Australia carbon credit system is under scrutiny this week. Andrew Macintosh, the former head of the Australian government Emissions Reduction Assurance Committee, publicly claims the carbon credits issued by Australia’s clean energy regulator are flawed, and “largely a sham”.
Mr. Macintosh says around 80% of the carbon credits funded by public money are fraudulent and wasting the taxpayers’ money.
The Australian government buys carbon credits from rural landowners and other businesses through the Regulator’s $4.5 billion “direct action” emissions reduction fund. Companies under pressure to reduce their emissions are also buying those credits.
According to Macintosh, the government is rushing to drive emissions down, therefore, it has made a conscious decision to prioritize building an abundant supply of cheap offsets over ensuring their integrity.
The clean energy regulator has $4.5 billion to spend on Australian Carbon Credit Units (ACCUs). Those units are the financial instruments awarded to eligible energy-efficient, renewable energy and carbon sequestration projects that reduce emissions and help drive the country’s carbon footprint down.
Out of those $4.5 billion, the regulator has spent $1 billion so far, buying over 100 million ACCUs from 1000 projects, with contracts outstanding for another $1.6 billion.
The former head of the Committee and his colleagues analyzed 119 human-induced regeneration projects in New South Wales and Queensland. The findings show that the government issued 17.5 million carbon credits to forest projects where each credit meant to represent one ton of CO2 being absorbed by growing trees. The credits were issued to them but the total forest area had barely increased.
For 59 of those projects, the amount of forest actually reduced. Despite that, they still received 8.2 million credits, worth more than $100 million. The analysis also showed that two-thirds of the claimed cuts in emissions would have happened anyway because the projects were economically viable without carbon credit revenue. That means the credits generated did not represent “additional” cuts in emissions, as required under law.
“People are getting credits for not clearing forests… they are getting credits for growing trees that are already there, they are getting credits for growing forests in places that will never sustain permanent forests and they are getting credits for operating electricity generators at large landfills that would have operated anyway,” said Prof Macintosh.
For those mistakes, Macintosh is blaming the Clean Energy Regulator, as it is the agency being responsible for almost everything: designing and regulating carbon credit methods, advising and providing the secretariat for the committee that oversees the integrity of the methods, and buying credits on behalf of the government. “It is a case study in poor governance,” he adds.
The regulator responded to Macintosh’s critique by rejecting it. It claims both it and the committee had undertaken considerable work using independent experts to test claims made by Macintosh and found no evidence to support them. They also argue that Professor Macintosh has been disproved by more sophisticated independent analysis.
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A spokesperson for Angus Taylor also added that when a chair of the committee, Macintosh had reviewed and signed off on methods that he now claims lack integrity. Macintosh’s response was that he attempted to address the problems with carbon credits while on the committee but had limited success, and regretted he had not taken a stronger stance on some issues.
He also carries on trying to persuade the regulator and other officials they need to act before deciding to go public. Macintosh also highlights he is not against the carbon market and he calls himself a “deep believer” in its ability to drive behavior change and improve environmental outcomes in a cost-effective manner.
However, he sees the government needs to take immediate steps for that market to be worthwhile. According to him, the initial errors in how carbon credits were issued were unintentional, but subsequent attempts had been made to cover up those mistakes.
The government plan includes 20% of emissions cuts by 2050 to come from carbon credits. That makes them essential to Australia’s goal of reaching net zero emissions by 2050. Angus Taylor plans to significantly expand the number of ways under which companies can earn carbon credits. Carbon capture and storage is also one of the recently approved methodologies that allow for emissions reduction credits to be earned.
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Andrew Macintosh criticism seems to be an urgent call for Australia carbon credit system reforms and greater transparency. All carbon credits being issued need to have rigorous and uncompromised processes that ensure for every ton of carbon credit taxpayers money go for, exactly one ton of CO2 will be eliminated from the atmosphere forever. Any failures by the government to ensure the integrity of emissions reductions credits puts into question the whole scheme and the need to have one in the first place.