Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026
Dr SCAMPS (Mackellar) (12:54): I rise to speak on the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026. This bill implements the government's response to the 2022 Independent Review of Australian Carbon Credit Units, chaired by Professor Ian Chubb, AC, as well as recommendations made by the Climate Change Authority through its statutory reviews of Australia's carbon crediting framework.
At the outset, I want to say I welcome the government's objective of strengthening the integrity, transparency and effectiveness of Australia's climate policies, particularly our carbon market. Public confidence in Australia's carbon market depends on every Australian carbon credit unit, or ACCU, representing a genuine climate benefit. If credits are not delivering real additional abatement not only will confidence in the scheme be undermined but Australia will fail to meet our 2035 and 2050 climate targets.
But, while this bill contains a number of positive reforms, it does not go nearly far enough to address ongoing and serious concerns regarding offset integrity. Most concerningly, aspects of the proposed method transition declaration framework risk allowing projects operating under methods with unresolved integrity concerns to avoid key safeguards currently built into the scheme.
In other words, projects that would have had to prove that they were achieving particular milestones may not be required to do so if transitioned to a new method. While this bill focuses on improving the operation of offset markets, it does not address a more fundamental challenge: Australia's increasing reliance on offsets to meet emissions obligations. Carbon markets can play a role in our climate response, but they should not become a substitute for real reductions in emissions at the source.
For better or for worse, the ACCU scheme has become Australia's primary domestic carbon-crediting regime and now plays a significant role in compliance under the safeguard mechanism. The intent of this legislation is to strengthen the integrity and effectiveness of those arrangements by implementation of the Chubb review and the Climate Change Authority recommendations.
That objective is important because serious concerns have been raised over a number of years regarding the integrity of ACCUs. Those concerns were brought to the national attention by Professor Andrew Macintosh, the former chair of the Emissions Reduction Assurance Committee, which was the statutory body responsible for assessing the integrity of offset methods.
Research by Professor Macintosh and ANU colleagues suggested that 70 to 80 per cent of all ACCUs issued under human induced regeneration, landfill gas and avoided deforestation methods may not represent real and additional emissions reductions. In other words, more than three-quarters of the ACCUs being issued by major emitters to meet their obligations came from methods that have been the subject of significant and ongoing integrity concerns.
I note that this is a highly technical area, and Professor Macintosh's conclusions have been contested, including by the Clean Energy Regulator. So there is clearly a need for better sharing of data and audits conducted by the regulator so the evidence base is transparent and public. But, while views differ on some of the detail, the broader concern that there are genuine integrity questions affecting several major ACCU methods has been echoed by many other expert bodies.
The Australian Academy of Science reviewed four ACCU methods and found that human induced regeneration was one of the methods with significant contestability regarding whether projects were consistent with the offsets integrity standards. The review identified concerns related to baseline data, measurement uncertainty, reliance on counterfactual assumptions, attribution of carbon sequestration outcomes, carbon leakage and the impact of climate change on the maintenance of carbon stores.
The Wentworth Group of Concerned Scientists has likewise raised serious concerns regarding the operation of the ACCU scheme, particularly, again, the human induced regeneration projects. It was against this backdrop that the government established the Chubb review in 2022. While the Chubb review ultimately concluded that the ACCU scheme was fundamentally well designed, it nevertheless made 16 recommendations aimed at strengthening governance, transparency and integrity arrangements.
While this issue remains contested, I think there is broad agreement on one point: integrity concerns must be addressed transparently and rigorously and low-integrity methods should be ended or phased out. There are a number of aspects of this bill that deserve support. The bill makes changes to native title consent requirements that are intended to better align with the principles of free, prior and informed consent.
This is a positive step; although, I believe there is more work to be done to ensure First Nations communities can participate meaningfully in, and benefit from, Australia's carbon markets while drawing on the expertise and perspectives of First Nations stakeholders. The bill also re-establishes the Emissions Reduction Assurance Committee as the new Carbon Abatement Integrity Committee.
This reflects a recommendation of the Chubb review and reinforces the importance of the independent oversight of method integrity. The legislation contains several other technical reforms including changes relating to research and development participants and provisions enabling methods to combine emissions avoidance and sequestration activities within a single project.
These reforms are sensible; however, the most significant aspect of this legislation, and the area I'm most concerned about, is the introduction of a new power allowing the minister to make something called a method transition declaration, MTD for short. The MTD provision allows the minister to require projects to transition off a particular method in limited circumstances.
The minister must be satisfied of three things: that the method fails to meet offset integrity standards, that continued crediting would present a material risk to the integrity of the scheme and that an alternative method is available. Projects are then provided with a transition period of between six months and two years, or even up to five years in the case of sequestration projects, to remove the replacement method.
