‘Well-designed’: Chubb review backs controversial carbon credit scheme

An independent review has rejected claims the federal government’s carbon offset scheme is broken, finding no basis for whistleblower accusations that taxpayers were funding carbon credits for fake tree planting and other climate action projects.

The report sparked an angry reaction from Professor Andrew Macintosh, the whistleblower academic whose work triggered the review, who argues hundreds of millions of dollars of taxpayers’ money has been spent on worthless carbon credits via offset projects that do not deliver any actual carbon sequestration.

Climate Change and Energy Minister Chris Bowen and Ian Chubb announcing the release of a report into Australia’s carbon credits. Credit: Brooke Mitchell.

Climate Change and Energy Minister Chris Bowen said the federal government welcomed the report and committed, in principle, to deliver on its recommendations.

Before the May election, Bowen promised to review the $4.5 billion Emissions Reduction Fund, which spends taxpayer money to buy carbon credits, and appointed former chief scientist Ian Chubb to lead a six-month inquiry, which published its report on Monday.

The scheme, a major source of the carbon offsets that will be bought by companies under the federal government’s safeguard mechanism, is the first major test for the Albanese government’s climate policy.

The mechanism forces the 215 largest industrial polluters to either cut their pollution or buy carbon offsets and is forecast to deliver around 30 per cent of the savings the government needs to reach its election commitment to cut emissions by 43 per cent by 2030.

The review was commissioned in response to accusations by Macintosh, an associate dean of research at the ANU College of Law who designed the carbon credit scheme, which pays individuals and companies for a variety of carbon-saving projects at landfill facilities, in mining and agriculture, and through tree planting and protection.

Macintosh said the Chubb review should have accepted warnings from both him and the Australian Academy of Science that hundreds of millions of taxpayer dollars were being wasted on questionable carbon credits.

“It’s a major problem for the integrity of Australia’s climate policy, it’s a waste of government money and has implications for the integrity of consumer markets,” he said.

Macintosh claimed the implementation of the scheme lacked integrity and overestimated the carbon capture across a range of projects.

He estimated the “vast majority” of the 30 million carbon credits for what is known as human-induced regeneration, which is meant to fund forest regrowth to sequester carbon, had not captured any extra carbon than if the credits had not been issued to the project proponents.

“If government is issuing low-integrity credits and they’re used under the safeguard mechanism, it’s going to increase Australia’s emissions,” he said.

“Taxpayers have already bought a large number of these credits and then they’re contracted to continue to buy them. This is a waste of government money.

“These credits are used by companies that want to voluntarily offset their emissions for carbon neutral, net zero purposes and when they’re not achieving the reductions that they think they are, they’re essentially being misled.”

The Chubb report said “the panel does not share this view”.

“Notwithstanding the criticisms, the panel concludes that the scheme was fundamentally well-designed when introduced,” it said.

However, the review called on the government to cancel one controversial source of carbon credits, known as “avoided deforestation”, recommending it cease any future projects that protected trees on private property from land clearing with a warning that any new projects in this field risked paying landowners for doing nothing.

It said new land clearing permits were not being issued any more – “raising questions about the
additionality of any new projects”.

“Even with the revocation of the method it does nothing to the 61 existing, registered projects,” Macintosh said. “They’ll continue to get credits for the next six to seven years.”

The Chubb report accepted another prominent criticism of the scheme, calling on the government to amend the scheme’s legislation to “maximise transparency, data access and data sharing”, which it said would “support greater public trust and confidence in scheme arrangements”.

Currently, the scheme is overseen by the Clean Energy Regulator. The Chubb review said some of its roles should be taken by new, independent oversight bodies with one for compliance and enforcement to check projects were delivering real carbon credits and another to do the purchasing with public funds.

Australia Institute climate change adviser Polly Hemming said the scheme failed to heed the findings of the Academy of Science and the government should revoke the scheme’s use of human-induced regeneration, avoided deforestation and landfill gas.

The Australian Conservation Foundation welcomed the report’s recommendations to improve transparency and its call to cease new funding for avoided deforestation.

It said the Clean Energy Regulator should audit existing avoided-deforestation projects to check they were producing “real-world carbon abatement”.

“It is essential that projects are assessed in real-life – not just on paper as per the Chubb review,” ACF chief executive Kelly O’Shanassy said.

Carbon Market Institute chief executive John Connor welcomed the report’s findings and its call for improved transparency.

“This is a scheme that has developed and evolved over more than a decade, and investors and the community should be encouraged by the ... findings that its framework is sound,” Connor said.

Environmental advocacy group Greenpeace said the review had failed to address leading scientists’ concerns that the Australian Carbon Credit Unit method for “human-induced regeneration” was not delivering real carbon abatement.

“Big-polluting corporations, including coal and gas companies, buy carbon offsets to avoid and delay actually reducing or removing harmful greenhouse gas emissions in their own operations,” Greenpeace Australia Pacific’s Glenn Walker said.

“Until this sham is removed from the system or fundamentally overhauled, emissions won’t actually be going down.”

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