The purpose of carbon credits is widely misunderstood and critics are putting climate investment at risk, a summit has been told.
“I support efforts to give greater integrity to carbon crediting mechanisms, but they are not the enemy,” Carbon Market Institute (CMI) CEO John Connor said on Thursday.
“We should not conflate inadequate decarbonisation strategies with the work to improve carbon crediting regimes and markets,” he told the annual Australasian Emissions Reduction Summit in Sydney.
He said Australia should lift its game on emissions reduction and market integrity to support a rapid pivot in the global economy.
Carbon credits allow emitters to pay for abatement action elsewhere to supplement what is possible in reducing pollution on site.
“To do otherwise risks not just investments in renewables and phasing out unabated fossil fuels,” Mr Connor said.
However, there is growing scrutiny around how businesses are using carbon credits in their climate change strategies, in what the fiercest opponents have called a “scammer’s dream” or a “fraud on the environment”.
Regulators have put firms on notice about false or misleading climate claims made to investors and consumers.
A CMI survey released ahead of the business summit gave Australian carbon credits seven out of 10 for robustness – up from a mere six out of 10 last year, showing there is room for further improvement.
A federal review found the carbon credit system was fundamentally sound but made a series of recommendations on how they are approved and issued.
Connor said scrutiny has been “intense and at times personal”, but was nothing compared to the suffering of those on the frontlines of the climate crisis, most recently in Libya and Greece.
He said improvements in international verification systems also need to continue, or risk squandering up to $250 billion a year that some analysts suggest might be available for investment in change.
The survey also found many businesses support following Europe’s lead in imposing a price on the carbon content of imported goods, known as a carbon border adjustment mechanism or CBAM.
A CBAM could prevent firms from shifting jobs offshore to countries where environmental standards are lower, to avoid the cost of carbon compliance.
Other frameworks will bring requirements for managing and disclosing climate risk and harm to nature from business activities.
Mandatory climate risk disclosure is slated to start in Australia for large companies from 2024-25 as the first step in a proposed federal reporting regime for around 20,000 organisations.
Connor said the exponential growth in disclosure standards and requirements has packed as many challenges in the last 10 months as in the last 10 years.
“But the rewards are great if higher standards of literacy and performance can accelerate climate investment,” he said.”
AAP
