An official review has rejected extensive criticisms of Australia’s carbon credit scheme. 

Australia’s carbon credit scheme is meant to provide backing for projects that use government-approved methods to store or avoid greenhouse gas emissions. 

One carbon credit should represent one tonne of abated carbon dioxide, and credits can then be sold to the government or polluting businesses to offset their onsite emissions.

But the scheme has faced significant and detailed criticisms from a broad range of authorities including experts at the Australian Academy of Science, the Wentworth Group of Concerned Scientists and CSIRO.  

Last year, a review by Prof Andrew Macintosh (an environment law professor at the Australian National University and former head of the emissions reduction assurance committee) found that over 70 per cent of carbon credits approved are unlikely to represent new or real cuts in emissions.

Professor Macintosh said he believes Australia's carbon offset market has become “a rort”. 

“People are getting ACCUs [Australian Carbon Credit Units] for not clearing forests that were never going to be cleared; they are getting credits for growing trees that are already there; they are getting credits for growing forests in places that will never sustain permanent forests; and they are getting credits for operating electricity generators at large landfills that would have operated anyway,” he said at the time. 

Climate change minister Chris Bowen promised to review the carbon credit system as part of Labor’s policy before the 2022 election.

That review, led by the former national chief scientist Prof Ian Chubb, made recommendations this week, but dismissed claims the scheme lacks integrity and is not delivering real cuts.

It found that the Clean Energy Regulator should lose some of its roles running and overseeing the system to “enhance confidence and transparency”.

The full report is accessible here.

The review panel denied that the integrity of the scheme is in doubt, or that the level of emissions reduction had been overstated.

Prof Chubb said the scheme was “not as broken as has been suggested”. 

He said Australia's carbon credit regime is a “human-designed process, implemented by human beings, and it will be a bit frayed at the edges”, but that the system is “basically sound” with safeguards in place.

The Chubb review says that the methods used to create carbon credits should be changed. It said the formula for credits based on ‘avoided deforestation’ - in which landowners are rewarded for protecting forest they could have bulldozed - should be changed, as the current process makes it hard to establish whether the landholders still genuinely intended to kill the trees.

The most popular method used to create credits - regrowing native forests in cleared outback areas in a method known as ‘human-induced regeneration’ - was also one of the most criticised before the Chubb review. 

Critics said regeneration projects have been awarded carbon credits for managed forest regeneration that had not occurred, as well as for regeneration that would have occurred anyway because it was mostly due to rainfall. 

It is estimated that over 24.5 million carbon credits have been awarded for reforestation, despite the combined area of forest and sparse woody vegetation cover going backwards by more than 60,000 hectares.

Still, the Chubb review panel said the method is largely sound.

The official review also called for some powers of the Clean Energy Regulator to be removed to improve confidence in the scheme, calling for the regulator to keep responsibility for compliance and enforcement while a new independent body be set up to oversee approval and integrity. The review said a separate existing government body should be given responsibility for buying carbon credits using taxpayer funds.

Experts say the fact that key questions were not addressed in the official review “will continue to undermine confidence in Australia’s central climate policy”.