David Pocock (ACT, Independent) Share this | Link to this | Hansard source

I move:

That Schedules 3 and 4 to the Carbon Credits (Carbon Farming Initiative—Plantation Forestry) Methodology Determination 2022, made under the Carbon Credits (Carbon Farming Initiative) Act 2011, be disallowed [F2022L00047].

The climate wars have left us with a very piecemeal climate policy. Here in Australia, there are more than 80 different piece of legislation that relate to energy and various elements of climate policy. Clearly, a price on carbon would be a better way to do this—better for business, better for the environment. Disappointingly, that is politically unpalatable, so we have to make the most of what we have. We have to ensure that we empower businesses to seize the opportunities of decarbonisation. We need to build as much certainty as possible and, crucially, as much integrity as possible.

Proposed changes to the safeguard mechanism mean that there will be an even greater reliance on carbon offsets, so it's more critical than ever to ensure that the methods to create carbon credits have integrity. Carbon credits are necessary in the hardest-to-abate sectors. They also have the potential not only to capture carbon but also to bring secondary benefits such as land restoration and increased biodiversity. They have the potential to reward land managers across the country for the work that they are doing in caring for and restoring the areas where they live and farm. But carbon offsets are also a high-risk environmental policy instrument. It's easy to create false abatement, to create credits that aren't actually sequestering carbon or voiding carbon emissions. Rarely will we have absolute confidence that carbon storage is real, additional and permanent, but we can get pretty close, and we should aim high to make a real impact to reduce the change in our climate.

That brings me to the method that I've lodged a disallowance for. It relates to schedules 3 and 4 of the Carbon Credits (Carbon Farming Initiative—Plantation Forestry) Methodology Determination 2022. Forestry is clearly a valuable and incredibly important contributor to our economy. We should all be grateful to those in the industry who work to create the materials that construct our homes, build our furniture and do countless other valuable things. We do need to incentivise and encourage tree-planting and the plantation forest industry to keep up with demand, as it is key to many in our communities and our economy and it will be for many years to come.

To that end, the first two schedules of the plantation forestry method are not problematic. They appear sound and, in consultations, experts in this field are happy with the way that they have been constructed. They provide credits for establishing new plantations to store carbon and for converting short-rotation plantations to long-rotation plantations. Trees are obviously a good way to store carbon, and we'll need them if we're going to effectively address the climate crisis. However, I am concerned that projects under schedules 3 and 4 would not provide additional carbon storage.

The recent Chubb review considered just three methods used to create carbon credits, and in that review Professor Chubb recommended that no new projects be registered under the avoided deforestation method. The Chubb review did not consider the plantation forestry method; however, schedules 3 and 4 of the method are remarkably similar to the method that his review suggested not be continued with. There are clear shortcomings, and I remain concerned that under these schedules credits would be given for not clearing land that actually would never have been cleared.

We have to have integrity in this market. Allowing these sorts of credits to be created casts doubt and uncertainty on all of the great high-integrity credits out there. So I really urge senators in this place to disallow these two methods and to add to the integrity of our carbon credit market.

Larissa Waters (Queensland, Australian Greens) Share this | Link to this | Hansard source

I move:

That the following legislative instruments, made under the Carbon Credits (Carbon Farming Initiative) Act 2011 and the Industry Research and Development Act 1986, be disallowed:

(a) the Carbon Credits (Carbon Farming Initiative) Amendment (Carbon Capture and Storage Projects) Rule 2021 [F2021L01378];

(b) the Carbon Credits (Carbon Farming Initiative—Carbon Capture and Storage)

Methodology Determination 2021 [F2021L01379]; and

(c) Industry Research and Development (Carbon Capture, Use and Storage Hubs and Technologies Program) Instrument 2021 [F2021L01593].

The Greens are seeking to disallow the rule and the methodology for carbon capture and storage under the Emissions Reduction Fund. Of course, those instruments are hangovers from the Liberal government climate policy—if you can even call it a climate policy. For clarity: Senator Pocock is seeking to disallow the plantation forestry method, and we'll be supporting him in that disallowance motion, but I'll speak primarily to the carbon capture and storage instruments.

Last year, the Australia Institute released a report demonstrating how this carbon capture and storage methodology was developed. Mr Angus Taylor, hand in hand with the fossil fuel industry and the big emitters, who are growing increasingly reliant on offsets to justify their lack of a transition plan, got together and agreed upon it. This CCS methodology would allow Australia's biggest gas companies, like Santos, Woodside and Chevron, to generate credits for burying just a tiny proportion of the gas they extract. This instrument is just another in a very long line of fossil fuel subsidies that should not be supported by the parliament, which is precisely why the Greens are seeking to disallow this Morrison hangover con of a climate-burying methodology.

