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An extensive review of the carbon credit system in Australia has been conducted, leading to some significant changes being recommended. The review was headed by former national chief scientist Prof. Ian Chubb, who found that the Clean Energy Regulator, which manages and oversees the scheme, should have its responsibilities altered to ensure greater transparency and reliability.
The review also suggested abolishing the Emissions Reduction Assurance Committee, the body that approves the methods used to create carbon credits. A new committee, known as the Carbon Abatement Integrity Committee, would be more independent and have more responsibilities. This was in response to academics led by Prof Andrew Macintosh, the former head of the Emissions Reduction Assurance Committee, who argued that the system lacks integrity and does not deliver real cuts in greenhouse gas emissions.
The review, however, dismissed these claims. It stated that there is no cause for such doubts about the integrity of the system, and that the level of emissions reduction has not been overstated.
So, what are carbon credits? Carbon credits replace the need to cut carbon dioxide emissions. Instead of reducing their own emissions, they buy credits which are meant to represent a decrease in emissions somewhere else. Each credit represents one tonne of carbon dioxide that has been avoided or taken out of the atmosphere.
Methods to produce credits in Australia include regenerating native forests which have been cleared, protecting forests that otherwise may have been cleared, and capturing and using emissions which come from landfills. The credits can either be bought by the government through a $4.5bn taxpayer-funded emissions reduction scheme, or by polluting companies privately on the market.
The climate change minister, Chris Bowen, promised to review the carbon credit system as part of Laborâs policy before the 2022 election. This gained more weight after Prof Macintosh called it âlargely a shamâ that damages the environment and wastes government funding.
The Chubb review suggested some changes to the methods used to create credits which had been questioned, such as the avoided deforestation strategy that rewards landowners for protecting forests that they could have otherwise bulldozed. The panel found that it should not be used anymore, since it would be difficult to figure out if the landholders intended to cut down the trees.
The review did not find any major issues with the most commonly used method for credit production; human-induced regeneration. This involves regrowing native forests in cleared rural areas, and is estimated to have come to around $1.5bn in contracts with the federal government. Prof Macintoshâs team had estimated that 165 human-induced regeneration projects in NSW and Queensland had gained 24.5m credits, despite the combined area of vegetation having decreased by more than 60,000 hectares.
The Chubb review did not directly address this data, but suggested taking steps to certify that all projects abide by what was originally meant; to become native forests and store carbon dioxide permanently. This could be done by publishing the results of five-yearly project reviews by the regulator.
The review was not overly critical of the current governance model, but recommended changing some features of the Clean Energy Regulator to restore trust in the scheme. It proposed that the regulator be responsible for compliance and enforcement, while an independent committee would be set up to oversee approval and integrity. A separate government body would be accountable for buying the credits with taxpayer funds.
The panel further recommended that more data concerning carbon credit projects be made available to the public, and that a portion of all credits should be cancelled to ensure that the cuts being rewarded are âappropriately conservativeâ.
The government has accepted the reviewâs sixteen recommendations âin principleâ. Carbon credits are expected to be at the core of the governmentâs plans to reduce emissions using the safeguard mechanism, a policy which has not been successful in preventing pollution from increasing. More details on how Labor intends to alter this approach will be revealed on Tuesday.
The matter of how many credits should be offered to meet government and corporate emissions reduction objectives is still a matter of contention. Last year, the UN created a group to target organisations which are âgreenwashingâ their commitment to net zero emissions. It argued that cuts need to be made in absolute emissions by 2030 in order to limit global temperature increases to 1.5C, with offsets only being used for reductions which are above and beyond this.