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Soaring demand for trees exposes carbon credits 'minefield' in fight to offset Australia's emissions

Lisa McCreery says there is renewed demand for native trees from carbon companies.  (ABC News: Claire Moodie)

From 50 trees to 2.8 million.

That has been the trajectory for Lisa McCreery's native tree nursery since it was set up 43 years ago by her parents outside Tammin in Western Australia's Wheatbelt.

"Mum started off with 40 or 50 trees," Mrs McCreery said.

"That's how I got my pocket money, just working in the nursery, my sisters and I."

It is a feel-good occupation.

"How can you not be happy when you walk down and see so many trees and the oxygen that's in the system?" Mrs McCreery said.

"You just feel good, you feel really good."

Demand has ebbed and flowed over the years, although farmers and local councils have been the nursery's mainstay.  

But lately, another major customer has been adding to the demand.

Carbon capture customers dominate

Companies planting trees to capture carbon and generate carbon offsets have been knocking at the door, bringing big orders for seedlings.

This year the nursery will supply close to a million trees to the sector.

"We didn't let that happen because we've got our bread and butter.

"My dad always used to say 'don't put all your eggs in one basket', so I'm going with that."

The nursery, near Tammin, seeded 123 different varieties of native tree this season. (ABC News: Claire Moodie)

With the new Labor government pledging to cut Australia's greenhouse gas emissions by 43 per cent by 2030 compared to 2005 levels, experts predict demand will soar for carbon offsets to meet the target.

Credits offset carbon emissions

Chris Lund runs Perth-based carbon company Decarbonology, which will plant 300,000 native trees at two WA properties this winter, at Gin Gin and Chittering using trees from the McCreery's nursery.

According to the government's modelling, the trees will capture close to 65,000 tonnes of CO2 over a period of 50 years.

Chris Lund's company is planting 300,000 native trees at two WA properties this winter.  (ABC News: Hugh Sando)

Once the project has been registered and independently verified, a proportion of the projected offsets can then be pre-sold to companies trying to offset their greenhouse gas emissions.

As the trees grow, the site has to be audited again to check the levels of carbon promised are actually being captured.

Helping companies to measure and cut their emissions is the priority, but Dr Lund believes if offsets have to be used, then planting trees is one of the few credible options that also has other environmental benefits.

Modelling suggests the trees at Chittering and Gin Gin will capture nearly 65,000 tonnes of CO2 over 50 years. (ABC News: Hugh Sando)

"They are actually one of the few ways to take carbon out the air," he said.

"A lot of offsets come about by not generating, not emitting carbon dioxide."

Dr Lund supports a coming review of the carbon market being commissioned by the new federal government. 

Getting paid for growing existing trees

In March, Australian National University law school professor Andrew Macintosh dropped a bombshell with a scathing assessment of the hundreds of millions of taxpayer dollars being paid to projects designed to cut emissions.

Professor Macintosh is an internationally respected authority on emissions reduction policies and is the former chair of the Emissions Reduction Assurance Committee (ERAC), a statutory group set up to oversee the methods being used to reduce carbon emissions.

He described Australia's carbon market as a "rort" and said an analysis had shown about 70-80 per cent of the carbon credits issued in Australia were "low in integrity".

Professor Macintosh is particularly concerned about an offset method called "human-induced regeneration" (HIR), where proponents are credited for growing trees by changing land management practices like removing livestock from particular areas.

ERAC says the scheme can be used effectively to regenerate native forests.  (ABC Rural)

"What we've seen across the scheme thus far is people getting credits for trees that aren't growing, that's very clear from the data," he said.

"Probably one of the clearest things is that people are getting credited for growing trees that are already there."

Claims dismissed by ERAC, industry

But ERAC this week released a statement saying Professor Macintosh's claims were not substantiated and there were serious deficiencies in his analysis.  

RegenCo, a company with nine HIR projects across three states, including WA, also disagreed with some of Professor Macintosh's findings.

Experts say plantings of native trees have other environmental benefits for the water table and ecology.  (ABC News: Claire Moodie)

"The industry needs to be willing to look at these criticisms and address them because I think we all accept that the integrity of the market is absolutely paramount," RegenCo managing director Greg Noonan said.

"I think the assertion that it's not possible to regenerate forest in a rangelands or semi-arid settings is something that we'd disagree with.

"Our projects are in those regions and we see evidence of not only existing forest cover, but the potential to return degraded areas to a forest state through management changes."

The Clean Energy Regulator, which administers the Emissions Reduction Fund, also responded to Professor Macintosh's concerns, saying requirements under the HIR method had been "progressively tightened over time".

"The CER has undertaken a review of project compliance with the HIR method and found a very high level of compliance," it said.

WA company bypasses Australian scheme

As the industry waits for the federal government's review, Dr Lund believes businesses will turn to offsets they can have confidence in amid the current "minefield".

Dr Lund's company is bypassing Australia's carbon scheme due to concerns over its credibility.  (ABC News: Claire Moodie)

"People will do the same for offsets."

Dr Lund said the ERAC's recent statement had not removed his concerns.

He said the uncertainty in the market was one of the reasons Decarbonology would bypass the Australian system for this year's plantings, choosing instead to be accredited under an international scheme known as the Verra standard.

All eyes on review

Meanwhile, Labor's promised review of the scheme has been welcomed by industry observers including Megan Evans, a lecturer and research fellow from the School of Business at UNSW Canberra.

"It'll be really important that there is a fully independent review," Dr Evans said.

Megan Evans is calling for integrity standards to be raised in the carbon offset system.  (Supplied: Megan Evans)

"And that recommendations from that review are taken up to basically ensure that whatever public money is used to purchase these carbon credits, that one carbon credit equals one tonne equivalent of abatement.

"Because at the moment, we are purchasing these Australian carbon credit units saying that they represent this amount of abatement … but we're not actually getting a tonne of abatement per credit."

David Pannell, a professor of agricultural and resource economics at the University of Western Australia, shared the concerns about the current system.

"I think an independent review that really looks deeply into which of these methods will really work, will actually really contribute to climate change mitigation is extremely important, " Professor Pannell said.

"Hopefully it will take quite a critical stance and identify those parts of the scheme that are worth continuing and those that are not and and should really just be shut down."

Offsets should be 'last resort'

Ultimately, carbon offsets will have to remain a big part of the journey to net zero, according to Dr Lund — but he argues they should be used sparingly.

Carbon offsets shouldn't be seen as a substitute for real action to curb emissions, Dr Lund says. (ABC News: Hugh Sando)

"There's only so much land we can actually plant. There are only so many offsets available, particularly ones that suck carbon out of the air," he said.

"If we actually utilise those in the stage where we are still happily emitting, then when we come to the point when we've stopped emitting and we still need to bring carbon out, we don't have them left.

"We do actually need credible, real offsets, but what we don't want to see is where they are a substitute for actual action.

"Offsets should be used as a last resort so we have enough for later."

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