An independent review into the government's carbon credit scheme has rejected suggestions it is fundamentally flawed, but has made a series of recommendations to improve its transparency and integrity.
The scheme works by giving a carbon credit, officially called an 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 go toward meeting emissions reduction targets, but a growing number are sold into a private marketplace to businesses wanting to offset their own emissions.
Last year a number of criticisms were made of the scheme, including by ex-industry insiders who claimed it had become a "rort" and some industry players who argued the rules did not incentivise any additional emissions reductions.
The review panel, chaired by former chief scientist Ian Chubb, noted the integrity of the scheme had been called into question.
"It has been argued that the level of abatement has been overstated, that ACCUs are therefore not what they are meant to be, so the policy is not effective," the report said.
"The Panel does not share this view.
"Notwithstanding the criticisms advanced, the Panel concludes that the ACCU scheme was fundamentally well designed when introduced."
The report argues one reason for the conflicting views is because of a lack of transparency around data in the scheme and decisions to award credits.
It recommended that "the default should be that data be made public, including carbon estimation areas" and the government should consider a national platform to share 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" it said.
Climate Change Minister Chris Bowen welcomed the report and said the government had accepted in principle all of its recommendations.
"This panel has not tried to please everyone," he said.
"There'll be some people who say this panel's gone too far, there'll be some people who say it's not gone far enough. That's understood.
"But it's a substantial piece of work. It's informed by the best science and by the best evidence."
Landfill gas changes
As well as recommendations to improve transparency and, as a result, integrity in the scheme, the report also made more specific recommendations about different carbon abatement techniques that qualify for credits.
One is for companies that turn the gas created by rubbish in landfill, methane, into a source of electricity.
At the moment credits are given to companies based on the amount of methane they take out of the atmosphere above their "baseline", which is usually 30 per cent.
But some of the heavy hitters in the industry have publicly argued the current system rewards companies for taking actions they would have done anyway and that fewer credits should be given out.
Instead, the report recommended that the baseline for landfill gas credits should be slowly increased in an attempt to encourage innovation and for companies to go beyond the minimum baseline amount.
"The baseline of new landfill gas projects and crediting period extensions of existing projects should be adjusted during the lifespan of the project," the report said.
And that: "Arrangements should be made for the early review and voluntary adjustment to the baseline of existing projects."
The report has also recommended not extending a clause in the scheme that would see permits for land clearing end in April 2025.
"Consideration should be given to developing new methods that incentivise the maintenance of native vegetation that has the potential to become a forest, as well as maintaining existing forests at risk of land-use conversion," it said.
Critics 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 Abatement Integrity Committee with a renewed focus on assuring the integrity of the scheme.
Former ERAC chair Andrew Macintosh blew the whistle on the scheme, raising his concerns about it early last year.
He said the report and its findings has left him and his colleagues confused.
"On the one hand, the panel has found there's a need to fight for sweeping governance changes. On the other hand, they're saying the projects and credits are largely fine.
"That's a source of great confusion for us.
"That leaves us scratching our heads to say, 'How on earth could there be no problems with the scheme when all the available evidence and all the key scientists have reached the conclusion that there are problems and there's a need for change?'"
Mr Macintosh said that, while he and others did not want to see the scheme "torn down", he hoped that pressure from within and outside the industry would lead to reforms.
"While the Chubb review might have said there's no real problems here, that working with key industry players and working with other scientists, it will be able to affect the reforms and persuade the government, if not the review, that there needs to be changes."
He criticised the lack of evidence included in the report, and said he did not believe the report's findings were based on research commissioned by the panel.
While the review panel noted the potential use of Carbon Capture and Storage (CCS) to limit the "pace and extent" of climate change, it also said it had been told during the inquiry period that it was not economic.
Meanwhile, the Australian Conservation Foundation said it welcomed the report's findings, but believed further action was needed to ensure credits were given to projects that genuinely abate emissions.
"ACF welcomes the move to prohibit new credits under the deeply flawed 'avoided deforestation' method but further assessment of existing projects is needed," chief executive Kelly O'Shanassy said.
"The Clean Energy Regulator should now commit to an audit of these projects, which we fear are not producing real-world carbon abatement.
"It is essential that projects are assessed in real-life — not just on paper as per the Chubb review."
