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Submission in response to the Independent Review of
Australian Carbon Credit Units
Prepared by
Environmental Justice Australia
3 October 2022
About Environmental Justice Australia
Environmental Justice Australia (EJA) is a national public interest legal centre. We use the law to empower communities, to protect and regenerate nature, to safeguard our climate and to achieve social and environmental justice.
We are proudly non-profit, non-government, and funded by donations from the community.
Our legal team combines technical expertise and a practical understanding of the legal system to protect communities and our environment.
We run legal cases and advocacy campaigns to stop the expansion of climate damaging fossil fuels and make sure Australia contributes our fair share to reducing global emissions. EJA also has a long history in advocating for a just energy transition and ensuring any public funding for fossil fuels is rigorously tested against our laws.
At this critical time, EJA recognises that financial support and institutional responses to climate risk must be directed at efforts to reduce real-world emissions and the protection of communities, ecosystems, flora and flora.
For further information on this submission, please contact:
Retta Berryman
Senior Lawyer
Environmental Justice Australia
T: 03 8341 3108
E: retta.berryman@envirojustice.org.au
Submitted to:
ACCU Review Secretariat
Department of Climate Change, Energy, the Environment and Water
GPO Box 3090 Canberra ACT 2601
ACCUReview@dcceew.gov.au
Executive summary
1. EJA welcomes the opportunity to make a submission in relation to the Independent
Review of Australian Carbon Credit Units (ACCUs).
Outline of submission
2. This submission will focus on the legal settings and governance of the current scheme for
the issuing of ACCUs under the Carbon Credits (Carbon Farming Initiative) Act 2011
(Cth) (CFI Act). Broadly, EJA submits that the scheme’s settings, structure and
legislative requirements are not appropriate or well-adapted to ensure good governance
and confidence in the integrity of the scheme.
3. This submission highlights the following concerns around integrity, transparency and
governance in the ACCUs scheme, taking as an example where relevant, the making of
the Carbon Credits (Carbon Farming Initiative – Carbon Capture and Storage)
Methodology Determination 2021 (Cth):
a. The key principles of effective carbon offsetting schemes and the deficiencies in
the ACCUs scheme;
b. Integrity concerns in the development of the methods for the creation of ACCUs;
c. Governance concerns with the Clean Energy Regulator and the Emissions
Reduction Assurance Committee (ERAC); and
d. Transparency and accountability concerns.
4. It also briefly highlights the critical importance of this Independent Review at this time,
having regard to other law reform proposals currently under consideration which would
seek to adopt or continue certain features of the ACCUs scheme.
Overview of recommendations
5. In summary, this submission makes the following recommendations for changes to the
CFI Act and ACCUs scheme:
A. The reintroduction of an express requirement under the CFI Act that the Minister
may only approve methods that comply with each of the offsets integrity
standards, supported by relevant, authoritative scientific results.
B. That an independent assessment be conducted of all existing methods against
the offsets integrity standards, and take necessary action to vary or revoke
methods that are not compliant.
C. That the statutory processes for the development and approval of new methods
and the review of current methods expressly incorporate appropriate expert
advice across relevant fields, including academia, industry and non-government
organisations.
D. That ERAC’s scope should be limited to matters concerning the offsets integrity
standards or matters directly incidental to ensuring those standards are met.
E. That the Panel consider whether to amend s 262 to expand the concept of
‘conflict of interest’ to require the disclosure by ERAC members of potential,
perceived and actual conflicts of interests arising in relation to a matter being
considered or about to be considered by ERAC.
F. That secrecy provisions are removed from the CFI Act and the Act is amended to
impose a positive statutory duty on agencies involved in the administration of the
scheme to regularly publish information on the performance of the scheme.
G. That the CFI Act be amended to provide for third party rights to seek reasons and
administrative review of key decisions made under the scheme, as well as
extended standing provisions for third parties to seek judicial review (ie, a
challenge made in relation to the lawfulness of the decision only) under the Act.
