Australia’s $4.5bn Emissions Reduction Fund was set up to cut pollution, but a new report reveals it’s failing to do that – and even worse.
Australia’s $4.5bn emissions reduction fund has failed to cut emissions and requires urgent review to avoid wasting billions more of public money, a new report says.
The Australia Institute report said evidence showed the scheme – the country’s only climate policy in force – was maintaining or even actually facilitating increased emissions.
The Emissions Reduction Fund (ERF) gives businesses incentives to cut the greenhouse gases they produce. Those taking part in the voluntary scheme earn carbon credits for every ton of emissions cut or stored. The credits can then be sold to the government or private sector.
But the Australia Institute said the scheme was never designed to carry the full weight of Australia’s climate policy and its foundations have begun to crumble.
Since the scheme began in 2015, more than half the $4.5bn fund has already been committed to buy just 217 million tonnes of emission reduction.
That was equal to less than half of Australia’s annual emissions, showing it was “clearly insufficient”.
Up to 80 per cent of existing Australian carbon credits (ACCUs) were also found to be low integrity, recent research had shown.
“The most obvious impact of the current regulatory regime is that billions of dollars of taxpayer money are being wasted on ACCUs from projects that deliver no actual reduction in greenhouse gas emissions,” the report, released on Thursday, said.
The authors suggest efforts to rapidly expand the ERF over the last two years also led to disproportionate industry influence.
They called for a full independent review of the ERF to restore confidence in Australia’s carbon credits scheme.
“Australia’s only legislated climate policy, the controversial $4.5bn Emissions Reduction Fund, is being undermined by poor regulation and the influence of industry,” Australia Institute executive director Ben Oquist said.
“Carbon credits with integrity have a role to play in reducing our emissions in genuinely hard-to-abate areas of the economy like agriculture. But dodgy credits used as offsets are effectively a license to pollute, fueling climate change.
“Instead of using public money to cut pollution, the emissions reduction fund has become a ready source of affordable, low-quality offsets for high-polluting industries.”
Mr Oquist said now was the time to correct the decline and ensure integrity underpinned climate policies.
“We need an urgent review of climate policy in Australia to restore integrity to the Emissions Reduction Fund, otherwise we risk wasting billions more of taxpayer dollars on hot air – that is, useless credits that don’t lower emissions,” he said.
“We can’t afford to waste the next decade like we have the last one.”
The report, An Environmental Fig Leaf: Restoring Integrity to the Emissions Reduction Fund, will be launched at the Smart Energy Conference in Sydney on Thursday morning.