Clean Energy Regulator defends carbon offset scheme as Labor flags review

The Clean Energy Regulator has defended the integrity of Australia’s primary carbon offset scheme, as federal Labor flags its intention to review the scheme should it win government.

Australia’s national carbon offsets regime has fallen into a state of crisis, after explosive claims by a former watchdog for the scheme that the methodologies used to issue carbon offset credits were flawed, and the credits did not represent genuine reductions in emissions.

The claims were made by Professor Andrew Macintosh, the former chair of the Emissions Reduction Assurance Committee, the group responsible for ensuring the integrity of the methods used to award carbon offsets under the Emissions Reduction Fund.

Macintosh said the regime for issuing Australian Carbon Credit Units (ACCUs) lacked environmental integrity and amounted to a “fraud on the environment”.

The scheme underpins the Morrison government’s $4.5 billion Emissions Reduction Fund, which purchases ACCUs on behalf of Australian taxpayers, and questions about the integrity of ACCUs have the potential to erode the confidence of carbon market participants and potential investment in new offset projects.

In an expansive response to the claims made by Macintosh, the Clean Energy Regulator defended the methodologies questioned, including offsets awarded to revegetation projects, for avoided deforestation and to projects that reduce emissions through the destruction of methane produced by landfills.

Regulator said that it stood by the integrity of the offset regime, and that the issuance of offsets was underpinned by “rigorous assessment processes”.

“The Emissions Reduction Fund (ERF) is a robust offsets scheme with a high degree of integrity,” the regulator said.

“This derives from the fact that the ERF is established in legislation and is administered by the CER as an independent regulator with a raft of compliance tools at its disposal.”

“Issuance of ACCUs is underpinned by the CER’s rigorous assessment processes using Global Imaging Satellite and other “big data” and compliance is further assured with a comprehensive set of audit requirements.”

The regulator said that Macintosh’s analysis of the scheme had not been able to incorporate the full body of information and data that is available to the regulator, including the precise location of carbon estimation areas, which it says cannot be disclosed publicly due to legislative restrictions.

With the underlying data not being publicly available, it is not possible for compliance under the carbon offsets scheme to be reviewed for verified by an independent third-party.

Speaking to ABC Radio National on Friday morning, Labor climate and energy spokesperson Chris Bowen said that should it form government after the forthcoming election, Labor would commission a review of the Emissions Reduction Fund.

Bowen added that he was concerned about the integrity issues raised by professor Macintosh and that this supported the need for a review.

“This is a very important scheme. I have had concerns for some time. This report by Professor McIntosh was concerning,” Bowen said.

“Australian credit units are very important and will be increasingly important, including under us, and I support the carbon trading system, I support ACCUs.”

“But I also want to ensure that they do have integrity. And in fact, even before this report, in [Labor’s climate policy], it explicitly says that a Labor Government will conduct a review of the Australian carbon market.”

Bowen has previously announced that Labor would seek to strengthen the existing Safeguard Mechanism, which has the potential to cap emissions from major industrial emitters. The scheme allows emitters to use ACCUs to offset their emissions and ensure they are able to remain under their respective caps.

“I want confidence in the system, and I want a short review to ensure confidence. These are complex matters. The human induced regeneration scheme and the landfill gas carbon abatement methods are all complicated matters,” Bowen said.

“I’m not a scientist. I would want independent advice giving me the confidence and the Australian people confidence that the ACCU market is functioning as it should, and that’s what we would deliver if we do win the election, and I would welcome Angus Taylor making a similar commitment.”

Australian Greens Leader Adam Bandt has said he would refer the Emissions Reduction Fund to the federal Auditor General for investigation, in light of the issues raised by professor Macintosh, as well as other claims of potential conflicts of interest amongst the current members of the Emissions Reduction Assurance Committee.

The Australian National Audit Office said the request for an inquiry was currently under consideration.

In a statement provided to RenewEconomy on Thursday, Angus Taylor said he stood by the design of the Emissions Reduction Fund, saying the criticisms were “politically motivated attacks”.