Key principles of effective carbon offsetting schemes
1. The ACCUs scheme is the first limb of the Emissions Reduction Fund (ERF). It provides
a crediting mechanism under which private entities earn credits for their emissions
abatement activities in accordance with methods approved under the CFI Act.
Integrity and transparency are crucial
2. There is theoretical acceptance of a limited role for carbon offsetting schemes in
achieving net zero,1 particularly for hard-to-abate sectors. However, in order to be a
viable and trusted measure in transitioning to a safe future, such a scheme must be well-
regulated and of high integrity.
3. Authoritative research and commentary on voluntary carbon markets identify the
following key principles of effective carbon offsetting schemes:
a. Mitigation hierarchies within and across sectors are crucial to ensuring that
carbon offsets do not become a substitute for deep emission reductions;2
b. In sectors where the use of carbon offsets is necessary, robust certification
schemes must ensure that emissions credits result in permanent, additional and
verified emissions reductions;3 and
c. Bottom-up and community driven strategies are central to carbon removal policy
and projects.4
4. These principles (and the risks of not adhering to the same) have been endorsed by the
IPCC, IEA, leading Australian barristers and voluntary carbon market initiatives across
the world.5 Although they are often raised in the context of international carbon markets,
they are equally relevant to a domestic carbon market scheme that seeks to incentivise
abatement in order meet international climate change obligations.
5. Similarly, in its Review of International Offsets released in August 2022, Australia’s
Climate Change Authority stated that ‘integrity and transparency are crucial’ in a carbon
offsets market to ensuring that:
a. carbon units represent genuine abatement;
b. participants and observers in carbon markets are able to:
1 See, eg, International Energy Agency (IEA), Net Zero by 2050 – A Roadmap for the Global Energy
Sector, (11 May 2021) < https://iea.blob.core.windows.net/assets/4719e321-6d3d-41a2-bd6b-
461ad2f850a8/NetZeroby2050-ARoadmapfortheGlobalEnergySector.pdf> (IEA Net Zero Report);
Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate
Change, (4 April 2022) < https://www.ipcc.ch/report/sixth-assessment-report-working-group-3/> (IPCC
WGIII Report).
2 The reference to ‘mitigation hierarchies’ refers to the need to prioritising abatement and mitigation measures over carbon offsetting or removal methods. See, IEA Net Zero Report pp 36 and 96.
3 IEA Net Zero Report p 36.
4 IPCC WGIII Report Ch 12.
5 IEA Net Zero Report; IPCC WGIII Report; Noel Hutley SC and Sebastian Hartford Davis, Climate
Change and Directors Duties: Further Supplementary Memorandum of Opinion (23 April 2021) < https://cpd.org.au/wp-content/uploads/2021/04/Further-Supplementary-Opinion-2021-1.pdf>; The
Voluntary Carbon Markets Integrity Initiative < https://vcmintegrity.org/>; The Taskforce on Scaling
Voluntary Carbon Markets < https://www.iif.com/tsvcm>.
i. track what is happening;
ii. have confidence in what units represent;
iii. hold one another to account; and
iv. drive continuous improvement.6
6. It is evident that even in a domestic context, ensuring a robust, high-integrity and
transparent market is essential to ensuring carbon markets achieve their primary goal –
abatement and elimination of emissions – and to foster confidence in the scheme
necessary for it to operate at scale. Put simply, in order for the ERF to achieve its policy
and statutory objectives, the credits produced as part of the ACCUs scheme must have
integrity and represent real world emissions reductions, and the institutional
arrangements for the scheme’s administration must transparently facilitate that outcome.
The offsets integrity standards
7. Under the CFI Act, the legislated criteria that intend to import the key principles of
effective carbon offsets schemes into the ACCUs scheme are the ‘offsets integrity
standards’. Set out in s 133 of the CFI Act, these six standards are said to be ‘based on
international standards and ensure carbon credits issued under methods represent real
emissions reductions that may be counted towards meeting Australian’s international
emissions reduction obligations.’7 In general terms, the offsets integrity standards are
used as a measure against which new methodologies and variations to existing methods
are assessed.
