Pressure to limit ACCU supply in Australia
Australia’s 4th largest political party, The Greens, have suggested a 40% reduction in the supply of ACCUs, in order to pressure large polluters to reduce their emissions, rather than buy carbon offsets. The party made the call, after agreeing to give their support to the controversial INFM (Improved native forest management) method, in return for concessions from the Government.
Image location: Chichester State Forest, NSW
Carbon credit economics: ACCU supply, emissions reduction and the policy trade-off
The new method, which is linked to the Great Koala National Park (GKNP), allows state governments to earn carbon credits for ceasing planned harvesting in defined areas of multiple-use public native forests, that would otherwise be used for commercial forestry. A major concession secured by the Greens, is a ban on coal and gas companies buying any future credits generated by the GKNP.
At the same time, however, the party announced its opposition to the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill, and will move to disallow the planned IFLM (Integrated farm and land management) method.
Greens leader Senator Larissa Waters claims blocking these two pieces of legislation would wipe out approximately 40% of the future supply of carbon credits:
“A 40% contraction in the offset market means the remaining credits will become much more expensive. It will become more expensive for polluters to buy their way out of the rules, so coal and gas will have to actually reduce their emissions.
“The free ride for big polluters is over. No more propping up their profit margins, while the climate keeps cooking and people and animals die because of corporate greed.”
When there's talk of removing 40% of future ACCU supply, it can be beneficial to take a step back, look at the fundamentals and remember the problems that Australia is attempting to tackle:
Atmospheric carbon dioxide is at a three million year high;
The rate at which greenhouse gases are being emitted is much too high;
There are very few pathways to making nature/environmental repair financially feasible.
The ACCU scheme in tandem with the Safeguard Mechanism attempts to address all three of these issues. It has proven itself at least partially effective at tackling the first and third problems. The degree to which it is slowing down emissions is less certain, but the Safeguard Mechanism is still in its early stages.
To date, the ACCU scheme represents almost 200 million tonnes of CO₂ abatement. We can debate whether one ACCU represents more or less than one tonne of abatement. And there are questions about permanence, additionality, integrity and co-benefits of certain methods and projects.
But even if that 200 million number was adjusted downwards, one would still be left with a significant amount of real land sector abatement, as well as multiple co-benefits.
In comments on LinkedIn, Kelly Campbell, who is Director of Ash Carbon, said:
“It's an incredibly short-sighted purist view that industrial decarbonisation and support for nature-based projects can't coexist within a broader climate strategy.”
Trying to constrain the supply of carbon credits, in order to raise prices, would slow land sector abatement and associated co-benefits. Perhaps the policy focus should shift away from the supply side, and towards boosting demand for ACCUs.
More on-site abatement does not have to come at the cost of less land sector abatement. The 2026 to 27 review of the Safeguard Mechanism is ongoing, with written public submissions now being considered.
Further reading: Koala Park coal and gas ban opens new front in climate wars (Australian Financial Review article published on September 10).
As always, we will continue tracking the underlying project data, register movements and policy developments shaping the Australian carbon market.
For more comprehensive market insights and analysis, please get in touch at info@carboneyes.io.
References
Carbon Eyes ACCU project register and project level analytics
Carbon Eyes market commentary on ACCU project activity and issuance trends
AFR
Koala Park coal and gas ban opens new front in climate wars (Australian Financial Review article published on September 10).
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