We know that carbon capture and storage is a con. It's used as a distraction by the coal and gas barons while they keep on extracting more of the products that are destroying our children's future, and, frankly, barely paying any tax while they're doing so. To date, governments have committed over $4 billion on this technology, and there is almost nothing to show for it. There is only one commercial-scale carbon capture and storage project in Australia—that is, the Gorgon LNG complex—and Chevron have had exemption after exemption from their pollution obligations from the Western Australian EPA. This technology has continued to break down on virtually an annual basis and will never sequester anywhere near as much pollution as was claimed by Chevron when they sought to get their environmental approvals.

The third instrument we're seeking to disallow was a good old cash handout for coal and gas donors. The Industry Research and Development (Carbon Capture, Use and Storage Hubs and Technologies Program) Instrument 2021 gave $250 million to companies who invested in carbon capture and storage projects. In November 2021 we moved to disallow a very similar fund, a $50 million CCUS development fund, a motion which the big parties joined together to oppose. I'll note that since this disallowance motion was lodged Minister Bowen has reclaimed the $250 million from this program to put into the government's Powering the Regions Fund. So why not kill the other two instruments, which give yet more cash to coal and gas and which credit dodgy methodologies, while you're at it?

I will speak just briefly to Senator Pocock's motion for the disallowance of the commercial forestry method. We are taking the position of supporting the disallowance because under this method it's easy to credit false abatement or overcredit actual abatement. In other words, it means that one tonne of so-called avoided emissions doesn't always equal one tonne of actual avoided emissions.

Under the government's safeguard mechanism the expansion of coal and gas will be enabled through the purchase of credits like this and, frankly, this method does not provide us with high enough confidence that the emissions abatement will be real or additional. This is important because basic science says that there is no better abatement than leaving coal and gas in the ground when we are in a climate crisis and all the relevant scientists and international bodies are begging us not to open new coal, oil or gas fields. If this parliament were to allow credits like this, we would simply be allowing coal and gas to be extracted while these big tax-dodging and polluting companies greenwash their way to net zero.

So, for these and numerous other reasons, we are moving to disallow the three CCUS methodologies listed in the motion and will also be supporting Senator David Pocock's disallowance of the forestry methodology.

Jenny McAllister (NSW, Australian Labor Party, Assistant Minister for Climate Change and Energy) Share this | Link to this | Hansard source

The government doesn't support either of the motions before the Senate, and I just wish to take a few brief moments to speak about why that is so. In relation to the matters raised by Senator David Pocock and the disallowance moved by the senator around schedules 3 and 4 of the Carbon Credits (Carbon Farming Initiative—Plantation Forestry) Methodology Determination, perhaps I can start with this. We have obviously been through an extended review of the arrangements for the creation of offsets, undertaken by Professor Chubb, and he had this to say in particular about the land sector. He said:

After experimentation and speculation for decades, the only pathway known to science that has the immediate capacity to remove GHG (CO2) from the atmosphere at scale is photosynthesis: the mechanism by which plants and some other organisms use light, CO2 and water to create energy (stored as sugars) to fuel cellular activity and growth.

Science and technology may well develop effective and scalable options to meet the twin challenges of GHG removal and secure long-term (millennial) storage. But to start at scale well before 2050, the land sector will have to carry much of the immediate load, starting now.

I appreciate the points made by the senator in relation to the significance of integrity in this sector and, indeed, the government shares the senator's interest in ensuring that the credits created through the ACCU scheme are of the highest integrity and that the public might have confidence in those credits. That is precisely why we commissioned the review and it's precisely why we have committed to implementing the recommendations made by Professor Chubb.

In relation to the specific mechanism, the plantation forestry method, it allows forest growers to generate Australian carbon credits units by storing carbon in plantation forests. The current method builds on an earlier version. It includes two new activities for keeping forests on land where plantations would otherwise be converted back to non-forest land. The method provides for additional abatement because evidence shows that plantation establishment rates are very low and existing plantations are being replaced with other land uses. Projects using the new activities also need to meet several specific tests to show that they are additional. These tests include providing a declaration and independent financial analysis showing the plantation would otherwise be converted to a more financially attractive land use.

The review undertaken by Professor Chubb did not consider the plantation method specifically, but it did conduct a serious review of the scheme, its governance arrangements and the offsets integrity standard. It was this offsets integrity standard that was used to develop these new schedules to the plantation method. The review found that the offsets integrity standard for developing our key methods is appropriate and consistent with good governance, well regarded by stakeholders and experts and supports confidence in the integrity of ACCUs and the scheme. Specifically, the review found that the overall scheme arrangements are sound and robust, with appropriate checks and balances at the scheme, method and project levels to protect the integrity of the scheme and the credits created under it.

