Carbon credits must not be used to shirk cuts, Chubb says

Offsets can’t be a device large emitters use not to change their behaviour, says ex-chief scientist now tasked with reviewing the scheme for the federal government.

The most recent Clean Energy Regulator statistics show a steep increase in the use of ACCUs and the related large-scale generation certificates. Picture: Jens Büttner/dpa

The country’s largest carbon emitters should not be permitted to use the commonwealth’s carbon trading scheme to shirk their responsibility to reduce emissions, says the man tasked by the Albanese government to review the system.

Ian Chubb, a former Australian National University vice-chancellor and ex-chief scientist, was appointed in July to conduct a review of the scheme. Professor Chubb’s conclusions are due in December.

The Australian Carbon Credit Units scheme has attracted considerable criticism from environmental groups and others associated with the program, who say it is wasting taxpayer funds without cutting carbon emissions.

In an interview with The Australian, Professor Chubb said the “offsets can’t be a device which big emitters use not to change their behaviour not to do something about reducing emissions”.

“Getting to net carbon zero requires a substantial reduction in our emissions,” he said. “It is essential that we do get emission reduction and that it be organised and strategically managed.”

The review, commissioned by Energy Minister Chris Bowen, followed criticisms by Andrew Macintosh, an academic at ANU and the ex-head of the government’s Emissions Reduction Assurance Committee. Professor Macintosh has described the carbon market as “largely a sham” and said the majority of carbon credits did not represent real cuts to emissions.

More recent analysis by investment house Allan Gray concluded concerns about the integrity of the ACCU scheme were “valid and warrant further investigation”.

Some 30 per cent of ASX 200 companies use carbon credits to reduce their emissions – almost half specifically note their use of ACCUs, Allan Gray found.

“The lack of integrity within the ACCU scheme could mean that companies’ reported net emissions are lower than their true volume of net emissions,” said Allan Gray’s responsible investing analyst Stephanie Derrington in a note last week.

Professor Chubb told The Australian that an ACCU scheme was still needed as part of the government’s goal of reaching net zero carbon emissions by 2050.

Professor Chubb said the review was linked to the proposed amendments to the Safeguards Mechanism – which requires organisations to report if they have emitted more than 100,000 tonnes of carbon dioxide in a year.

The government plans to step up requirements on the 215 emitters reporting under the scheme to make more cutbacks in their carbon dioxide emissions from July 1.

Professor Chubb said the aim of his review was not to recommend the abolition of the carbon credit scheme, but to boost its integrity. He said the goal was to recommend changes that would provide confidence “units which are tradeable have integrity”.

“Our primary role (is to make recommendations which would bring about a situation where) you can trade these units and be confident they have value,” he said.

He said he agreed with those who said that the carbon credits should not be used by big emitters to get out of cutting back on their carbon emissions. “I take on board the comments that the offsets cant be a device which big emitters can use not to change their behaviour – not to do something about reducing emissions,” he added.

“The … review of the Safeguard Mechanism is all part of this. When the caps are tightened and the targets are reduced (under the Safeguard Mechanism), you want actual reductions in emissions.

The most recent Clean Energy Regulator statistics show a steep increase in the use of ACCUs and the related large-scale generation certificates – up 80 per cent and 138 per cent respectively compared to the first six months of 2021.

“Following the (federal) election, there was significant increase in market activity in response to anticipated future demand for ACCUs,” the CER noted in a report in September. “This was in line with announced policies prior to the election, including the increased 2030 greenhouse gas abatement target and changes to the Safeguard Mechanism.”

Professor Chubb said there was a widespread view from the people the review panel had already spoken to that there needed to be more transparency in the system.

“The thing we have heard most commonly is the need for more transparency along the process … so that people from the outside looking in can get enough information to make a judgment call (about it).”

He said simplification of the system could be important to make sure “people don’t inadvertently make mistakes.”

“I’m sure, in a complex system, with methods being applied by a number of people, with the best will in the world, mistakes will be made.”

“If it is inadvertent, then you need to look at ways it can be avoided. We haven’t come to any conclusions.”

Other members of the review panel include former Federal Court judge Annabelle Bennett, Pollination Foundation chief executive Ariadne Gorring and Steve Hatfield-Dodds, ex-executive director of the Australian Bureau of Agricultural and Resource Economics and Sciences.