Regulator rejects carbon allegations as Labor pledges inquiry

The Clean Energy Regulator has rejected a set of whistleblower allegations over the integrity of its carbon offset program.

Opposition energy spokesman Chris Bowen says the claims are serious and a probe is necessary to restore confidence. Picture: NCA NewsWire / Gaye Gerard

The Clean Energy Regulator has rejected a set of whistleblower allegations over the integrity of its carbon offset program, but Labor has vowed to create an independent review of the scheme if it wins a looming election.

Fresh volatility has hit the sector just weeks out from a federal poll after the former chair of an audit committee lobbed allegations that most of the carbon credits issued by the regulator were flawed, while new market rules from the Morrison government have upset many in the industry.

Andrew Macintosh – an ANU professor and former chair of the Emissions Reduction Assurance Committee – this week revealed a series of problems with the ­government’s Emissions Reduction Fund, which is run by the regulator.

It directly contracts for the purchase of Australian Carbon Credit Units from carbon offset schemes such as revegetation on pastoral properties, energy efficiency projects run by big energy users and even promises by farmers to end or avoid land clearing.

Mr Macintosh alleged “proponents are being issued ACCUs for growing trees that were already there when the projects started” among other charges and called for an independent investigation to explore the Clean Energy Regulator’s administration and the broader suitability of the Emissions Reduction Fund.

The Clean Energy Regulator said it stood by the Emissions Reduction Fund, describing it as a “a robust offsets scheme with a high degree of integrity”, and said complaints about several of its carbon methods were unfounded.

It said the human-induced regeneration method – which allows landholders to earn ACCUs for regenerating native forests by changing land management practices – had high integrity standards. Forest cover results were positive in NSW and Queensland and exceeded expectations.

Opposition energy spokesman Chris Bowen said he held concerns about the Emissions Reduction Fund and would launch a review should Labor win government at a May poll.

“This report by Professor Macintosh was concerning. Now carbon trading, Australian credit units are very important and will be increasingly important, including under us, and I support the carbon trading system – I support ACCUs. But I also want to ensure that they do have integrity,” Mr Bowen told ABC Radio on Friday.

“I want confidence in the system and I want a short review to ensure confidence. These are complex matters – the human-induced regeneration scheme and the landfill gas carbon abatement methods, they’re all complicated matters,” Mr Bowen added.

“I’m not a scientist, I would want independent advice, giving me the confidence and the Australian people confidence that the ACCU market is functioning as it should. That’s what we would deliver if we do win the election and I would welcome Angus Taylor making a similar commitment.”

Federal Energy Minister Angus Taylor said the Clean Energy Regulator had challenged many of Andrew Macintosh claims as ‘‘false’’, and the Emissions Reduction Fund was the world’s largest and most successful national offset scheme.

The Morrison government made a major change to Australia’s carbon offsets market earlier in March, giving owners of land-based schemes the right to sell ACCUs on the open market rather than to the Commonwealth at lower prices.

The move saw the price of ACCCs crash by more than a third given market fears of an oversupply, consultancy RepuTex said.

“While potential remains for buyers to return to the market, many participants remain watchful as they wait to see how a forecast large volume of new supply from existing fixed delivery contracts will be made available to the market,” RepuTex said.

The consultancy has previously raised fears the move could halt new projects.

“Over the last six months carbon project developers had been busy lining up a pipeline of new sequestration projects to meet a forecast increase in demand from new corporate net-zero pledges, investor participation, and the conclusion of multi-year monitoring periods under the government’s Safeguard Mechanism.

“At current spot prices, however, many of these new projects are no longer viable, translating into an expected pause in new project development,” RepuTex said on March 9.

Under pressure from investors and the broader community, Australia’s biggest corporations have set new targets to reduce carbon emissions over the next decade.

Fortescue Metals has set by far the most aggressive target, saying it will be net carbon neutral by 2030. Other major industrial emitters such as BlueScope Steel, Orica and Incitec Pivot have also advanced their own plans.