Extract from ABC News
There are few people in the world of carbon credits and emissions reduction policy with the credibility of Andrew Macintosh.
Key points:
- Andrew Macintosh is the former chair of the Emissions Reduction Assurance Committee
- He says Australia's carbon offset market has become "a rort"
- Emissions Reduction Minister Angus Taylor says Australia's carbon credits scheme is seen as one of the best "in the world"
The ANU law school professor is an internationally respected authority on these issues.
He's also been a go-to expert for the Coalition government, serving on its bushfires royal commission panel, the Climate Change Authority and its review into offsetting emissions by heavy industry and agriculture.
For nearly seven years, he chaired the Emissions Reduction Assurance Committee, a statutory body tasked with vetting the integrity of carbon offset schemes under the government's Emissions Reduction Fund.
Now he's blowing the whistle.
"I'm a big believer in these schemes and the ability to use offsets to help cut emissions and to help lower the cost of doing so," he told the ABC.
"But what we're seeing is a real inability to operate schemes like this with high integrity.
"An environmental market without integrity is not an environmental market," he says. "It's a rort.
"And I feel that Australia's carbon market is just that – it's degenerated to become a rort."
For years, he says, he stayed within the tent, accepting compromises and fighting a losing battle to convince the government and the Clean Energy Regulator, which oversees the schemes, that the approach it was taking was wrong.
"People didn't want to admit the mistakes that they made, and they sought to bury what we had found. There's a lot of denial, there's a lot of money at stake. And there's also an incredibly politically charged space."
He has decided to go public with his concerns about the hundreds of millions of dollars the government is paying to projects designed to cut emissions.
And he's pulling no punches.
Australia's commitment to achieve "net zero" emissions by 2050 rests in part on a suite of schemes that rewards landholders and other businesses for taking steps to capture carbon – in trees, or in the soil – or to otherwise curb greenhouse gas emissions.
For every tonne of greenhouse gases stored or avoided, projects registered under the government's Emissions Reduction Fund receive a carbon credit, known as an Australian Carbon Credit Unit or ACCU.
Most of these carbon credits have been purchased by the government and go towards meeting Australia's greenhouse gas reduction targets.
A growing number are being sold into a private marketplace where there's soaring demand from businesses that want to offset their own emissions.
Support for these programs is bi-partisan.
Labor is relying on them for about a fifth of the reductions it needs to hit its 43 per cent emissions reduction target by the end of this decade.
Emissions Reduction Minister Angus Taylor points to soaring demand for Australia's carbon credits as proof of their integrity.
"It's seen as one of the best crediting schemes in the world," he says.
"We've seen companies around Australia wanting access to more credits as part of their emissions reduction programs.
"I think the facts are very clear. When you have people who are prepared to pay 10 times more for credits in Australia, when you see and I hear regularly around the world, people looking at ACCUs, the credits that are created under the Emissions Reduction Fund, and the regard with which they are held, I have great confidence in the strength of this program."
But the man his government has often turned to on these issues believes the minister is wrong.
"I'm not saying all credits are devoid of integrity," Professor Macintosh says.
"But it appears from the analysis we've done, and the evidence we have seen, that somewhere in the order of 70 to 80 per cent of the credits that have been issued are markedly low in integrity."
Professor Macintosh believes that integrity standards set down in legislation are being compromised – especially a critical requirement that all greenhouse gas reductions under the schemes be additional to what would have happened in the normal course of events.
The Clean Energy Regulator, which registers and regulates these projects, dismisses the allegations as completely false.
Suite of methods
A suite of different types of greenhouse gas offset schemes are permitted under the government's Emissions Reduction Fund, but three dominate:
- A forest regeneration scheme called "human-induced regeneration of a permanent even aged forest", usually short-handed to human-induced regeneration;
- Avoided deforestation, which rewards landholders for not clearing trees they have permits allowing them to clear;
- And a landfill gas scheme that pays businesses operating waste dumps for curbing emissions of methane, a powerful greenhouse gas.
Professor Macintosh has major concerns about the way all of these emission reduction methods are being run – especially the human induced regeneration forest program.
