Climate action has dropped off the political agenda. It's no longer the top issue for voters. The government barely talks about it, even while Australia is co-hosting COP, which is an opportunity to drive coordinated international climate action. I understand why. Australians are facing more immediate pressures. Mortgage repayments are increasing as the RBA continues to raise the cash rate. Rents are increasing, and groceries, petrol and insurance are more expensive. With the cost-of-living squeeze it's difficult to think about the long-term state of our climate. But the threat hasn't changed; it hasn't gone away because we've stopped talking about it.

The climate crisis continues to escalate. We're now unable to limit global warming to 1.5 degrees Celsius of global warming. We've failed to meet the goal of the 2015 Paris Agreement; 1.8 degrees is now the best we can hope for, and even that requires dramatic action. Every year there are more floods that wash away towns, more fires ravaging rural communities, more heatwaves that kill the old and the sick, more droughts that break farming families, more households that are displaced, more climate refugees and more irreversible environmental degradation. Species that have been here for millennia are becoming extinct on our watch.

The physics of climate change does not care about the news cycle and about what's politically palatable. The true test of political leadership is not in doing what's politically popular. Anyone can do that. The test is in doing what must be done, even when it isn't popular. It's in spending political capital and spending it well. The climate crisis requires that kind of leadership. I accept that there's no appetite or political pathway for big, bold reform like a carbon price. But this is where our political leaders must pursue a different type of ambition: ambitious incrementalism—lots of small meaningful changes that make a difference, trying new things, fixing what's broken, doubling down on what works. That's how you continue to make change when you feel there's no appetite for bold reform.

What does that mean in the context of the Australian climate policy landscape? It means strengthening the safeguard mechanism by tightening the rules around the use of offsets and new entrants. It means ensuring the new vehicle efficiency standards are aligned with our emissions targets. It means amending the National Greenhouse and Energy Reporting Scheme so that we're accurately measuring methane emissions. It means reforming the fuel tax credit system that continues to subsidise the use of diesel by Australia's largest and most profitable mining companies. And it means improving the Australian Carbon Credit Unit Scheme, ACCU, and that is what this bill tries to do.

The ACCU scheme lets projects that cut emissions or store carbon, earn tradable credits. For every tonne of carbon dioxide removed or avoided, a project receives one ACCU. The methods that receive the most credits are human-induced regeneration—largely, planting trees—landfill gas and avoided deforestation. These credits are then sold, mostly to larger matters who need to reduce emissions to meet their Safeguard Mechanism obligations.

Carbon credits have an important role in the Safeguard Mechanism. Some industries don't yet have the technology to cut emissions at scale. Others work on long capital cycles, so their emissions come down in steps as plant is replaced. A well-designed credit gives those facilities flexibility when they invest. But the whole system rests on one thing: integrity. A carbon credit is a licence; it lets someone else keep emitting. If the credit represents a real tonne then that's a fair trade. If it doesn't then it has not just failed to help; it has actively made things worse. It's actively contributed to further warming, worsening climate change.

The ACCU scheme has been full of integrity concerns. First, the integrity of ACCUs remains contested. Independent research has raised ongoing concerns about several ACCU methods, including human-induced regeneration. While the Chubb review concluded that the ACCU scheme is fundamentally sound, subsequent academic analysis has questioned whether credited areas are regenerating as claimed. Second, ACCUs are not a like-for-like substitute for fossil fuel emissions. Land sector carbon removal projects only store carbon temporarily and therefore cannot genuinely offset carbon dioxide emissions from the combustion of fossil fuels, a significant proportion of which remain in the atmosphere for thousands of years. Similarly, the ACCU framework treats carbon dioxide and methane as interchangeable, despite methane's significantly higher global warming potential over a 20-year timeframe.

Despite the lack of equivalence between fossil fuel emissions and both avoidance and land based removal credits, the Safeguard Mechanism allows facilities to use these credits to meet their emissions obligations. So it's not perfect. We can improve it. It's better than nothing, but it can be better. Against that backdrop, what does this bill do? Well, it's a large package. Here are a few things it does. It replaces the Emissions Reduction Assurance Committee with a new Carbon Abatement Integrity Committee with prescribed expertise, a requirement for at least one Aboriginal or Torres Strait Islander member, tighter conflict of interest rules and a duty to publish its advice. It moves the purchasing of credits from the Clean Energy Regulator to the department, and replaces 'least cost' with 'value for money'. It creates a method transition declaration allowing the minister to stop crediting under a method that fails the offsets integrity standards. It recognises registered native title claimants as eligible interest holders and requires consent in two stages. It extends the fit-and-proper person test to carbon service providers. It gives the regulator new relinquishment powers where credits turn out to be over issued plus infringement notices and the ability to reverse decisions made on false or misleading information. It changes the newness test to allow genuine research and development. And it makes changes to the NGER Act to allow more data to be published, and to the vehicle efficiency standard dates.