I will say this, though: the panel made some important and sensible recommendations to improve the scheme, including around transparency and governance, especially given that we are now at beyond 10 years of operation of this scheme. In particular, the review recommended that the standards should be clearly defined and supplemented with ACCU scheme principles to support consistent application, and it made recommendations on how questions regarding the application of the offset integrity standard and method variation should be considered and undertaken. Recommendation 6 specifically addresses an opportunity to improve, by stating:

The Offsets Integrity Standards (OIS) should be clearly defined and supplemented with ACCU Scheme Principles …

We have accepted all of the review's recommendations in principle.

We are working through implementation now, but it will produce changes in scheme governance, and we would expect that the ACCU scheme would continue to examine all of the methods to ensure that we are using best practice and doing everything we can to ensure the integrity of the scheme and to, indeed, enable the confidence that Senator Pocock referred to in his opening remarks. I will say, though, that these new structures present, or offer us, the best way— (Time expired)

Jonathon Duniam (Tasmania, Liberal Party, Shadow Minister for Environment, Fisheries and Forestry) Share this | Link to this | Hansard source

I'll also make a contribution to the debate on these two proposed disallowances. At the outset I'll say that the opposition will be opposing both of the proposals put forward here. I appreciate the remarks made by the minister around the scheme and the purpose behind it. I'll start with the forestry plantation methodology. As someone who had a hand in going to the Clean Energy Regulator and seeking a review of what was in place in the early parts of 2021, I'll give some historical context about that. As has been well canvassed in Senate estimates, in this place and in the public domain, there is great difficulty in growing our forest estate to meet the demand that we actually talked about in question time today. This was one of those policy levers that the then government, and obviously the current government, thought was a good lever to have in place to be able to incentivise investment in plantation forestry to get us on a pathway to meet demand.

I appreciate, as Senator McAllister did, the points that have been made by Senator Pocock and the reason for him moving this disallowance motion, and I accept the arguments he's put forward. The thing we have to do here is balance up our responsibilities. We import so much timber into this country—a huge amount of it—much of it from places that don't do forestry well and, in fact, rip it out of the ground and don't care one iota for their environment. I know there will be some people in this chamber who don't agree with the point I'm about to make, which is that we do it to world's best standard, and, on the way through, we create jobs in many regional communities, where they're most needed. This methodology, as it was drafted in 2021, was about trying to grow that sector, create more jobs, create more resource, suck in more carbon, lock it up forever in beautiful timber products and incentivise that investment and use of this material—perhaps displacing concrete, steel and other, more carbon-intensive materials as well. That was the purpose behind it.

As I say, I understand the points that are being made, but, for the purposes of seeking to grow this industry and noting that many of the key stakeholders in that sector said this is one way we will be able to unlock that investment, it is one of the key hurdles. We have farmers we normally contract with who are saying, upon harvest, they now want to turn that land into pasture because there's more money and easier returns in growing certain types of crops or heading into dairy, for example, in certain parts of Tasmania. Obviously it takes a while to see the fruit borne from this scheme, but I remain confident that it will do what we intended it would. For that reason, we won't be supporting that disallowance.

On the disallowance motion moved by Senator Waters, I don't agree with the assessment that under this new safeguard mechanism proposal put forward by the government there'll be this flurry of seeking to grab ACCUs to cover over the emissions, because there won't be enough ACCUs. There just will not be enough. All the modelling is suggesting there'll be a massive shortfall, even with schemes like this in place. So, in the end, they'll just end up paying this massive tax that's going to be imposed instead. The disallowance is a bad one in this regard, and we won't be supporting it, but I appreciate the work that has been put in. That is the opposition's position.

Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

I just want to bring one point to the attention of the chamber. There were some remarks made around carbon capture and storage. I'll just note this: I think all senators should be looking at what's happening around the world et cetera in terms of all the different ways, the different methodologies, there are to address this issue. I refer senators to a press release on the European Commission's website on 12 January 2023 which is entitled 'State aid: Commission approves 1.1 billion euro Danish scheme to support rollout of carbon capture and storage technologies'. This technology is moving very quickly around the world. I think we have to be open-minded with respect to the technologies that we bring to bear in terms of addressing these issues.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

There are two matters simultaneously before the Chair. I propose to put the first one, by Senator Pocock, and then follow with Senator Waters's motion. So the question is that the motion moved by Senator David Pocock be agreed to.

Question negatived.

The question is that the motion moved by Senator Waters be agreed to.