Unfortunately, Australia’s carbon market currently suffers from a distinct lack of environmental integrity.
Australia’s Emissions Reduction Fund (ERF) has serious governance flaws and is potentially wasting billions of dollars in taxpayers’ money, a leading expert from The Australian National University (ANU) warns.
Andrew Macintosh, an expert on environmental markets, has chaired and sat on several bushfire royal commissions. He was also chairman of the Integrity Committee of ERF for six-and a half years. He was also a member of King Review of Low-cost Sources of Adoption.
He and his co-authors have published a series highlighting systemic flaws within the ERF, as well as the way it issues Australian Carbon Credits (ACCUs). They have labelled the ERF an “environmental and taxpayer fraud”.
Professor Macintosh explained that the ERF is dominated three types of projects: avoided forest destruction in western New South Wales (NSW); human-induced restoration of native forests in the dry rangelands Queensland, NSW and South Australia; and the combustion and disposal of methane. These projects account for around 75% of ACCUs.
“The available data suggests 70 to 80 per cent of the ACCUs issued to these projects are devoid of integrity – they do not represent real and additional abatement,” Professor Macintosh said.
“Unfortunately, Australia’s carbon market currently suffers from a distinct lack of environmental integrity.
“All of the major emission reduction methods have serious integrity issues, either in their design or the way they are being administered.
“People are getting ACCUs for not clearing forests that were never going to be cleared; they are getting credits for growing trees that are already there; they are getting credits for growing forests in places that will never sustain permanent forests; and they are getting credits for operating electricity generators at large landfills that would have operated anyway.
“What is occurring is a fraud on the environment, a fraud on taxpayers and a fraud on unwitting private buyers of ACCUs, including private households who purchase ACCUs to offset their personal emissions.”
The Clean Energy Regulator manages the ERF and has $4.5 billion available to spend on ACCUs.
“The Clean Energy Regulator has already spent $1 billion on purchasing ACCUs and has contracts to purchase a further $1.6 billion,” Professor Macintosh said.
“By issuing ACCUs for these low integrity abatement projects, the regulator is throwing good money after bad and undermining Australia’s ability to meet its long-term emission reduction targets.”
Professor Macintosh, along with his co-authors, call for a variety of solutions to the problem. These are their recommendations:
Eliminating the Clean Energy Regulator
The ERF immediately removes the low integrity methods that are infringing
Reforms to stop low-integrity projects being denied credit
Making the ERF transparent.
“We are also calling for a full and independent inquiry into what has happened, which has the power to compel people to give evidence,” Professor Macintosh said.
“The public deserves an explanation for what has occurred and what can be done to ensure this does not happen again.
“I do not want to give people the impression that carbon markets are a waste of time or that we are trying to ‘tear down the carbon market’.
“But to make the carbon market worthwhile, to ensure it performs its intended functions, the government needs to take immediate corrective action.”