8. Prior to the establishment of the ERF, the offsets integrity standards operated under the
‘Carbon Farming Initiative’ policy. However, the CFI Act was subject to large scale
reform pursuant to the Carbon Farming Initiative Amendment Act 2014 (Cth)
(Amendment Act 2014) in preparation for the commencement of the ERF. With these
changes, the offsets integrity standards were altered,8 and the process for assessing and
making methodologies simplified. Said to provide ‘greater flexibility to develop
methodologies for emissions reduction activities across the economy’, it was also
intended that the reformed scheme for carbon credits under the ERF would ‘[retain] the
same high standards as under the Carbon Farming Initiative’.9
9. It is apparent from the matters that have given rise to this Independent Review,10 that this
has not been the case.
6 Climate Change Authority, Review of International Offsets (August 2022)
, p 3.
purpose and objectives of the ACCUs scheme,23 especially given the integrity and
governance concerns raised elsewhere in this submission.
25. EJA recommends that the CFI Act should be amended to provide for third party rights to
seek reasons and administrative review of each key decision made under the scheme.
EJA further submits that the CFI Act should provide for extended standing rules to enable
relevant third parties to seek judicial review of decisions made under the CFI Act. To
leave the framework for legal rights of review as it presently exists continues the risk that
low-integrity methods and projects will receive accreditation under the scheme with very
limited avenues for legal redress. This will potentially have a very poor effect on the
quality of the scheme.
F. That secrecy provisions under the CFI Act are removed, and that the Act is
amended to impose a positive statutory duty on agencies involved in the
administration of the scheme to regularly publish information on the
performance of the scheme.
G. That the CFI Act be amended to provide for third party rights to seek reasons
and administrative review of each key decision made under the scheme, as
well as inserting extended standing provisions for third parties to seek judicial
review under the CFI Act.
Integrity and governance deficiencies must not be duplicated in other proposed schemes
26. EJA notes that there are two separate legislative schemes in relation to which the
Commonwealth is proposing law reform, each of which has highlighted a role for certain
features of the current ACCU scheme:
a. The Department of Climate Change, Energy, the Environment and Water
(DCEEW) has recently consulted in relation to proposed reforms to the Safeguard
Mechanism which aims to require Australia’s largest greenhouse gas emitters to
keep their net emissions below a ‘baseline’ emissions limit. ‘Safeguard’
participants can currently surrender ACCUs as an alternative to reducing their on-
site emissions. This feature is intended to continue under the reformed scheme.24
b. The DCCEEW has also proposed a new ‘Biodiversity Market’ modelled on the
ACCUs. The Clean Energy Regulator would administer many elements of this
proposed framework.25
27. Whilst the above proposals are outside the of the Panel’s terms of reference in this
Review, they highlight the critical importance of this Review and that it provides strong
23 See further Baxter and Gilligan, ‘Verification and Australians Emissions Reduction Fund: Integrity
Undermined Through the Landfill Gas Method?’ (2017) 4 Australian Journal of Environmental Law
(2017), pp 25-26.
24 DCCEEW, Safeguard Mechanism Reforms: Consultation paper (August 2022) 15.
25 DCCEEW, Factsheet, A Market for Biodiversity (August 2022).
and actionable recommendations, to be addressed before problematic features of the
ACCUs scheme are adopted or replicated elsewhere.
Conclusion
28. EJA thanks the Panel for its consideration of this submission and we welcome any
questions or requests for further material arising from this submission.
29. We look forward to the Panel’s report in due course, and to its recommendations for a
more robust, integrity-driven and transparent carbon credit scheme to supplement the
urgent emissions reduction and mitigation measures necessary to address the climate
crisis.
