Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026

Ms SPENDER (Wentworth) (11:37): I rise to speak on the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026. This bill amends three statutes at the centre of Australia's mitigation effort: the Carbon Credits (Carbon Farming Initiative) Act, the National Greenhouse and Energy Reporting Act and the New Vehicle Efficiency Standard Act.

It actions recommendations from the Chubb review and from successive Climate Change Authority reviews. I commend the government for legislating statutory reviews, responding to them and then acting on them. That discipline is rarer than it should be.

But, on process, I note that the bill is currently before a Senate committee, which will report on 24 November. It remains a frustration to those of us in this chamber that we debate legislation without the benefit of that proper review. Why does this bill matter?

The ACCU scheme underpins a multibillion-dollar market. It supports least-cost abatement. It funds environmental restoration and Indigenous land management.

It is not a substitute for decarbonising industry and transport, and we must do that. But it does buy us the carbon budget to solve those problems. A fortnight ago, the UN Environment Programme published Limiting overshoot.

It's the first UN report to concede that breaching 1.5 degrees is inevitable. Best case: we peak at 1.8. The only route back down is net negative emissions—removing more than we emit.

Global carbon dioxide removal today runs at around 2.2 billion tonnes a year, almost all of it land based. That figure has to grow by an order of magnitude. So I believe in carbon removal, because every pathway to a liveable planet now depends on it.

I also believe we must accelerate genuine onsite abatement to shrink the removal task to something we can actually deliver. Those two beliefs are in tension only if you cannot trust the credits, and trust in this scheme is fraying. That is why this bill and the safeguard mechanism review that follows it are so important to get right.

The integrity of the ACCU scheme is not merely a feature; it is the entire product. A credit that does not represent a tonne is worse than no credit at all. It does not merely fail to remove emissions; it authorises someone else to keep making them.

I do support most of what is in the bill. It renames the Emission Reduction Assurance Committee to the Carbon Abatement Integrity Committee. It tightens who can be appointed, requires expertise the committee has not always had, mandates First Nations representation and bars members from paid work that conflicts with their duties.

Those are sound reforms to expertise, independence and transparency. It also removes the option to conditionally register products on native title land before consent is obtained. As written, the current law was inconsistent with free, prior and informed consent, and it undermined the bargaining position of one party.

Removing it, again, is right. The bill also amends the newness requirement so that research and development can proceed without destroying additionality, consistent with both Chubb and the authority. I support that.

We need far more R&D in this space. But newness is the test that stops us paying for things that were going to happen anyway. Loosen it, and someone has to draw the line between genuine R&D and a project reaching backwards for a justification.

The regulator must be able to tell the difference. I would also say this: the most important methods we do not yet have are for engineered and novel removals. That work should be prioritised to unlock R&D.

Finally, I support the bill reducing regulatory burden and streamlining administration. We should be doing more of that in every part of the economy. But I do have two main concerns: the method transition declaration and the departure from least-cost procurement.

My first concern is with the method transition declaration. At present, if a method is revoked or expires during a project's crediting period, the proponent is grandfathered. They keep earning under the original method unless they choose to move.

That gives certainty. It also leaves integrity problems unresolved, which is corrosive to the entire scheme. Under this bill, the minister may declare a transition to all projects under a method where three things hold: (1) that the method fails to offset integrity standards, (2) continued issuance would pose a material risk to the integrity of the scheme and (3) there is another method to move on to.

Projects then have between six months and two years, or five years for sequestration, to transition. Many stakeholders oppose this power for different reasons. Project developers say it introduces sovereign risk, strands capital already committed and invents a class of low-integrity credits that will be repriced the moment a method is even investigated.

Environmental lawyers are concerned that the threshold is set so high it may never be used, and that material risk is undefined and left to ministerial discretion. Setting the availability of an alternative method as a prerequisite means the worst methods—the ones with nowhere to send the projects—are the ones that escape. Both concerns are pointing at the same hole: nobody outside this building knows what this power is actually for.

