Carbon credit ‘trickery’ would put climate target at risk, experts warn

Hugh Grossman, chief executive of modeling firm RepuTex, argued against industry averaging and warned that carbon credits are actually being spent through “accounting tricks” that would jeopardize the government’s climate target.


“The environmental integrity of the program – and Australia’s 2030 target – could collapse, which would require greater mitigation efforts from other sectors,” Grossman said in an interview.

But the Grattan Institute’s climate and energy director, Tony Wood, said the program will produce winners and losers no matter how it is designed, setting a race against the clock for the government to meet the emissions cuts needed to meet its climate target.

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“With its climate target, the government has imposed a great deal of pressure on itself. Australia has never had this before and the result is some very difficult issues for the minister,” Wood said.

Grattan’s proposal states that industry averaging would create a useful market for the credits earned by those below the emission baseline.

“Industry averages are a more transparent and equitable way to set baselines… [they] will also improve over time as plants respond to the signal to reduce emissions and as new, more efficient plants are built.”

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However, Grossman said that any credit issued to a company “must represent a unit of emissions that can be used to help meet Australia’s climate change targets”.

“Unless a credit represents a tonne of emissions or a tonne removed, stakeholders would have little confidence that the reductions reported by the industry are real,” he said.

Ten LNG plants are among the top 20 polluters.


Grossman said under the industry median proposal, five of those facilities would be classified as underperforming and issuing loans that “could be banked or sold for an unexpected profit.”

“These plants would not be responsible for their emissions,” he said. “While this aims to reward ‘cleaner’ processes, in practice half of all fossil fuel producers could simply receive a financial benefit instead of complying with any emissions restrictions.”

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Climate activists are pushing to rule out any exemptions from the mechanism, set up by the coalition in 2016 but dormant until the Albanian government went to the May elections and promised lower pollution limits.

Break through the noise of federal politics with news, perspective and expert analysis from Jacqueline Maley. Subscribers can sign up for our weekly Inside Politics newsletter here.

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