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As the dust settles on the Chubb review of Australia's carbon credit system, farmers and the big polluters relying on them for offsets are weighing up what it all means.
Key points:
- A key method to earn carbon credits by not clearing land is on hold
- Critics warn about the long-term capacity of soil to store carbon
- The carbon market is steady after big policy shifts
Despite whistleblower claims that the system is being rorted, Professor Ian Chubb said it was "fundamentally well designed" and he did not share the view that the level of abatement had been overstated.
However, he recommended some changes to the scheme, including a halt on further approvals for one key methodology used to offset emissions and tighter rules for others.
The scheme works by giving a carbon credit — known as an Australian Carbon Credit Unit (ACCU) — for every tonne of greenhouse gases avoided or stored by registered projects.
These credits are bought by the government, which uses them to help meet emissions reduction targets. Some, however, are sold into a private marketplace to businesses wanting to offset their own emissions.
Avoided deforestation under fire
The Chubb review has recommended that no more carbon credits be issued for "avoided deforestation".
This method allows farmers who had a permit to clear their land in north-west NSW to obtain a credit for not clearing it.
Professor Chubb said the clearing permits were now so old that it would be hard to establish an 'intent to clear land'.
It is a significant change because one in five credits issued in Australia is for projects based on this method.
Together with human-induced regeneration of native forests in the dry rangelands of Queensland, New South Wales, Western Australia, South Australia and the Northern Territory, and the combustion of methane from landfills, they make up three-quarters of all credits.
That figure is based on research by Professor Andrew Macintosh, a leading expert on environmental markets who chaired the Integrity Committee of the Emissions Reduction Fund.
He published a paper with colleagues that described some of these schemes as an "environmental and taxpayer fraud", and he supplied the review with what he described as a "mountain of evidence" about that.
While Professor Chubb is closing the door on projects based on the "avoided deforestation" method, he thinks new rules could be developed that allow more approvals in future.
Human-induced regeneration
Rules governing another controversial methodology — human-induced regeneration — have been tightened up.
Professor Chubb has recommended a five-yearly check on regeneration projects and wants the energy regulator to publish the outcomes of each assessment.
He wants all future projects to meet the expectations of the scheme, which is to turn farmland into native forest that can permanently store carbon.
Professor Chubb dismissed concerns about the variability of carbon sequestration based on rainfall.
Richard Eckard is professor of sustainable agriculture at the University of Melbourne and director of the Primary Industries Climate Challenges Centre.
He warned that carbon levels would increase in years of good rainfall and decline again during drought but said some projects were basing their claims on three years of good rainfall.
"What happens when El Nino comes back, and we have three dry years in a row, and the carbon barrels back out of the soil?" he asked.
"Sequestration is not permanent, so that's the issue. We think there's an oversell of the potential."
Doubts remain for farm group
Peter Holding farms at Harden in NSW and is a community outreach officer for the Farmers For Climate Action group .
He is disappointed by Professor Chubb's findings, but he is pleased to see the rules around avoided deforestation projects have been tightened up.
"I don't think a lot of the country would have been cleared anyway, and that's the problem with additionality.
"Have we really achieved anything or have we just paid somebody because they managed to get a ticket from the government?"
And he wants farmers to focus on how they will reduce their own emissions from farm equipment reliant on diesel.
"It might be with ammonia, it might be with hydrogen, it might be with EVs (electric vehicles), who knows, but pretending we don't have to worry about it isn't the answer."
"We need to stop these fake ideas and start dealing with the real issues about how you're going to transition your machinery into the new world in under 10 years."
Clear signal to market
John Connor, from the Carbon Market Initiative, an independent, member-based organisation dedicated to the transition to net-zero emissions, welcomed the review's finding that the effectiveness of Australia's carbon credit system had not been overstated.
And said that, together with changes to the Safeguard Mechanism, had delivered a clear signal to the market.
He said that landholders involved in those projects were safe, as none of the changes were retrospective, and the establishment of the Carbon Abatement Integrity Committee should improve confidence in the system.
The price of Australian carbon credit units, or ACCUs, has remained steady despite the big changes in policies.