He believes the Clean Energy Regulator is registering projects in areas where forest will never be sustained.
When you think of native forest, the arid and semi-arid outback regions of Australia might not be the first places that come to mind.
But this is where nearly all of the human-induced regeneration projects are located.
Professor Macintosh says: "We're seeing projects registered in the deserts of South Australia, the deserts of Western Australia. Even projects in the pipeline near Alice Springs."
Professor Don Butler, an ecologist and an expert on what drives vegetation growth in these regions, shares his concerns.
"As time has gone by, we've seen that the projects have been in the wrong places," he says. "More and more we saw projects going into the arid zone."
The human-induced regeneration projects are based on the theory that native forest that once existed is being suppressed, either through grazing by livestock or feral animals, or by continued land clearing.
Professor Butler is among a number of ecologists who reckon that's a furphy, and grazing by livestock doesn't make much of a difference to the level of tree cover.
"Ultimately, it's rainfall that drives tree cover change in arid zones," he says.
"Forest cover may arise in a really wet year. But it's going to go away again in the next drought. There won't be a permanent change."
But this view is facing fierce resistance.
Macintosh replaced with coal lobbyist
In early 2020, Andrew Macintosh left the integrity body for the carbon offset schemes to take up a role on the federal government's bushfires royal commission.
Angus Taylor replaced him with the former coal, oil and gas industry lobbyist David Byers.
During a long career, Mr Byers was interim CEO and deputy CEO of the Minerals Council of Australia, CEO of the oil and gas industry lobby APPEA, CEO of the research and promotional body for the carbon capture and storage industry, the CO2CRC, and also served as a government relations manager with BHP and Exonn Mobil.
Alongside Mr Byers on the integrity body, the minister also appointed Dr Brian Fisher — a highly qualified agricultural economist, but one at the centre of controversy over consulting work for the government and the mining industry, which produced high estimates of the cost of taking action to cut greenhouse gas emissions.
Mr Byers does not share his predecessor's concerns.
"We've done a full statistical study of that, which did show that the [human-induced regeneration] projects were significantly increasing regrowth independent of climatic factors and rainfall."
The study was co-authored by a longtime former colleague and business associate of Brian Fisher, Stephen Beare.
Both men worked at the Australian Bureau of Agricultural and Resource Economics (ABARE) and as consultants.
Stephen Beare was also a principal at CRA International, which had a history of arguing the case against strong action on climate change.
The report Mr Beare co-authored with statistician Professor Raymond Chambers found "strong but not conclusive statistical evidence" that the human-induced regeneration scheme was effective.
Last November, the Emissions Reduction Assurance Committee issued a media release hailing that finding, minus the qualification.
Yet the fine print in the Beare and Chambers report raises other serious questions.
Its data suggests that 11 to 13 per cent of projects contained existing forest cover in areas used to estimate the amount of carbon stored, which should have been excluded under the program rules.
It said "a substantial proportion of projects in Queensland" appeared to have produced negative impacts.
"There were a bunch of projects that were grossly underperforming yet were still getting carbon credits," says Professor Macintosh.
"How is it possible this wasn't picked up previously by the Clean Energy Regulator?"
According to the Clean Energy Regulator, it has done an in-depth assessment of eight projects that were identified as possibly non-compliant and only half were still under investigation — less than three per cent of all the projects in the Beare and Chambers study.
A team of six experts including professors Macintosh and Butler has written a critique of the Beare and Chambers report, which includes the results of their own study of satellite data.
It found that about half of all projects examined had gone backwards.
"We've paid out hundreds of millions of dollars," says Don Butler, "for next to no outcome."
The regulator says the academics do not have access to precise data on where the areas used to estimate carbon levels in the projects are located, which is protected by legislation, and that may have skewed their results.
Professor Macintosh has another concern about the human-induced regeneration program.
He says the regulator is misapplying the rules by allowing projects to go ahead on land that already contains significant amounts of woody vegetation — which skews the estimates of how much new carbon they will store and leads to projects being overpaid millions of dollars.
On this issue, he has some heavyweight backing: the leading scientific experts in this field at the CSIRO.
