Proposed reforms to Australia’s carbon credit scheme have come under fire at a Senate inquiry, with a senior adviser warning that new powers for the environment minister could “send chills through the market”.
The changes, announced in August, would allow the minister to halt projects using flawed methods to generate credits. They would also strengthen the Clean Energy Regulator’s enforcement powers and tighten eligibility and auditing requirements.
Australian Carbon Credit Units represent one tonne of carbon dioxide equivalent avoided or removed from the atmosphere. Businesses and governments buy them to help meet climate targets.
Karen Hussey, chair of the Emissions Reduction Assurance Committee, said the proposed ministerial intervention powers could damage business confidence if they were used against particular projects.
“The very existence of this power will send chills through the market, which is understandable but regrettable,” she told the inquiry.
Ms Hussey said the committee supported the reforms, but believed any declaration to move projects away from an approved method should be treated as a last resort. The committee regularly reviews the methods used to generate credits, she said.
Revegetation projects criticised
Academic researchers and environmental groups argued that the changes did not go far enough to address weaknesses in the scheme, including concerns about three revegetation projects.
Andrew Macintosh, director of the Australian National University Centre for Environmental Markets, said some land involved in carbon credit projects could not meet the forestry growth targets required of it, despite credits having been generated.
“It’s the equivalent of saying ‘we’re trying to regrow forests on the moon,’ that’s how silly this is,” he said.
“Why should we make a new method that accommodates these projects when they’re trying to do the impossible and being credited for the impossible?”
The Wilderness Society, Climate Integrity and the Australian Conservation Foundation also opposed the proposed reforms. The foundation’s chief executive, Adam Bandt, described carbon credits as “an accounting trick”.
Dean Smeulders, a spokesman for the Clean Energy Regulator, said the 2022 Chubb Review had found the scheme to be essentially sound and that claims about revegetation projects had been examined.
“We assess the performance of the projects and, in simple terms, if the trees don’t grow, the credits are not issued and the credits don’t flow,” he said.
He added that scientific views could be contested and might differ because of policy or values.
The Senate inquiry is expected to publish its final report on November 24.
