government should consider creating a national platform to share this information.
“More transparent data and information sharing arrangements will enable communities and stakeholders in the carbon market to more effectively assess, understand and manage potential project impacts and opportunities,” she said.
Climate Change Minister Chris Bowen welcomed the report and said the government had accepted all its recommendations in principle.
“This committee did not try to please everyone,” he said.
“There will be some people who say this committee has gone too far, and there will be some people who say it has not gone far enough. That is understandable.
“But it is a fundamental work. It is inspired by the best science and the best evidence.”
Landfill gas changes
In addition to recommendations for improving transparency and, as a result, fairness in the scheme, the report also made more specific recommendations on which different carbon reduction technologies would qualify for credits.
One is for companies that convert gas from landfill garbage, methane, into a source of electricity.
Right now, companies are given credits based on how much methane they take out of the atmosphere above their “baseline,” which is usually 30 percent.
But some industry hitters have argued publicly that the current system rewards companies for taking actions they would have done anyway and that less credit should be given.
Instead, the report recommended that the baseline for landfill gas credits should be slowly increased in an effort to encourage innovation and for companies to exceed the minimum base amount.
“The baseline for new landfill gas projects and extensions of the lending period for existing projects must be adjusted during the life of the project,” the report said.
And that: “Arrangements should be made for early review and voluntary adjustment of the baseline of existing projects.”
The report also recommended against extending a clause in the scheme stating that land clearance permits expire in April 2025.
“Development of new methods that incentivize the conservation of native plants that can become forest should be considered, as well as the conservation of existing forests at risk of land-use conversion,” she said.
Critics left “stumped”
The report also recommended the government rebrand and restructure the body overseeing the scheme, the Emissions Reduction Assurance Committee (ERAC), into a carbon reduction integration committee with a renewed focus on ensuring the integrity of the scheme.
Andrew McIntosh, former ERAC president, blew the whistle on the system, raising his concerns about it early last year.
He said the report and its findings left him and his colleagues confused.
“On the one hand, the committee has found that there is a need to fight for sweeping changes in management. On the other hand, they say the projects and appropriations are quite good.
“This is a source of great confusion for us.
“This leaves us scratching our heads to say, ‘How on earth can there be no problems with the scheme when all the available evidence and all the major scientists have come to the conclusion that there are problems and that a change is needed?'” “
McIntosh said that while he and others did not want to see the scheme “collapse”, he hoped pressure from within and outside the industry would lead to reforms.
“While Chubb’s review may have said there are no real problems here, that working with key players in the industry and working with other scientists, he would be able to influence reforms and convince the government, if not the review, that changes should be made.”
He criticized the lack of evidence in the report, and said he did not believe the report’s findings were based on research conducted by the commission.
While the review panel noted the potential use of carbon capture and storage (CCS) to reduce the “frequency and extent” of climate change, it also said that it was told during the course of the investigation that it was not economic.
Meanwhile, Conservation Australia said it welcomed the report’s findings, but believes more action is needed to ensure credits are given to projects that actually reduce emissions.
“The ACF welcomes the move to block new appropriations under the deeply flawed ‘avoid deforestation’ approach, but further evaluation of existing projects is needed,” said CEO Kelly O’Shannasi.
“The clean energy regulator must now commit to reviewing these projects, which we fear are not producing real global carbon reductions.
“It is imperative that projects are evaluated in real life — not just on paper according to Chubb’s review.”