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Whistleblower’s ‘fraud’ claim threatens integrity of $4.5 billion carbon offset scheme

By Mike Foley

Confidence in the federal government’s $4.5 billion fund for carbon credits is being stripped following whistleblower accusations about fake climate action, amid warnings a lack of integrity in the scheme could derail one of the crucial elements in Australia’s push to reach net zero emissions.

The designer of the Emissions Reduction Fund’s carbon credit scheme, Professor Andrew Macintosh, this week went public with claims most of the money was being spent on fake carbon reductions. His claim was backed by research he presented to the Clean Energy Regulator, which administers the funds.

Andrew MacIntosh claims many of the carbon credits are for projects that don’t represent real and additional carbon abatement.

Andrew MacIntosh claims many of the carbon credits are for projects that don’t represent real and additional carbon abatement.Credit: Vikky Wilkes

Australian Carbon Credit Units (ACCUs) are awarded to entities that reduce greenhouse gases by employing approved techniques, including carbon farming, and sold to polluting companies that want to offset their emissions and reduce their carbon footprint.

About $1 billion has been paid out for 100 million ACCUs to date, with $1.6 billion worth of contracts issued to ongoing projects.

Professor Macintosh, the Associate Dean of Research at the ANU College of Law, served as the inaugural chairman of the ERF assurance committee for six years. It was his job to ensure when public money was spent on ACCUs it was being used to buy real carbon reductions.

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However, Professor Macintosh said three-quarters of the ACCUs issued come from three carbon sequestration methods and flaws in the scheme had perpetrated “a fraud on the environment, a fraud on taxpayers and a fraud on unwitting private buyers 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,” he said.

His studies analysed $300 million of credits issued for protecting forests, known as avoided deforestation, and found land clearing in far western NSW would have needed to have been at least 750 per cent higher than in reality to justify the payments.

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He also found around 50 per cent of the credits – worth $200 million – issued in NSW and Queensland for forest regrowth were for projects where the forest cover actually declined.

The Clean Energy Regulator rejected Professor Macintosh’s claims. It said in a statement that the fund has a “high degree of assessment and we do not believe this assertion to be true”, but it will analyse his studies.

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The land sector is crucial to Australia’s pledge to reach net zero by 2050. It has delivered 20 per cent of the emissions reduction to date, and the federal government is banking on farmers delivering 20 per cent more by 2050.

Farmer Mark Wootton owns significant livestock on his 3500-hectare property in western Victoria, with 20,000 Merino sheep for wool and 500 head of beef cattle.

He has established a carbon-neutral brand, Jigsaw Farms, to market premium meat and wool by offsetting livestock carbon emissions with 600 hectares of revegetation, which is split between plantation timber and native forest habitat.

He said Professor Macintosh had raised valid criticisms about the standards that could undermine the commercial value of any farmer relying on their carbon-neutral status.

“Mud sticks and that’s what that’s what I find really frustrating because there’s some good people doing really good work,” Mr Wootton said. “We need those offsets to have integrity or else it damages our reputation when we go to sell our products.”

Energy and Emissions Reduction Minister Angus Taylor said Australia’s fund was “one of the highest integrity markets in the world”.

Energy and Emissions Reduction Minister Angus Taylor said Australia’s fund was “one of the highest integrity markets in the world”.Credit: Alex Ellinghausen

Energy and Emissions Reduction Minister Angus Taylor said he rejected any assertion the fund was a fraud, arguing Australian carbon credits are valued as much as 10 times higher than comparable schemes.

“This is a market which is considered to be one of the highest integrity markets in the world. And that shows up in pricing,” Mr Taylor said.

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General manager of agriculture think tank the Australian Farm Institute, Katie McRobert, said questions over the integrity of carbon credits would deter investment in carbon farming, which not only reduces greenhouse gases but can help boost the sustainability of agriculture.

“This will put a handbrake on the market and that would inadvertently put a handbrake on carbon sequestration activities. That’s a problem because there’s no reason for Australian farmers and primary producers to stop doing carbon abatement activities,” she said.

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Original URL: https://www.smh.com.au/link/follow-20170101-p5a7ma