Review of carbon credits scheme rejects criticism that it is flawed and recommends changes to improve transparency
An independent review of the government’s carbon credits scheme has rejected suggestions that it is fundamentally flawed, but has made a number of recommendations to improve its transparency and integrity.
Key points:
- The review found the scheme to be “fundamentally” well designed when it was first introduced.
- The panel has recommended that credit data be made public
- Critics say it is confusing that the report thinks 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 purchased by the government and serve to meet emissions reduction targets, but a growing number are sold on a private market to companies that want to offset their own emissions.
A number of criticisms of the scheme were leveled last year, including by former industry members who claimed it had become a “rort” and some industry players who argued that the rules did not incentivize any further emissions reductions.
The review panel, chaired by former chief scientist Ian Chubb, noted that the integrity of the scheme had been called into question.
“It has been argued that the level of reduction has been exaggerated, that the ACCUs are therefore not what they should be, so that the policy is not effective,” the report says.
“The Panel does not share this opinion.
“Despite the criticisms leveled, the Panel concludes that the ACCU scheme was fundamentally well designed when it was introduced.”
The report argues that one reason for the conflicting views is due to a lack of transparency around data in the scheme and decisions to grant credit.
It recommended that “the default should be for data to be made public, including carbon estimation areas” and that the government should consider a national platform for sharing this information.
“More transparent data and information sharing arrangements would enable communities and carbon market stakeholders to assess, understand and manage potential project impacts and opportunities more effectively,” he said.
Climate Change Minister Chris Bowen welcomed the report, saying the government had accepted all of its recommendations in principle.
“This panel has not tried to please everyone,” he said.
“There will be some people who will say that this panel has gone too far, there will be some people who will say that it has not gone far enough. That is understood.
“But it is substantial work. It is informed by the best science and the best evidence.”
Landfill Gas Changes
In addition to recommendations to improve transparency and, as a result, integrity in the scheme, the report also made more specific recommendations on different carbon reduction techniques that qualify for credits.
One is for companies that convert the gas created by garbage in landfills, methane, into a source of electricity.
At the moment, credits are given to companies based on how much methane they remove from the atmosphere above their “baseline,” which is typically 30 percent.
But some of the industry heavyweights have publicly argued that the current system rewards companies for taking steps they would have done anyway and that less credit should be given.
Instead, the report recommended that the baseline for landfill gas credits be increased slowly in an attempt to encourage innovation and that companies move beyond the minimum baseline amount.
“The baseline for new landfill gas projects and crediting period extensions for existing projects should be adjusted over the life of the project,” according to the report.
And that: “Arrangements must be made for early review and voluntary adjustment to the baseline of existing projects.”
The report also recommended against extending a clause in the scheme that would make clearing permits end in April 2025.
“Development of new methods that incentivize the maintenance of native vegetation that has the potential to become a forest, as well as the maintenance of existing forests at risk of land use conversion, should be considered,” he said.
Critics were left ‘scratching our heads’
The report also recommended the government rebrand and restructure the body that oversees the scheme, the Emissions Reduction Assurance Committee (ERAC), to become the Carbon Reduction Integrity Committee with a renewed focus on ensuring the integrity of the scheme. scheme.
Former ERAC Chairman Andrew Macintosh denounced the scheme and raised concerns about it early last year.
He said the report and its findings have left him and his colleagues confused.
“On the one hand, the panel found that it is necessary to fight for radical changes in governance. On the other hand, they say that projects and credits are largely fine.
“That is a source of great confusion for us.
“That leaves us scratching our heads to say, ‘How the hell could there not be problems with the scheme when all the available evidence and all the key scientists have concluded that there are problems and that a change is necessary?'”
Macintosh said that while he and others did not want to see the scheme “shot down”, he hoped that pressure from within and without the industry would lead to reforms.
“While the Chubb review might have said there are no real problems here, working with key industry players and working with other scientists will be able to affect the reforms and persuade the government, if not the review, that there needs to be changes. .”
He criticized the lack of evidence included in the report and said he did not believe the report’s findings were based on an investigation commissioned by the panel.
While the review panel noted the potential use of carbon capture and storage (CCS) to limit the “rate and scope” of climate change, it also said it had been told during the review period research that was not economical.
Meanwhile, the Australian Conservation Foundation said it welcomed the report’s findings, but believed further action was needed to ensure credits were awarded to projects that actually reduce emissions.
“ACF welcomes the move to ban new credit under the deeply flawed ‘avoided deforestation’ method, but further evaluation of existing projects is needed,” said CEO Kelly O’Shanassy.
“The Clean Energy Regulator should now commit to an audit of these projects, which we fear are not producing real-world carbon reduction.
“It is essential that projects are evaluated in real life, not just on paper based on Chubb’s review.”