The fossil fuel industry’s CCS offsets scheme is aggressively absurd

It is deep into a stew of policy absurdity that the Australian government readies itself to attend COP26, a major update of climate ambitions to be held in Glasgow, in a few weeks.

They’ve spent the past two years responding to Covid19 by incentivising new coal and gas projects, and subsidising new fossil fuel plants and infrastructure. They’ll almost certainly be announcing a target to reach “net zero by 2050”, but they’ll very, very definitely not be announcing any new policies that would suggest they aim to meet that target, or change the all important interim goals. The situation is urgent, and they respond by calmly and confidently making it worse.

None of this is particularly surprising or inventive. The core goal – to protect the revenue streams of Australia’s fossil fuel industry from regulatory and financial threats – is the key driver. But as pressure to act mounts, the government finds itself having to double down on the sheer absurdity of it all. They have to run much, much harder on the treadmill of ludicrous policy, purely to stay in the same spot.

The latest addition to this melting pot of weirdness is, truly, an all-time great. Please, stick with me – I really need to explain this one to you. It’s much worse than you know.

Australia is addicted to dodgy offsets instead of real decarbonisation

Here’s a big problem: the government’s preferred approach to ‘reducing’ emissions is not to create policies that incentivise a direct reduction in greenhouse gas emissions, paired with regulation that forces those who refuse. The ‘Emissions Reductions Fund’ is, fundamentally, a massive offsetting system that hands ‘Australian Carbon Credit Units’ (ACCUs) to people who claim they’ve taken an action to avoid emissions they would have otherwise gone ahead with. These ACCUs are then sold to people who are emitting greenhouse gases, but want to claim that they’ve “offset” those emissions.

This would only really be a true “offset” if the person granted the ACCU re-captured the literal and physical equivalent of the mass of carbon dioxide it released, and stored it permanently underground with a near-zero chance of escape. Even then, it would really need to capture more than released, because carbon causes harm for the amount of time it’s in the atmosphere, and some changes are irreversible (such as sea level rise and melting ice caps).

This isn’t how offsets work in Australia. Instead of recapturing carbon, the majority of offsets actually “avoid” emissions that, apparently, would have otherwise been released without this system. This is stuff like building a wind turbine that displaces coal, or deciding to not chop down a tree that you originally planned to (the tree then sucks carbon from the atmosphere).

Climate Active is the Australian government’s certification program in which actions to reduce emissions get traded around to justify actions to worsen emissions. They use the phrase “carbon neutral”, and it’s unintentionally a perfect illustration of how this entire scheme – in the best possible interpretation of it – actually has a total impact on climate action of a hard, round zero.

Some of Australia’s biggest emitters and fossil fuel enablers are “climate active”. AGL, Ampol, ANZ, Cooper Energy, Energy Australia, Origin Energy, Qantas and Westpac have all played pivotal and major roles in worsening Australia’s emissions, but they’re all “certified brands“.

It is good to avoid emissions, but that shouldn’t then lead to a justification for continued emissions elsewhere. The entire system of, when an emissions reduction happens, creating a moral redemption certificate that can be slapped onto someone else worsening the problem is an absurdity that we are yet to broadly grasp. It is so upsettingly, stomach-knottingly grim that the world’s fossil fuel industries and their champions in governments have created this system of self-reinforcing climate delay.

It isn’t just that the principle is wrong. The actual system doesn’t always do what it says on the box. Turns out that many of the times folks granted ACCUs weren’t all that honest about the emissions they were avoiding, according to a recent analysis by the Australia Institute. 1 in 5 credits are ‘junk’ credits that don’t even represent ‘avoided’ emissions, because they were paid to ‘avoid’ land clearing they were likely never going to go ahead with. In that situation, offsets aren’t just ineffective. They actively make things worse.

Climate policy needs to bring about actual reductions in greenhouse gases. The Australian government’s design philosophy around climate policy is to skip this, by creating a needlessly circular and stunningly over-complicated, untrustworthy system of offsets, credits, avoidance and certificates. That is why Australia’s actual fossil emissions have been rising for a half-decade, halted only briefly by Covid19.

Already, major emitters use these dodgy offsets to justify a continued reliance on fossil fuels. Recently, one Twitter friend told me that Origin are offering a “Green Gas plan“. No, Origin Energy are not working to electrify homes with induction stoves and heat pumps – they’re using purchased ACCUs as public relations cover for the continued dominance of fossil fuel burning.

The Clean Energy Regulator tracks and administrates this entire system, and claims in its latest quarterly report that ACCUs will have reduced emissions by 17 million tonnes of CO2-e in 2021. But that avoidance comes with the creation of a certificate that companies like Origin plaster on the continued sale and burning of fossil gas. This is a system that is simultaneously working to resolve and cause climate change, at the same time. So you get how deeply and seriously I mean it, when I use the word ‘absurd’.

It’s a bad situation. Unfortunately, it’s about to get worse.

The ultimate escalation in the absurdity of ‘avoided emissions’

Australia’s fossil fuel industry really wants in on the offsets scam. They want to be the supply and the demand, the alpha and the omega, of this entire system. Origin Energy’s former CEO, Grant King, is trying to see industrial emitters granted offset certificate creation rights if they don’t emit as badly as they could under an arbitrary, and blatantly over-generous, ‘baseline’. This is bonkers for the reason detailed above: why for the love of everything holy would you cancel out a real emissions reduction with a little piece of paper that morally excuses continued emissions elsewhere?

