The new Minister for Climate Change and Energy, Chris Bowen, has announced an independent review into the Australian Carbon Credit Unit scheme (ACCUs), following allegations of fraud. The integrity of the AUD $4.5 billion scheme is essential to help the country meet its emissions reduction target of 43 per cent from 2005 levels by 2030, said Minister Bowen. 

The Emissions Reduction Fund (ERF) has been the centrepiece of Australia’s climate policy for the past decade. The scheme sells carbon credit units to the Australian government and companies that are required to offset or reduce their greenhouse gas emissions, or who choose to voluntarily. 

However, earlier this year, researchers from the University of New South Wales exposed serious integrity issues with the ERF, labelling it “environmental and taxpayer fraud”. Their analysis suggests up to 80 per cent of the carbon credits issued to projects meant to avoid deforestation, regenerate native forests or collect methane from landfills “lack integrity”. 

In other words, such carbon credits used by polluters do not represent any real or additional emissions abatement, concluded the report. When this is the case, Australia’s emissions will be higher than they otherwise would be. For context, one carbon credit represents one tonne of carbon dioxide (CO2), and over 100 million ACCUs have been delivered under this scheme.

Evidence of “environmental fraud”

The growing carbon credit market is “largely a sham”, said Professor Andrew Mcintosh, the lead author of the report. “What is occurring is a fraud on the environment, a fraud on taxpayers and a fraud on unwitting consumers”, he said. “People are getting credits 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.”

Mcintosh’s findings are consistent with a May 2022 report, An Environmental Fig Leaf?, by the Australia Institute. The report found that the ERF has failed to reduce Australia’s emissions, with evidence that the scheme is, in fact, facilitating an emissions increase.

However, the Clean Energy Regulator and the Emissions Reduction Assurance Committee have rejected Macintosh’s analysis, claiming it is based on an incomplete dataset.

Welcome news for Australian climate policy

The government has appointed highly respected former Australian chief scientist and senior academic Professor Ian Chubb to lead the independent review of the Australian Carbon Credit Unit scheme. The review will investigate the integrity of methods used to generate carbon credits, whether the overseeing governance structure was fit for purpose and whether there was appropriate management of social, economic and environmental impacts, he has confirmed.

He added the review would also consider the extent to which governments and businesses should rely on carbon credits to meet emissions targets. “What proportion [is right] I’m not sure, but we might get a better sense of that when we look at the circumstances”, he said.

Policy experts at the Australia Institute welcome the review and appointment of Professor Chubb as review lead. “Integrity must sit at the heart of Australia’s climate policies. The review is welcome and critical to ensure any climate target legislated by the Australian Parliament is met credibly”, said Richie Merzian, Director of the Climate & Energy Program at the Australia Institute. 

At least AUD $1.5 billion in public funds could have purchased carbon credits nothing more then “hot air”, he continues. “Carbon credits with integrity can play a role in Australia’s net zero future, but dodgy credits that are not additional or real abatement are effectively a licence to pollute and are only further fuelling climate change.”