March ended with two important reminders on ACCU and Safeguard Mechanism reforms.
Firstly, we saw the release of data from the 2022-23 reporting period for the Safeguard Mechanism, that under the Coalition was a compliance mechanism prior to further amendments starting from 1 July 2023. The data released by the Clean Energy Regulator (CER) last Thursday showed that there was a three-fold increase in ACCUs surrendered on the previous 2021-22 year. Not counting “deemed surrenders,” almost 1 million ACCUs were surrendered by the February deadline which, using February spot prices, represents a four-fold increase to almost $34.5 million in value. We expect these figures to increase under the now-enhanced Safeguard Mechanism, which is aligned to the bipartisan Net Zero by 2050 goal.
Secondly, with renewed media attention on ACCU integrity, we’re reminded that the renovation of Australia’s carbon crediting framework is still underway with important steps forward in transparency and assurance. However, we need to recognise that implementation of the ACCU Review recommendations is incomplete and requires continued action, as well as adequate resourcing in the Federal Budget next month.
Some criticisms re-emerged last week which still rely on a data source deemed inadequate at a project level 5 years ago. These criticisms didn’t recognise key aspects of the reforms underway, including independent 5 yearly ‘gateway’ checks, instigated under the 2022 Chubb Review. All scrutiny should be taken seriously, but we do need to discuss them in the context of the current and intended regulatory landscape.
CMI welcomed the Government’s announcement, following some confusion, that it will continue the development of an Integrated Farm and Land Management ACCU method with an extended aim to conclude by the end of 2024. This will of course need to include all the necessary evidence for Emission Reduction Assurance Committee (ERAC) to consider in line with its legislative requirements. This should also include data from the HIR review processes, which were strengthened in 2019 and through ACCU Review recommendations implemented in 2023.
In addition to the above, CMI continues to advocate for necessary Carbon Farming Initiative (CFI) Act amendments required to implement key ACCU Review recommendations, progress on landfill gas ACCU method reforms, and a process for new method proposals that may be considered by ERAC under the “proponent led” method development. We’ve also been busy with other Safeguard Mechanism implementation issues, Nature Positive reform plans and engagement with the Net Zero Sectoral plan development processes, including advocating for a cross cutting carbon market strategy to support these plans.
As next month’s Federal Budget approaches, we’ll continue focus on our budget priorities which include calls for sufficient resourcing to relevant government departments and agencies to ensure the ACCU reform process is adequately staffed. Other priorities include further outreach resourcing for landholders and instalments for the Australia/Pacific COP31 Presidency bid.
Finally, last week I was back in Fiji where I previously lived for two years supporting Fiji’s COP23 Presidency. CMI was there to support the Fijian Government Climate Change Division to develop a Fijian Carbon Market Strategy Roadmap. Our meetings reinforced the role carbon markets can play in financing achievement of 2030 Nationally Determined Commitment goals, as well as assisting technology transfer and capacity building, whilst delivering critical community co-benefits. It reminded me that a COP Presidency is not just about a single event but the regional and global influence that a Presidency offers, for what is now a three year period under “troika” tripartite Presidency arrangements instigated from COP28 this year – more on that later!
Thanks again for your support and interest, with important work ahead as we deepen engagement with Australian and international reforms underway this year.
John Connor
CEO
Carbon Market Institute