For more than 22 years, Keryn Paul has been the CSIRO's national science leader in measuring and modelling carbon stored in forests. Dr Stephen Roxburgh leads a team at the CSIRO devoted to investigating forest growth and carbon sequestration.
Both these scientists worked with the Australian government to develop and update the carbon accounting model and are experts on its application.
The ABC has obtained an email exchange where these scientists were asked, in technical language, about whether the approach the Clean Energy Regulator is taking would properly measure the amount of carbon being captured on sites that already had significant tree cover.
Their response was blunt: "The answer to the question is no."
They sent a detailed paper to the Emissions Reduction Assurance Committee outlining their concerns.
Their objections have to do with the basic science of tree growth.
Trees compete with one another for water, sunlight and nutrients. Where there are already plenty of trees, new vegetation will grow more slowly, store less carbon, and there will be less potential for new growth.
But, the scientists say, Australia's carbon crediting rules assume that such projects are starting from a baseline of zero, or negligible, tree cover – leading to an overestimate of how much carbon is being sequestered, and projects being over credited and overpaid.
David Byers dismisses this.
Asked why the integrity body and the regulator were ignoring the advice of the CSIRO's leading scientists in this area, he said:
"We have full respect for the involvement of CSIRO. It just so happens in this set of circumstances that we don't agree with some of the advice coming from a couple of CSIRO scientists, but we thoroughly investigated that. There's been no lack of endeavour in trying to get to the bottom of that issue, and we found no evidence."
Angus Taylor told 7.30, "The advice the clean energy regulator gives, the advice it receives is based on a broad range of sources. That's as it should be. And they have been enormously successful.
"Look at the outcomes of 100 million tonnes of abatement delivered, over 200 million contracted, 70 million in the last year alone. Well-regarded credits that are well priced in the market significantly higher than credits in other countries. These are the outcomes that matter.”
But Andrew Macintosh says "it's not just the CSIRO".
"We have the same concern. The people who built the [carbon accounting] model, the people who calibrated the model, have the same concern, and yet our concerns are not being taken seriously."
The Clean Energy Regulator said all of the human-induced regeneration projects under the government's Emissions Reduction Fund "must undergo at least three audits, which also check abatement claims, and regular regeneration checks".
“If trees are not growing according to modelled growth paths, crediting can be suspended until tree growth catches up. In extreme circumstances, inadequate tree growth can result in ACCUs being relinquished – but this has never actually occurred.”
'Let people see what's actually going on'
As a man who has received numerous government appointments, and considerable government research funding, there could be much to lose and little to gain from being so outspoken.
"There's almost certainly going to be some sort of retribution," Professor Macintosh says.
"I assume people will try to ensure that I don't get contracts from the government in the future, I would assume that people will ensure that I don't get other jobs working with the government in the future."
The government, the regulator, the industry, and the new head of the integrity body all maintain the strong reputation Australia's carbon credits enjoy is well deserved.
"We are very determined to ensure that the Australian Carbon Credit Units keep the reputation for integrity that they have," says David Byers.
"And it's an international reputation as well as the national reputation."
If the critics are right, the implications are profound.
"It's actually resulting in increased emissions because we get the increase in emissions from the large polluters, but we don't get the offsetting reduction."
If emissions reductions are overstated, or would have happened anyway, it could compromise Australia's ability to deliver on commitments to the global community.
Businesses that have relied on the resulting carbon credits to offset emissions could face a backlash from investors, financiers, and regulators – and could even be sued.
"The government, whatever colour it is, needs to take immediate action to shut down the problematic methods and to make reforms to ensure that low integrity projects stop receiving carbon credits," Professor Macintosh says.
"We also need to have greater transparency. The public can't have confidence in a market like this, where there's so little information that's made publicly available. So let in the light, let people see what's actually going on.
"Ultimately, we also need a full independent inquiry into what has occurred.
"That inquiry must have the powers to compel people to give evidence, because we have to find out why this has occurred, and if there has been wrongdoing, if there's been maladministration and the people who are responsible for it should be held accountable."
Watch this story on 7.30 on ABC iview.
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