Think tank calls for complete overhaul of troubled Emissions Reduction Fund

There are renewed calls for an overhaul of the troubled Emissions Reduction Fund, after the Morrison government’s flagship climate policy was plunged into crisis by a series of surprise government interventions and questions about the credibility of the carbon offsets it issues.

The call has come from the progressive think tank The Australia Institute. Its executive director, Ben Oquist, told the Smart Energy Expo in Sydney that whichever party formed government after the election needed to commit to a substantial review of the Emissions Reduction Fund.

Oquist says that while The Australia Institute has sought to support improvements to the design of the Emissions Reduction Fund, a much more comprehensive reform overhaul was now needed.

“Over the years, the Institute has continued to work on improving the methods that underpin the emissions reduction fund – banning the carryover Kyoto credits, for example – which would have reduced demand for the ERF,” Oquist said.

“However, in the last few years, it’s become increasingly clear that regardless of whether the original version of the Emissions Reduction Fund was fit for purpose, Australia’s only legislated climate policy and entire carbon credit scheme is in crisis and an urgent need for reform.

“It is completely lacking in integrity.”

The Emissions Reduction Fund is administered by the Clean Energy Regulator and was created by the Abbott government as a means of directly purchasing emissions abatement from carbon offset projects.

The Coalition has allocated $4.5 billion to the Emission Reduction Fund, and it stands as the Morrison government’s only major policy for directly reducing emissions.

As RenewEconomy has detailed, serious questions about the integrity of the Emissions Reduction Fund have been raised by those once responsible for overseeing the design of carbon offset methodologies.

Professor Andrew Macintosh, who formerly chaired the Emissions Reduction Assurance Committee, has slammed a number of carbon offset methodologies that award Australian Carbon Credit Units (ACCUs) to projects that may not achieve any genuine reductions in emissions.

Macintosh labelled the scheme a “fraud on the environment” and that substantial amounts of taxpayer funds had been expended for little benefit in terms of emissions reduction.

Compounding the issues facing the scheme were surprise policy interventions by the Morrison government, including a decision to effectively release carbon offset projects from government contracts, flooding the open market for ACCUs and sending prices plummeting.

Oquist said that the dysfunction impacting the Emissions Reduction Fund would be a problem for the next government, as well as continuing to undermine Australia’s broader efforts to tackle climate change.

“That’s obviously a big problem for our climate, but beyond that, it’s a problem for any government who takes the emission reduction fund on as part of their climate policy,” Oquist said.

“It’s a problem for taxpayers when billions of dollars of public money is being wasted, and it’s a problem for those businesses who are participating in the carbon market in good faith, who now is being accused of greenwashing.”

“It’s a problem for those landholders and traditional owners who are relying on the benefits of that, that carbon market brings.”

“The Emissions Reduction Fund was never designed to carry the full weight of Australia’s climate policy,” Oquist added.

Oquist reiterated The Australia Institute’s call for a review of the scheme and called on both major parties to commit to reforming the scheme after the next election.

“We need an urgent review of climate policy in Australia to restore integrity to the Emissions Reduction Fund. Otherwise, we risk wasting billions more of taxpayer dollars on hot air – that is, useless credits that don’t lower emissions,” Oquist said.

“Integrity must underpin Australia’s climate actions and policies. We can’t afford to waste the next decade like we have the last one.”

Federal Labor has already indicated they would undertake a “quick” review of the Emissions Reduction Fund, should they form a government after the election.

The Morrison government has defended the current design of the scheme, largely dismissing the recent criticism.