Submission: Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill
Climate Integrity welcomes the opportunity to provide feedback on the proposed Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill.
Submission Summary
Climate Integrity welcomed the opportunity to provide feedback on proposed legislative amendments, that seek to reform aspects of the Australian Carbon Credit Unit (ACCU) scheme.
Climate Integrity raised the following three core issues in relation to the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill (‘the Bill’). These concerns reflect foundational issues with the principles of carbon offsetting: that it must remain a limited practice for accounting for residual emissions after all efforts to reduce emissions have been exhausted, employ high-integrity emission reduction measures backed by the best available science, and not detract from prioritising long-term reductions in greenhouse gas emissions.
1. While the Bill makes some important steps towards addressing Australian Carbon Credit Unit (ACCU) integrity concerns, it fails to address the structural integrity failures inherent in carbon offsetting regimes, including ACCUs.
Since their inception, the design and purpose of both the ACCU scheme and the Safeguard Mechanism have evolved considerably. The ACCU scheme has become Australia’s primary domestic carbon crediting regime and presently plays a significant role as a mechanism for compliance under the Safeguard Mechanism.
However, the ACCU scheme has suffered from material and unresolved concerns about the environmental integrity of the carbon credits issued. Well-documented analyses of carbon crediting methodologies, including those used under the ACCU Scheme, have demonstrated systematic challenges with additionality, over-crediting, leakage and permanence.
The CFI Act should be amended to restrict the issuance of ACCUs to only emissions removal activities that achieve demonstrable benefits to the climate, and low integrity ACCU methods must be phase-out with urgency.
2. Operation of the ACCU Scheme must recognise the inherent limits of carbon offsetting approaches and the trade-offs associated with land-use practices, including permanence risks and opportunity cost that accumulate for future generations.
There is limited global capacity to generate high-integrity and long-term carbon credits, and Australian capacity to offset residual emissions should be reserved for the most valuable and hardest to abate activities.
Since its commencement the ACCU Scheme has been dominated by carbon abatement projects dependent on vegetation and land-use management to reduce or avoid emissions. Yet, carbon stored biogenically in forests, land and marine ecosystems cannot compensate for the CO₂ released from burning fossil fuels. Once in the atmosphere, 20–30% of emitted CO₂ remains for longer than 1,000 years – making fossil fuel-derived CO2 effectively permanent in ways that biogenic carbon storage cannot match.
A responsible policy approach should place clear limits on carbon offsetting use, especially under policy mechanisms like the Safeguard Mechanism that permit the use of ACCUs for compliance, to ensure the resources available to achieve long-term carbon removals are prioritised for truly residual emissions after all other efforts to cut emissions have been exhausted.
3. The ACCU Scheme must not detract from long-term decarbonisation efforts
Carbon offset schemes must not deter or delay genuine mitigation or investment in zero-carbon economic opportunities. Meeting the goals of the Paris Agreement requires reducing emissions as fast as possible. Compliance regimes like the Safeguard Mechanism that permit widespread use of offsets undermine the investment signal companies need to prioritise permanent emissions mitigation. This delays near-term emissions reductions, and jeopardises the world’s chance of meeting the Paris Agreement goals, and Australia’s ability to achieve long-term emissions reduction objectives.
Placing caps on the use of ACCUs under the Safeguard Mechanism, or limiting the number of ACCUs that may be issued for emissions reduction measures at fossil fuel extraction facilities (such as carbon capture and storage projects) could support systemic reductions in Australia’s greenhouse gas emissions.
As currently designed, the Safeguard Mechanism enables large fossil fuel companies to rely upon the use of ACCUs to justify the expansion of fossil fuel production. This was evident in the recently published 2024–25 baselines and emissions data showing the sectors with the largest surrenders of ACCUs under the Safeguard Mechanism were fossil fuel industries (with facilities involved in coal, oil and gas production representing almost two-thirds of all ACCU surrenders).
In the context of amendments to the ACCU Scheme, policies like the Safeguard Mechanism must be reformed to ensure systemic reductions in the production of fossil fuels and greenhouse gas emissions are prioritised over a reliance on carbon offsetting.
