Independent experts advising the conservative Liberal-National federal government have called for changes to its Direct Action climate policy to prevent tens of millions of dollars of public money going to projects that would have gone ahead anyway.
The recommendation is in a review of the $2.55bn Emissions Reduction Fund (ERF), the central plank of Direct Action, which pays landowners and companies to avoid emissions or sequester carbon dioxide in plants at the lowest cost.
The Guardian reports the fund is supposed to support projects that would reduce Australia’s carbon pollution below what it would otherwise have been.
However, the Emissions Reduction Assurance Committee found one type of project, existing landfill sites that capture methane, a potent greenhouse gas, from decomposing rubbish and burn it to generate energy, already make enough money from the sale of electricity and renewable energy certificates to cover their costs and were mostly likely to continue without taxpayer support.
The report was published online in late March.
The Guardian reports it follows long-standing criticism that the ERF is in some cases not delivering the cuts the government has promised.
Critics say under the current design it is creating “junk” carbon credits that do not represent actual reductions, but are used by industry and government to offset emissions.
The committee recommended that no electricity generating landfill gas projects currently receiving carbon credits be given extensions when agreements lapse.
Most existing contracts run to 2021 or longer.
The Guardian reports the University of Melbourne legal academic Tim Baxter, who has published peer-reviewed research revealing flaws in the fund, said the change was long overdue.
He said several analyses had suggested many of the emissions reductions paid for from the fund were not genuine, as they would have happened without spending more than $2bn of taxpayers’ money.
Landfill gas was probably the worst example, he said.
“There is no way that 191m tonnes of abatement is being kept in the ground or sequestered (as the government has claimed),” Mr Baxter said.
“Based on the design and accounting, we are either counting abatement that they were already doing or we’re counting emissions they were not going to be released anyway.”
The ERF is the only policy the Liberal-National government has legislated to cut emissions.
It was hastily devised by then opposition environment spokesman Greg Hunt after Tony Abbott took the Liberal leadership in December 2009 promising to oppose carbon pricing, and was introduced in 2014, after the government, under then Prime Minister Abbott, repealed Australia’s carbon pricing legislation.
The Guardian reports landfill gas projects have long been controversial inclusions in the Direct Action scheme, largely because about three-quarters of them were already operating before the ERF was created in 2014.
Mr Baxter said it was a transparent case of political expediency overruling good policy.
“For the sake of being able to say ‘our scheme per tonne of emissions is cheaper than the previous government’s scheme’ you’re seeing essentially junk credits being created,” he said.
“These projects are allowed into the fund to make the price cheaper based on a spurious argument that if we don’t provide credits that these worthwhile landfill gas projects would close. There is no evidence that any of these projects were at or near closure.”
Current Environment Minister Josh Frydenberg did not directly respond to The Guardian’s questions about whether he would accept the committee’s recommendation.
He said a departmental review of climate policies last year confirmed Australia had a comprehensive set of emission reduction policies and the ERF was internationally recognised as one of the world’s largest domestic carbon offset markets.
The independent expert review comes as the Clean Energy Regulator, the government agency that runs the ERF, prepares for its seventh auction on June 6 and 7.
To date, $2.285bn has been contracted, leaving $265m to spend.
The Clean Energy Regulator chairman, David Parker, told a Senate estimates hearing last week that he expected contracts worth between $50m and $100m would be signed in June.
