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

Dr RYAN (Kooyong) (10:36): Australia needs to take a closer look at carbon credits and offsets. The stakes are high. Like it or not, carbon markets now play a significant role in Australia's emissions reduction framework.

Well over $1 billion flows through carbon projects in this country every year. Major industrial facilities rely too much on carbon credits to meet their obligations under the safeguard mechanism. Governments, businesses, farmers and investors all have a growing interest in the success of our carbon market.

For Australians to have confidence in the role that carbon credits play as we transition our economy to net zero emissions by 2050, those credits must represent real, measurable and additional emissions reduction. Regrettably, however, that confidence is in short supply. For years, scientists, economists, environmental organisations and market participants have expressed concern about whether or not Australian carbon credit units, or ACCUs, generally represent the emission reductions that they are claimed to represent.

At the same time, many of Australia's biggest polluters have relied more and more heavily on offsets—more heavily, in fact, than they have tried to reduce emissions within their own operations. While offsets may have a role to play in Australia's transition to a clean economy, they were never intended as a pay-to-pollute scheme through which companies can continue polluting rather than undertaking meaningful onsite abatement.

The basic principles which guide the use of offsets are well established and straightforward. First, reduce emissions wherever possible. Second, transition to cleaner technologies and energy sources.

And third, and only then, offset residual emissions that cannot be eliminated. But our biggest polluting companies are buying record amounts of carbon credits, while the heavy industry sector reduced climate pollution by just 2.3 per cent in 2024-25. Mining giant Rio Tinto was Australia's largest user of carbon credits under the safeguard mechanism scheme, surrendering 1.2 million credits in 2024-25.

The company's published climate reporting shows that its global scope 1 and scope 2 emissions barely moved last year, reducing from 31.7 megatonnes of carbon dioxide equivalent to just 31.5. Several other coal and gas companies, like Woodside, Glencore and Peabody, are prodigious users of carbon credits, while the top 10 users account for almost 60 per cent of all credits surrendered.

This pattern has contributed to understandable and rational public scepticism about the role of carbon credits in our climate framework. Perhaps the most influential and respected body of work regarding ACCU methodologies has come from Professor Andrew Macintosh and his colleagues at the ANU, who have argued consistently that Australia's carbon credit regime has failed to deliver real and additional carbon abatement.

Professor Macintosh has described the scheme as a fraud on the environment, a fraud on taxpayers and a fraud on unwitting private buyers of ACCUs, including private households who purchase ACCUs to offset their personal emissions. These concerns led to the commissioning of the Independent Review of Australian Carbon Credit Units, chaired by Professor Ian Chubb.

The Chubb review concluded that the ACCU scheme was essentially sound but made 16 recommendations to improve its governance, transparency, confidence and integrity. The government accepted those recommendations in principle, but the review's central conclusion was not widely accepted. Scientists, climate advocates and environmental organisations argued then, as now, that legitimate concerns about the integrity of methodologies used to calculate the efficacy of carbon offsets have been consistently understated or overlooked.

The central concern then, as it is now, was whether the credits being generated represent genuine emissions abatement. The controversy surrounding the review itself reflects the broader challenge confronting this parliament as we debate this bill. For carbon credits to play a substantial role in Australia's race towards net zero we have to have confidence that every credit represents a real environmental outcome.

Complicating this trust exercise is the reality that carbon credits will always be an imperfect solution. Besides the imperative that credits function as the option of last resort for companies and organisations to reduce their emissions after all other avenues have been exhausted, as climate scientist organisations like the Climate Council have emphasised, there is no guarantee that carbon stored in land based offsets will remain permanently stored there.

Regenerated forests can be destroyed by fire, by flood and by drought, all of which are increasing in frequency and intensity due to climate change. This is the elephant in the room when it comes to carbon offsets. It's also against this backdrop that the Chubb review proposed 16 very sensible recommendations to strengthen governance and transparency.

This bill now seeks to implement many of them, and one of the most welcome elements of the bill is its focus on transparency and on public disclosure. While Australia's carbon credit methodologies are publicly available, confidence in the scheme depends on more than access to legislative rules. Australians should be able to access the data and the evidence needed to independently scrutinise project outcomes and assess whether carbon credit projects are delivering the genuine emission reductions that they claim.