The stated purpose of the method transition declaration process is to provide a pathway for projects operating under methods that are found not to meet integrity standards to transition to a replacement method. This appears to be reasonable at face value and a useful mechanism for dealing with low-integrity measures; however, concerns have been raised with how this mechanism may operate in practice.
Concerns include that the threshold trigger is set so high it may never be used. The material risk is a discretionary power open to subjective interpretation by the minister as to what they consider to be a material risk to the integrity of the ACCU Scheme. I will be moving amendments to remove the material risk tests, requiring that a method only be compliant with the offset integrity standards for an MTD to be made.
Another major concern is that requiring the availability of an alternative method as a prerequisite to transition projects means that methods with the least integrity may not be able to be transitioned and could continue to earn credits. While other aspects of this bill clearly mirror the recommendations from the Chubb review, it is not clear where this recommendation has come from or why it is there.
The MTD process outlined in this bill differs in important respects from the Chubb review recommendation that it purports to respond to. In particular, there is concern that the mechanism could be used retrospectively to legitimise projects that have failed for years—potentially including those under the human induced regeneration method—and allow them to avoid one of the most important integrity tests built into the existing method.
Under the human induced regeneration method, project proponents receive ACCUs on the basis that regeneration will occur and forest cover will be re-established. A critical safeguard within the method is the requirement that, after 15 years, the project must demonstrate that it has attained forest cover across at least 90 per cent of the project area. If a project fails to meet this requirement, proponents are required to relinquish credits that were overissued during the life of the project.
It is one of the central integrity safeguards underpinning the method and provides a final check that projects have actually delivered the outcomes for which they received the credits. This is particularly important because human induced regeneration projects account for around 30 per cent of all ACCUs issued under the scheme to date. As these projects begin approaching their reconciliation periods, there is a real possibility that some may not be able to demonstrate that they have achieved the required forest cover outcomes.
If that occurs, substantial quantities of credits may need to be relinquished. That is plainly a material integrity issue for the ACCU scheme. My concern is that the method transition declaration mechanism, as currently drafted, could allow human induced regeneration projects to transition to a new method, such as the proposed integrated farm and land management method, which, at present, does not contain the same forest cover requirement.
If that occurs, the 15-year reconciliation test could effectively be avoided altogether, precisely at the point where it becomes most meaningful. This would undermine the integrity of the safeguard mechanism entirely. For this reason, I'll be moving amendments that would ensure credits issued to regeneration projects that transition to any new method remain subject to the key eligibility requirements that applied under their original method.
These amendments are designed to provide certainty that the method transition declaration framework cannot be used to bypass existing integrity safeguards, and I urge the government to support them. Australia is currently advancing its case as a climate leader and preparing for its role as a co-host of COP31 alongside our Pacific partners. The government has rightly identified keeping the 1.5-degree goal within reach.
They've also identified improving access to climate finance, elevating the importance of the ocean and amplifying Pacific voices and leaderships as priorities for the Australia-Pacific COP31 partnership. Those are important objectives, but, if Australia wants to be seen as a credible climate leader by our Pacific neighbours, our domestic policies need to match our international rhetoric.
Increasingly, international law and international agreements are making clear that we cannot simply rely on accounting mechanisms and offsets while continuing to expand fossil fuel production. The recent advisory opinion of the International Court of Justice reaffirmed the principle of 'common but differentiated responsibilities and respective capabilities'. In practical terms, that means wealthy, developed countries such as Australia have a responsibility to lead, not just balancing emissions on paper but also adopting emissions reduction measures that are consistent with the best available science.
Similarly, the Australian government signed the Belem Declaration on the transition away from fossil fuels. That declaration explicitly recognises that fossil fuels are the primary driver of climate change and that transitioning away from fossil fuels is necessary to keep the goals of the Paris Agreement within reach. Countries are being called upon not only to improve carbon markets and offset integrity but, first and foremost, to reduce emissions at their source and accelerate the transition away from fossil fuels.
That's why there's a tension at the heart of this debate. On one hand, we are seeking to improve the integrity of Australia's offset framework. On the other hand, we continue to approve new fossil fuel projects and developments, including the recent approval of the Hunter Valley Operations mine extension in New South Wales.
To conclude, this bill includes some worthwhile reforms but also some significant concerns. The method transition declaration provisions risk allowing projects operating under methods with unresolved integrity issues to avoid important obligations that currently apply to them. At a time when confidence in carbon markets is essential, we should be strengthening integrity safeguards, not weakening them.
For those reasons, I'll be seeking amendments to transition the integrity provisions and the method transition declaration framework.