Carbon credit doubts remain, as farmers weigh up Chubb review findings, but market holds steady

As the dust settles on Chubb’s review of Australia’s carbon credit system, farmers and the big polluters who depend on them for offsets are weighing what it all means.

Despite claims by whistleblowers that the system is being tampered with, Professor Ian Chubb said it was “basically well designed” and did not share the view that the level of reduction had been exaggerated.

However, it did recommend some changes to the scheme, including suspending further approvals for a key methodology used to offset emissions and tougher rules for others.

The scheme works by awarding a carbon credit, known as the Australian Carbon Credit Unit (ACCU), for every tonne of greenhouse gases avoided or stored by registered projects.

These credits are purchased by the government, which uses them to help meet emissions reduction targets. Some, however, are sold on a private market to companies that want to offset their own emissions.

Avoided deforestation under fire

The Chubb review has recommended that no further carbon credits be issued for “avoided deforestation”.

Former Chief Scientist Professor Ian Chubb
Professor Ian Chubb has discontinued a key method of acquiring carbon credits used by farmers.(Four corners)

This method allows farmers who had a permit to clear their land in North West New South Wales to obtain a credit for failing to clear their land.

Prof Chubb said the clearance permits were so old that it would be difficult to establish an “intent to clear the land”.

This is a significant change because one in five credits issued in Australia is for projects based on this method.

Together with human-induced regrowth of native forests in the dry grasslands of Queensland, New South Wales, Western Australia, South Australia and the Northern Territory, and methane combustion from landfills, they account for three-quarters of all credits.

That figure is based on research by Professor Andrew Macintosh, a leading environmental markets expert who chaired the Emissions Reduction Fund’s Integrity Committee.

A man wearing a white collared shirt.
Professor Andrew Macintosh is not convinced by the Chubb review finding that Australia’s carbon credit system is well designed.(ABC News: Alex McDonald)

He published an article with colleagues who described some of these schemes as “environmental and taxpayer fraud,” and provided the review with what he described as a “mountain of evidence” on the matter.

While Prof Chubb is closing the door on projects based on the “avoided deforestation” method, he believes new rules could be developed allowing for more approvals in the future.

Human-induced regeneration

Two black trays containing small trees sit on the ground amid green hills
The rules governing human-induced regeneration projects are changing.(Rural ABC: Peter Somerville)

The rules governing another controversial methodology, human-induced regeneration, have been tightened.

Professor Chubb has recommended a five-year verification of reclamation projects and wants the energy regulator to publish the results of each evaluation.

He wants all future projects to meet the expectations of the scheme, which is to convert farmland to native forest that can permanently store carbon.

Professor Chubb dismissed concerns about the variability of carbon sequestration as a function of rainfall.

A map of Australia.
The projects registered under the human-induced regeneration method are spread throughout the country.(Supplied: Don Butler)

Richard Eckard is Professor of Sustainable Agriculture at the University of Melbourne and Director of the Center for Primary Industries Climate Challenges.

Professor Richard Eckard on the grounds of the University of Melbourne.
Professor Richard Eckard cautions against “exaggerating” the potential to store carbon in soil because it changes with the seasons.(ABC News: Jess Davis)

He warned that carbon levels would rise in years of good rain and fall again during drought, but said some projects were basing their claims on three years of good rain.

“What will happen when El Niño comes back, we have three dry years in a row, and the barrels of coal come out of the ground again?” she asked.

“The sequestration is not permanent, so that is the problem. We think there is an oversold potential.”

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How does carbon capture and storage actually work?

Doubts remain for the livestock group

Peter Holding farms in Harden in NSW and is a community outreach officer with Farmers For Climate Action.

He is disappointed by Professor Chubb’s findings, but pleased to see that the rules on avoided deforestation projects have been tightened.

“I don’t think much of the country would have been cleaned up anyway, and that’s the problem with additionality.

“Did we really achieve something or did we just pay someone because they managed to get a ticket from the government?”

Farmer in front of a combine
Peter Holding wants to see real emissions cuts and doesn’t think avoided deforestation projects have worked.(Supplied: Peter Holding)

And he wants farmers to focus on how they will reduce their own emissions from diesel-dependent farm equipment.

“It could be ammonia, it could be hydrogen, it could be EVs, who knows, but pretending we don’t have to worry about that is not the answer.”

“We need to stop these misconceptions and start dealing with the real issues of how you will transition your machinery to the new world in less than 10 years.”

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Industry experts say the independent credit plan review is confusing.

Clear signal to the market

John Connor of the Carbon Market Initiative, an independent membership-based organization 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 he said that, together with the changes in the Safeguard Mechanism, he had sent a clear signal to the market.

He said landowners involved in those projects were safe as none of the changes were retrospective, and the establishment of the Carbon Reduction Integrity Committee should improve confidence in the system.

The price of Australian Carbon Credit Units, or ACCUs, has remained stable despite big policy changes.

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