Review of Australia’s carbon credit units announced

The Federal Government has announced the appointment of an independent panel (Panel) to review the integrity of Australian Carbon Credit Units (ACCUs).

The panel, to be comprised of 4 experts, will be led by former Chief Scientist, Professor Ian Chubb, and is tasked to respond to criticisms that have been raised about the integrity of ACCUs issued under Australia’s carbon credit system.

The Panel is to provide its report, including recommendations, by 31 December 2022.

The review is critical given that the emissions reduction or net zero commitments of many, including government and the private sector, will depend at least in part on reputable carbon credits.  The review will also be important to support the foreshadowed changes to the safeguard mechanism, directed at a gradual reduction in emissions from Australia’s largest emitters.

The terms of reference for the Panel include evaluating and advising on:

• the governance of the scheme;
• whether the methods by which ACCUs are generated meet the offsets integrity standards;
• whether current processes are appropriate to manage negative social, economic and environmental impact, including on agricultural productivity and regional communities;
• the extent to which carbon projects are currently supporting positive environment, social and economic outcomes including for biodiversity and the participation of First Nations people; and
• opportunities to maximise non-carbon benefits of projects.

Importantly, the terms of reference appears to be recognising the potential of carbon credits to generate co-benefits, which we already see leading to increased integrity and value in the market.  The terms of reference also direct the panel to evaluate any unintended impacts, particularly on agriculture.

It is expected that there will be broad ranging public consultation with those directly involved in carbon credits, as well as First Nations Groups, business, government and the broader community, including an opportunity for submissions.

By Kathryn Pacey, Partner, Peter Briggs, Partner, Heidi Asten, Partner, Melanie Debenham, Partner, and Timothy Stutt, Partner.