INTERVIEW: Carbon credit review raises questions about avoided deforestation in Australia’s biodiversity market

Published 11:46 on January 10, 2023  /  Last updated at 11:46 on January 10, 2023  /  Biodiversity  /  No Comments

A government-commissioned review of Australia’s carbon credit system published this week recommended ditching the nation’s avoided deforestation methodology over baseline issues, a move that could create challenges for such projects in finding a place in the country’s emerging biodiversity market.

A government-commissioned review of Australia’s carbon credit system published this week recommended ditching the nation’s avoided deforestation methodology over baseline issues, a move that could create challenges for such projects in finding a place in the country’s emerging biodiversity market.

Amid a raft of criticism over some of the project types eligible to generate carbon credits in the Australian market, the Labor government last year commissioned Professor Ian Chubb to head up an independent panel to review the scheme.

The panel’s findings were published – and agreed on by the government – this week, and while it found there is a need for greater transparency and reorganisation of the market structure, most of the under-fire project methodologies came away unscathed.

One project type did not survive the axe, however – avoided deforestation projects, which in Australia offers carbon credits for not cutting down trees in areas that had received a clearing permit before July 1, 2010.

“The length of time that has elapsed since the issue of any remaining unused land clearing permits imply that it would be hard to establish intent to clear land, raising questions about the additionality of any new projects that might be registered under the current method,” the panel concluded.

That conclusion could easily be extended to the planned nature repair market, a national voluntary biodiversity credit market for which the government published draft legislation on Dec. 23, according to Tim Beshara, manager of policy and strategy with the Wilderness Society.

“Australia urgently needs more investment in environmental protection and restoration, but without clear baselines, any market or biodiversity credit within that market is questionable on additionality grounds,” he told Carbon Pulse.

Inadvertently, the review panel revealed that the push to establish the nature repair market, which Environment Minister Tanya Plibersek has said will help turn Australia into a ‘Green Wall Street’ is being made while the regulatory system is unprepared for it, according to Beshara.

“Australia’s biodiversity regulation system is grossly insufficient, especially in regard to deforestation. The Chubb review, in drawing the line on new carbon credits from the ‘avoided deforestation’ method is an acceptance that the days of using an archaic so-called ‘right to clear vegetation’ as a carbon additionality benchmark are over,” he said.

“But without a credible regulatory system for deforestation, it is impossible currently to work out what protection activities are mandated by law at a globally-acceptable standard and therefore, what activities would be in addition to this,” said Beshara.

MORE TO DO

Chubb’s panel did recommend to start developing new project methodologies to incentivise the maintenance of native vegetation, though the government is eager to get the nature repair market bill legislated this year, well before any such methodologies can be developed.

The general expectation is that a voluntary biodiversity market will emerge gradually, as national governments implements national targets to fulfil their Kunming-Montreal Agreement obligations and then start looking for ways to distribute those goals as well as reporting requirements to major corporations.

However, Australia is pushing through its market without any mention of biodiversity- or nature-related obligations being imposed on companies, which is why some observers expect the government to be the sole buyer of the credits in the Australian market.

That adds to the uncertainty surrounding the new market, which will be the first of its kind globally.

“This is why the national government is putting the cart before the horse with their nature repair market reforms right now. They need to be doing the regulatory reform which sets new and clear baselines now, not establishing a market based on dodgy baselines in advance of this. Until then, the whole system and everything within it is marked with a giant asterisk,” Beshara said.

He said baseline issues become even fuzzier for biodiversity credits for issues such as restoration and management, as Australia lacks a standard duty of care for biodiversity management for landholders.

“While some of the obligations on government are apparent, these are rarely met and we don’t have a baseline for government expenditure on these issues either,” he said.

“Right now, it’s just as likely that any issued ‘biodiversity credit’ would be for an activity that someone already should be doing, or would displace rather than add to existing efforts. But we would be none the wiser whether the individual or cumulative ‘credits’ are actually credits at all,” Beshara told Carbon Pulse.

Australia’s draft nature repair market legislation will be out for public consultation until Feb. 24.

By Stian Reklev – stian@carbon-pulse.com

*** Click here to sign up to our weekly biodiversity newsletter ***