The government has not said what circumstances it contemplates for a bar set at simultaneously failing the integrity standards and threatening the whole scheme and having somewhere else to go. So we can only speculate. Avoided deforestation and human induced regeneration have well-documented problems, and together they account for the largest share of ACCUs ever issued—HIR alone for roughly a third.

Under the HIR rules, projects face a late-stage reconciliation. Around year 15, the project has to demonstrate the forest cover it was modelled to achieve, measured against what is actually on the ground. Where the abatement has not materialised, credits already issued are handed back.

That gateway is the one point in the design where the model has to meet with reality. The integrated farm and land management method, the most likely destination for these projects, carries no equivalent requirement. Follow that through.

The prospect of a very large relinquishment across a third of the market is, on any reading, a material risk to the integrity of the scheme. That is the trigger for a declaration. What is available under this bill is to move those projects onto a method where the model isn't tested against reality.

The test would be extinguished at precisely the moment it became meaningful. I'm not alleging that is the intention. I'm saying that the drafting permits it, and that a power whose stated purpose is to raise integrity should not be capable of laundering a problem instead.

A functioning market and a high-integrity market are not alternatives. A market in credits that do not represent tonnes is not functioning; it is just liquid. The method transition declaration is an attempt to hold both at once, and it can, but only if moving a project between the methods can never lower the standard it is held to.

As to why an exceptional power is needed at all, the government has not said, and we are unlikely to find out. The Clean Energy Regulator Act binds officials to secrecy on the threat of two years imprisonment, so we are asked to legislate a remedy without being told the disease. My second concern is value for money.

An ACCU represents one tonne of abatement. That is a commodity. The government's job is to maximise the carbon abated for a given sum of public money—and that is not my preference; it is the statute.

Section 20G(3)(b) requires a purchasing process to 'maximise the amount of abatement the Commonwealth can purchase'. This bill replaces least-cost abatement with value for money and leaves that requirement untouched. Either the government intends to purchase less abatement for the same money or the two provisions do not sit together.

It should tell us which. The assistant minister says the change will mean future purchasing can be done in a way that supports strategic priorities as they evolve over time, but which priorities and who sets them remains unspecified. The priority of this bill is to reduce emissions—full stop.

The problem with this government is it hangs so many objectives off a single program that the program costs more and delivers less of what it was built for. And where there is discretion, there is risk. Valuing co-benefits is inherently subjective, and subjectivity in procurement is where public money goes missing.

The secretary of a department will decide which outcomes are most meritorious—another opportunity to select favoured proponents in favoured electorates for reasons opaque to the public whose money is being spent. Recent grant program controversies in this space make the point better than I can. The government is no longer the main buyer.

Real demand now comes from the Safeguard Mechanism and from voluntary action. Government should not be buying up the cost curve and leaving the cheap credits for compliance. I want to see covered facilities procuring credits with genuine co-benefits and paying for them.

If the government is to depart from these costs, it should at least state the criteria explicitly and say why, and that departure should be confined to a first-of-a-kind removals project. It should not become an open-ended subsidy for avoidance projects. If projects with high co-benefits are sub commercial, the durable fix is not the Commonwealth paying over the odds; it is a higher carbon price.

That is what the evidence points to and it is what does the work. It drives onsite abatement, it rewards R&D and it brings high-cost projects into the money without anyone in Canberra deciding which ones deserve it. The government's role is not to pick up the largest tab.

It needs to stop thinking that it is. Its job is the integrity of the whole scheme, not only of the credits it happens to buy. Credits that do not represent real abatement should not be issued in the first place.

Last week the Senate spent half an hour and a division deciding whether a methodology determination had integrity. That is what happens when machinery for settling integrity questions is not trusted to settle them. This bill is an opportunity to repair the machinery.

It does not do that yet. I encourage the government to support the amendments from the crossbench.