Australia’s fossil fuel industry has been demanding a similar sort of scheme for some time. If a fossil fuel company “avoids” a certain quantity of greenhouse gas emissions by, instead of releasing it like they planned to capturing it using ‘Carbon capture and storage’ (CCS), they want a carbon credit they can sell to a high-emitter, who can use it to justify not reducing emissions.

Look, that’s probably a little too cynical, surely the reality is a bit less dire. Let’s check in with Santos, who are largely behind the push for this scheme. “Carbon offsets could be sold to polluting industries, such as airlines and manufacturers, within Australia and offshore”. Oh….okay. They’re just saying it out loud, then.

It is, thankfully, only for projects that permanently store the captured carbon underground. Most carbon captured through CCS is used, cynically and openly, to help release more oil underground, so it is notable that the bare minimum of actual carbon storage is being set here. But the bigger problem lies with how this might change the landscape for fossil fuel extraction.

The Australia Institutes’ Polly Hemming has been following the dynamics of this market closely, and she’s written great threads on Twitter about this, here, here and here. Her latest on this topic brings home the truly incredible and extremely-difficult-to-explain absurdity of this situation, because Australia’s Energy and “Emissions reductions” minister Angus Taylor literally said, out loud, in public, on the record, that “This high-integrity method will position Australia to scale up clean LNG production”.

We really need to pause on that for a second, because I’m worried you still don’t quite realise the situation that we’re in right now. Australia’s federal energy minister is very explicitly and openly declaring that their sole emissions reductions policy will directly result in the extraction – and eventual burning – OF MORE FOSSIL FUELS.

Of course, if a gas extraction project goes ahead on the grounds that they’ll suck up a tonne of cash from “avoiding” a really, really tiny sliver of emissions that they should never be releasing in the first place, the net impact of this process is, comfortably, a significant worsening of the pain and suffering we experience through the extraction and eventual burning of fossil fuels.

My recent analysis for RenewEconomy of the last batch of emissions data showed just how pathetically small the proportion of total emissions avoided by CCS is. But CCS only applies to operational emissions from digging up fossil fuels; not to the emissions when the fuel is burned.

Australia’s has a gargantuan pipeline of new fossil gas extraction projects waiting to go. The dream seems to be to slap some miniscule amount of CCS onto these projects, and then have the dual boost of a revenue stream to the miner but also a stream of offset certificates for other emitters to avoid any real change to their business. The actual major emissions footprint of these projects is totally unaddressed by CCS.

Santos, who’ve championed this idea, have linked it to the Moomba CCS project, which will capture around 1.7 megatonnes per annum of carbon dioxide. But in 2019-20, Santos emitted 37 megatonnes of CO2 equivalent. If we apply this CCS project to the company’s emissions, including those when their products are burned, you can see how miniscule it is:

You see the problem here, right? If this CCS offset scheme does what Angus Taylor says it is meant to do – incentivise and realise gas extraction projects – then it’ll worsen greenhouse gas emissions, well beyond the problems with offsets I’ve highlighted earlier. This makes it go from a traditional offsets problem – one of excusing inaction from high emitters – to one of active and serious worsening of the climate problem, as it helps to unlock huge and unparalleled reserves of fossil fuels from underground.

That this is presented as if it’s a climate policy is absurd beyond words.

Taylor and Morrison don’t care about net zero by 2050

There are no secrets here. There’s no shame, or hesitation, or any real need to be sneaky or underhanded about it. This is a scheme to incentivise new fossil fuel projects, through the guise of extremely small emissions reductions at the operational phase. Worse still, this fossil fuel subsidy creates a tradeable get-out-of-jail free card for high emitters. At every single level, this is bad stuff.

Considering it’s still only a few months since the International Energy Agency said that the only pathway compatible with net zero by 2050 globally was no new coal, oil or gas extraction projects, it’s utterly clear that this scheme and its explicitly stated purpose shows that whatever ‘net zero by 2050’ target Morrison and Taylor set will be an outright lie. There is no intention to align with that goal.

Taylor’s announcement includes the news that 2022 will bring a litany of new ‘avoided emissions’ horrors to Australia’s already extremely dire situation around offsetting. Slap a plug for an EV on the street? You get permission to pollute! Inject a pathetically small fraction of hydrogen into existing gas infrastructure? You get permission to pollute!

Considering that none of this makes any actual physical sense, the only limit here is our imaginations. Walk past a tree and decide not to tear it down using your animalistic strength? Have a carbon credit! Spend a full day without buying 50 gas bottles and venting them into the atmosphere? Avoided emissions! Tell AGL they can keep their coal plant running a little while longer, thanks to your brave decision. They’ll be chuffed to hear it.

This is happening among a broader global debate about the role of offsets, particularly those from ‘avoided emissions’ instead of real, permanent carbon removals. It’s going to be a focus of COP26, and there’s very little doubt which side of the debate Australia’s government will be on. That the fossil fuel industry has been fighting tooth and nail to see this scheme realised is all the evidence we need to be sure that it has a sinister undertone. But the details are so much worse than I could have ever thought; a severe and upsetting escalation in the sheer absurdity of this moment we find ourselves in.