This bill takes useful steps in that direction. It strengthens independent oversight through the creation of a carbon abatement integrity commission. It expands publication and information-sharing powers.

It establishes mechanisms to respond when carbon credit methodologies pose integrity risks. And it strengthens the compliance framework that underpins the ACCU scheme. All of these are good, but there's still a lot more to do.

The Institute for Energy Economics and Financial Analysis, IEEFA, has argued that the transparency provisions could be further strengthened through the publication of facility-level measurement methodologies, greater visibility around methodological changes, and disclosure of baseline adjustments when reporting methods change. These are sensible proposals. The bill also contains important reforms on First Nations consent and native title.

Indigenous-led carbon projects can create meaningful opportunities for First Nations communities by supporting ranger programs and land management activities, generating employment and providing an ongoing source of income for traditional owners and Indigenous organisations. These opportunities have to be built on genuine consent and partnership, which is why I support the measures in this bill that strengthen free, prior and informed consent for projects affecting Indigenous land and interests.

I also urge the government to strike a careful balance between First Nations participation and timely project approval. It's absolutely important that traditional owners participate meaningfully in decisions affecting projects on their land. But at the same time, governments must ensure that consent arrangements remain clear, practical and workable.

Communities deserve meaningful participation, but project assessment processes must also remain sufficiently predictable to support investment and development. While there's much to support in this legislation, there are also areas where further attention is required. The first concern is the proposed carbon abatement integrity committee.

The creation of an independent integrity body is a step in the right direction. The Chubb review identified the need for stronger governance and enhanced independent oversight of the ACCU scheme. The establishment of the carbon abatement integrity committee will address some of those concerns.

But as the Environmental Defenders Office has argued, stronger protections could further reinforce that committee's independence. These could include requiring methodologies to be reviewed on a regular and transparent basis so that emerging scientific evidence can be incorporated and integrity risks identified before they become entrenched. The EDO has also advocated for stronger conflict-of-interest safeguards so that decisions about methodology, development and approval remain independent of commercial interests.

It's argued that the committee should be able to initiate its own reviews of methodologies where integrity concerns arise, rather than relying solely on ministerial direction. Such reforms would help ensure that the integrity framework remains responsive, evidence based and capable of maintaining public confidence in the ACCU scheme. A second area requiring attention is the new integrity risk method declarations framework.

The creation of a mechanism allowing intervention where methodologies present integrity risks is a positive development. But experts have raised concerns about whether or not the framework relies too heavily on ministerial discretion. The Smart Energy Council argues that integrity risk method declarations should be anchored in science and independent technical advice, not political judgement.

Others have similarly emphasised the importance of strong governance and of independent integrity oversight. Where significant integrity issues arise, it's my belief that decisions should be guided by transparent evidence and independent expertise, and that public trust will be lost if decisions appear vulnerable to political judgements. While this bill focuses on improving transparency and streamlining administration of Australia's carbon crediting scheme, it's the integrity of the offsets themselves which most concern experts and Australian communities.

A high-integrity carbon market has to satisfy several criteria: it must generate genuine emissions reductions; it must employ robust and evidence based methodologies; it must operate transparently and minimise conflicts of interest; and it must avoid and prevent greenwashing. This legislation represents an important contribution towards that goal, but it should not be regarded as the final word.

The government's legislative response to the Chubb review is only one step in a much larger process. There remains considerable work ahead. Questions remain—questions regarding methane measurement and reporting, regarding methodology development and regarding how ACCUs and Safeguard Mechanism credits are being excessively relied upon to meet compliance obligations under the Safeguard Mechanism.

Most importantly, there is much work to be done to rebuild trust in carbon credits. Serious questions are still being asked. Until strong governance, public accountability and genuine environmental benefit can be demonstrated, those questions will persist.

Most importantly, Australians expect a carbon offsets regime that treats credits as supplementary to deep and sustained emissions reduction, not a substitute for it. For those reasons, I support the intent of this bill, while encouraging the government to continue strengthening the integrity, the transparency and the independence of Australia's carbon credit framework in the years ahead.