One in five carbon credits issued by the Federal Government’s $4.5 billion Emission Reduction Fund (ERF) do not represent real abatement and are essentially ‘junk’ credits, according to new research by the Australian Conservation Foundation and the Australia Institute Climate & Energy Program.

Key Findings:

• Australian Carbon Credit Units (ACCUs) generated by the ‘avoided deforestation’ method of carbon abatement are awarded to landholders who surrender land clearing permits and commit to retain vegetation on their properties.
• The Australian Government has committed to buy 26.3 million ACCUs from avoided deforestation projects, using around $310 million of taxpayers’ money, to meet its climate targets.
• Analysis shows projects are being issued ACCUs for retaining vegetation that was never going to be cleared, meaning anyone purchasing these credits is buying non-existent abatement.
  • The avoided deforestation method is currently responsible for more than 20% of the total number of ACCUs that have been issued under the ERF.
• Analysis shows the avoided deforestation method fails to meet legislated offset integrity standards.

“The lack of integrity relating to Australia’s carbon abatement methods calls into question the overall value of the ERF and its success as a mechanism to help Australia meets its climate targets,” said Richie Merzian, Climate & Energy Program Director at The Australia Institute.

“There is legislation in place that requires landholders not be paid to avoid emissions that were never going to be generated. The Australian Government has failed to ensure that requirement has been met.

“Just as it would be a poor use of taxpayer funds to pay non-smokers to stop smoking, this method of accounting sees taxpayer dollars paying to retain vegetation that was never going to be cleared. Our research shows that many of Australia’s carbon credits could be little more than hot air,” Mr Merzian said.

“The Emissions Reduction Assurance Committee exists purely to ensure the integrity of the ERF. In 2019, we wrote to the Committee raising serious concerns about the integrity of the methods and the ERAC conducted a review. What happened to the review?” said Annica Schoo, Lead Environmental Investigator at the Australian Conservation Foundation.

“Two years later, the Committee has not released any findings. In that time, the Clean Energy Regulator has issued approximately $68 million worth of questionable carbon credits to projects that use the avoided deforestation method.

“Our findings demonstrate that the avoided deforestation method—which makes up one in five of all Australian carbon credits—is deeply flawed. The Committee’s review should have reached this conclusion at the beginning of the Morrison Government’s term.

“Protecting and regenerating nature in Australia is an important part of the climate solution. Methodologies must be designed with integrity to ensure benefits to nature and the climate are being realised.

“The Morrison Government should be embarrassed by its flagship climate policy. Australians want real climate action, not cheap tricks and hot air,” said Ms Schoo.

The Australia Institute’s statement in response to the Clean Energy Regulator can be found here.