Aerial view of rainforest ©Kalyakan - stock.adobe.com

Aerial view of rainforest ©Kalyakan - stock.adobe.com

Improving integrity in Australia’s carbon market

25 Jan 2023

Keywords

WWF-Australia statement on the Chubb Review

The World Wide Fund for Nature-Australia welcomes the findings of the review, led by former Chief Scientist Professor Ian Chubb, into Australia’s carbon credit scheme.

WWF-Australia believes that the key recommendations of the review report, if implemented by government, should strengthen the integrity of carbon credit supply in Australia and help restore public confidence in carbon markets.

WWF-Australia is convinced that carbon markets can help deliver a net zero emission future, in line with the commitments in the 2015 Paris Agreement on climate change. However, carbon markets must also align with the environmental mitigation hierarchy. This states that polluters should prioritise abatement of greenhouse gas (GHG) emissions at source, in their own operations, using carbon credits only as a last resort to address residual emissions.

Whilst WWF notes that this issue was not part of the review’s terms of reference, we firmly believe that guidance on the mitigation hierarchy and how carbon credits are used needs to be much clearer.

Nevertheless, WWF-Australia welcomes many of the recommendations in the review report. In particular, we support proposals to facilitate participation by First Nations Australians in the carbon market. Key recommendations include stronger assurance of Free Prior and Informed Consent before Australian Carbon Credit Unit (ACCU) projects are registered on Native Title lands, as well as capacity building for First Nations communities to develop ACCU generation methods and projects.

WWF-Australia also welcomes the recommendations to strengthen the governance of the ACCU scheme, notably by separating key administrative functions to avoid conflicts of interest, and seeking advice from the Climate Change Authority. Additional recommendations to improve scheme transparency and ensure positive ACCU project outcomes, including verification of social and environment co-benefits, should be enacted urgently.

Much of the review, and recent commentary about it, focuses on the validity of methods used to generate ACCUs. The review defends one widely used method (Human Induced Regeneration), calls for suspension of another (Avoided Deforestation), and revision of a third (Landfill Gas).

Continual review and strengthening of ACCU generation methods, based on the latest science and technology, is critical to ensure the credibility and effectiveness of carbon markets. The Chubb Report facilitates this outcome by recommending an enhanced method development and review process, rigorous audits of projects, and greater data transparency – all essential measures to improve the quality of carbon credit supply, as well as public confidence in the scheme.

WWF-Australia is committed to working through cross-sectoral partnerships to increase the integrity and efficacy of Australia’s carbon market. We engage across the public and private sectors to pursue complementary pathways to reduce GHG emissions that also deliver wider nature positive and community outcomes.

At a global level WWF is a founding partner of the Carbon Credit Quality Initiative (CCQI), providing transparent information about the quality of carbon credits to help buyers determine what types of credits are more likely to deliver emission reductions as well as social and environmental benefits.

One local WWF initiative is the Koala Friendly Carbon pilot project, an innovative partnership with Climate Friendly and the NSW government. This project involves planting koala food and habitat trees, generating both carbon credits and benefits for local wildlife.

Project partners are working together to ensure best practice outcomes, by targeting climate refugia regions (where wildlife can thrive in the face of changing climate conditions), by designing plantings to consider fire and flood risks, and by committing to keep trees in the ground for at least 100 years.

In addition, by using the independent Accounting for Nature Framework, WWF developed an accredited method (including scat surveys to measure koala activity levels) to verify that koalas are benefiting from the plantings financed from the sale of carbon credits.

More generally, WWF-Australia supports ongoing dialogue and efforts to improve Australia’s carbon credit scheme, as part of wider efforts to engage business and industry, including landholders, in addressing the climate and biodiversity crises.

Along with efforts to improve the integrity of carbon markets, Australia also needs more stringent regulation of pollution, vastly increased investment in low carbon technologies, as well as targeted incentives for emissions reduction measures, regenerative production practices, and renewable energy supplies and uptake.

Proposed reforms to the Federal Government’s Safeguard Mechanism are an important complement to the Chubb review. If enacted, these reforms mean that Australia’s largest polluters will be required to reduce their GHG emissions by at least 30 percent by 2030.

 

A key question is to what extent companies subject to the Safeguard Mechanism will be allowed to use carbon credits (offsets) to meet their statutory obligations.

The carbon market has an important role in the energy transition and can help finance high integrity emissions removals and reductions. However, while ACCUs can help to reduce the costs to emitters of achieving net zero targets, WWF-Australia believes that carbon credits should be used sparingly. They are no substitute for deep and rapid reductions in GHG emissions at source, based on a just transition with firm, time-bound exit plans for removing fossils fuels from Australia’s economy and export markets.

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