Australia’s dirtiest companies can buy bogus carbon credits that allow trees to be supposedly grown inside of other trees, even though a landmark review said areas of existing vegetation shouldn’t count.
Carbon credits have become a major talking point of the Albanese government’s climate policy crown jewel, the safeguard mechanism, where the 215 biggest polluters must keep their emissions below 4.9% or purchase offsets — known as Australian Carbon Credit Units, or ACCUs.
But Climate Minister Chris Bowen has not set a limit on the number of carbon credits a major polluter can buy. Polly Hemming, acting director of the Australia Institute’s Climate and Energy program, says this infinity clause is causing a “large supply of dubious carbon offsets” to flood the market.
“It’s not too dramatic to say that this whole scheme is reminiscent of the subprime mortgage crisis,” she told Crikey.
“This is an industry worth billions of dollars. Investment decisions are being made on the basis of these credits. Except everyone is turning a blind eye to the fact that the vast majority are junk.”
Why are our credits dodgy?
Speaking to a Senate committee this week, ANU College of Law Professor Andrew Macintosh explained that carbon farmers are supposed to exclude the parts of their land where there is existing mature vegetation.
If a carbon farmer doesn’t, the implication is they’re basically “growing a tree through the middle of another tree”, the leading environmental law and policy scholar said.
“So just think of a paddock with a bunch of mature trees on it. What they’re meant to do is carve it out of the area that’s going to be credited, and that’s one of the key things that hasn’t been happening.”
Why? Because the Clean Energy Regulator is allowing carbon farmers to do so (and cash in), even though a review recommended against it, UNSW Canberra Public Service Research Group academic Megan Evans told Crikey.
The independent review, commissioned by Bowen and led by former chief scientist Ian Chubb, largely established the ACCU scheme as essentially sound.
But it also found the model used to credit carbon should be applied according to the guidelines, which Evans says requires the exclusion of mature vegetation from carbon estimation areas.
It’s not changing anytime soon. On Tuesday the Department of Climate, Energy, the Environment and Water told the Greens’ Sarah Hanson-Young that the government expects to accept these ACCUs from existing projects “indefinitely”.
“There isn’t any issue about the ACCUs already in circulation,” department deputy secretary Jo Evans said.
Why isn’t the government acting?
Hemming said she finds it unsurprising the government has chosen to interpret the Chubb review recommendations this way, which “will ultimately maintain a lack of transparency and large supply of dubious carbon offsets available to gas and coal companies”.
“The government has essentially promised that big polluters will have access to affordable offsets under the safeguard mechanism,” she said.
“Economics 101 tells us that the best way to keep the price of something low is to increase the supply. And the best way to keep that supply up is to keep the quality low.”
Evans said her team’s analysis found that unless steps are taken, at least 60 million high-risk (low integrity) ACCUs are likely to be issued until 2030, about a quarter of the abatement projected by the safeguard mechanism.
“To put these numbers in context, we’re basically talking about the annual emissions of a coal-fire power station that would be counted as emissions abatement on paper, but are largely hot air.”
Climate Minister Chris Bowen’s office was approached for comment.