Now, much of this is sensible, and I'm not going to spend time on it. Many of these changes implement recommendations of the Chubb review, which I generally support for improving the integrity of this system. I do have some concerns about one measure, and that's the method transition declaration. At the moment, if a method is found to be flawed, projects already registered under it keep earning credits under the old rules. Now, that certainty is valuable for investment, but it also means a serious integrity problem can run on for years. The bill tries to fix that by allowing the minister to declare a method to be a superseded method where it fails the integrity standards and poses a material risk to the whole scheme. Industry says this creates sovereign risk. The Carbon Market Institute told the department it signals to investors that approved methods might later be challenged.

The final bill has more safeguards in it than the exposure draft, including advice from the committee, consultation and a delayed start. I acknowledge that. On the other side, the Environmental Defenders Office and others say the threshold is so high now that it may never be used. The minister must be satisfied that the method fails the standards, that it poses a material risk to the whole scheme and that there is a suitable alternative method for every affected project. That last condition is concerning. If the worst methods are the ones with nowhere to send the projects, then the worst methods are the ones that will escape this provision.

There's also a more specific concern. Human induced regeneration, which is largely planting trees, is roughly a third of all credits ever issued. Projects under that method face a reconciliation test later in their life where the forest cover that was modelled is checked against what's actually on the ground and the credits are returned if it hasn't materialised. With this power, the minister could move these projects onto a new method with no reconciliation test, effectively taking away the safeguard just when it's required. I understand that the minister has said this power is not intended to move those projects onto a different method without that test, and I welcome that, but a statement of intent is not a legal safeguard.

I will be asking the government for two things in relation to the method transition declaration: first, clarity on when this power will be used, because at the moment no-one really understands what it's for, and, second, a guarantee in the bill that moving a project to a new method cannot reduce the standard that it's held to, including the verification that applies to it. The government should closely consider amendments moved by the member for Mackellar to do just this. If the government is committed to not using this power to avoid reconciliation of all of the human induced regeneration projects, then it should have no issue confirming this in the legislation.

There are significant problems with our ACCU scheme and how it interacts with the safeguard mechanism that this bill does not address. There's no meaningful limit on the quantity of offsets that can be used to comply with the safeguard mechanism. While many carbon pricing schemes internationally permit some use of offsets, they typically include quantitative restrictions to ensure that regulated entities undertake genuine emissions reductions. In contrast, the safeguard mechanism's only guardrail is to require facilities that surrender ACCUs equivalent to 30 per cent or more of their baseline to submit a statement explaining why. Demonstrating the weakness of this guardrail, 23 facilities exceeded the 30 per cent threshold in the 2024-25 reporting year alone. This does not address the unlimited use of offsets in the safeguard mechanism. The government is about to review the safeguard mechanism, and when it's doing so it must address this issue. Access to credits cannot stay unlimited. We should be looking at a cap on the share of a facility's obligation that can be met with offsets that declines over time, with proper treatment of industries where emissions are a feature of the process itself, like cement. If we don't do this, we're asking the land sector to carry the weight of industry's choices, and the evidence suggests industry will keep choosing the cheapest credit over cutting its own emissions.

The second unaddressed significant problem is that the ACCU price is too low to drive the level of onsite decarbonisation required. Estimates of the marginal cost of achieving Australia's climate targets, including the values used by the Australian Energy Regulator, Infrastructure Australia and the New South Wales government, currently range from about $70 to $130 per tonne of CO2 equivalent, substantially higher than the price that facilities pay for ACCUs to meet their obligations under the safeguard mechanism, which are around $38 per tonne. The availability of relatively cheap offsets has contributed to their increasing use under the scheme. Even in industries where onsite abatement is cheaper than purchasing ACCUs, like underground coal mining, companies tend to prefer to purchase offsets rather than deal with the high capex and risk of a new decarbonisation technology.

Finally, this bill does not support the growth of the carbon removal industry independent of providing a licence for continued emissions. I support the removal of carbon dioxide from the atmosphere. The government's Net Zero Plan assumes about 167 million tonnes of gross emissions in 2050, which is fully counterbalanced by removals. The only way to reach our national and international net zero emissions target is through carbon removal, and the only way to return to a stable climate is to remove emissions after we've reached net zero and go net negative. The first way through this is through land based methods: capturing carbon in trees, plants and soils. But we also need to invest early in novel and engineered removal methods because those will take years to develop and are the ones we don't yet have methods for—direct air capture, carbon mineralisation and beyond—and this remains a challenge that the government has not yet solved.

To conclude, this bill makes a range of small technical changes to the carbon credit scheme. They're mostly non-controversial measures, and many of them are small improvements to the scheme. There are also some elements of uncertainty which need to be resolved. But, ultimately, it doesn't deal with the big issues around the scheme. It doesn't address some of the key integrity concerns of the scheme, particularly the fact that one ACCU does not actually offset one tonne of fossil fuel emissions, and it doesn't do enough to incentivise onsite abatement at our largest emitters. Instead it continues to provide an easy way out. I will keep pressing for a high-integrity carbon credit scheme that provides industry with flexibility and certainty while also driving onsite decarbonisation as the priority. This is the only way Australia can meet its emissions targets, meet its international agreements and meet its moral obligations to restore a stable climate and a prosperous economy for future generations. Thank you.