Ian Chubb's carbon credits review released after claims of 'environmental and taxpayer fraud'

Australian National University professor Andrew Macintosh has accused the Ian Chubb-led review of glossing over the main source of his and other experts' concerns about the integrity of the scheme.

Professor Macintosh has warned that without major changes, greenhouse gas emissions would rise and the government's climate action agenda would be ineffective.

The independent review, published on Monday, concluded that it "does not share" the concerns of critics who have called into question the integrity of the scheme.

However it did recommend a major overhaul of the scheme's governance, including a new body to oversee the integrity of carbon credit methods and a splitting up of the responsibilities of the Clean Energy Regulator to avoid conflicts of interest.

The government has accepted, in principle, all 16 of the review's recommendations.

Climate Change and Energy Minister Chris Bowen launched the review last July, three months after Professor Macintosh went public with claims the carbon credit scheme had become an "environmental and taxpayer fraud".

Under the regime, credits are issued to projects that reduce greenhouse gas emissions under certain methods, including protecting native forests and the contentious carbon capture and storage.

One credit - known as Australian Carbon Credit Units (ACCUs) - is supposed to equal one tonne of carbon abatement.

Professor Macintosh, a former chair of the government committee that oversees the integrity of the system, claimed that up to 80 per cent of carbon credits issued to projects using the three main types of methods were "devoid of integrity" and didn't result in actual carbon abatement.

The three methods are avoided deforestation, restoring native vegetation and the combustion of methane from landfill.

An internal Clean Energy Regulator review dismissed the allegations and said there were "serious deficiencies" in the analysis from Professor Macintosh and his colleagues.

But after promising a review prior to the election, Labor pushed ahead with an independent probe.

Mr Bowen tapped professor Emeritus Professor Chubb, a former chief scientist and Australian National University vice-chancellor, to lead a four-person expert panel.

The panel's final report was published on Monday morning.

The report acknowledged concerns about the scheme's integrity, including that abatement levels were overstated, but said it "does not share" that view.

"While the panel was provided with some evidence supporting that position, it was also provided with evidence to the contrary," the report read.

The report suggested the reason for the "polar-opposite" views was a lack of transparency which prevented third parties from accessing data.

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Speaking to The Canberra Times after the report was published, Professor Macintosh said he was "bewildered and confused" by the findings.

"Discussion of the three key methods amounts to a mere five pages [of the report] and those five pages do not raise or address any of the key questions that need to be asked in order to assess the integrity of these methods," he said.

Asked if the public could have confidence in the carbon credit scheme, he said: "No, not at the moment".

"My team, and most of the scientists in this space agree that there's material problems with the methods and most of the credits that are coming out of the pipe," he said.

"Until something happens to change that, I don't think anybody can have faith in the system."

Professor Macintosh said it was essential that credits had integrity given the role they would play in one of the government's major climate policies - a planned overhaul of the mechanism designed to limit pollution at heavy-emitting facilities.

Facilities that exceed emissions baselines can purchase and surrender credits to offset emissions.

"If you don't fix the integrity of the credits then you're jeopardising the effectiveness of the safeguard mechanism," he said.

While concluding the scheme was "essentially sound" and well designed when it was introduced 11 years ago, the panel said there were a number of areas for improvement.

That included establishing a new body to effectively replace the integrity committee, which professor Macintosh once chaired.

The review found the so-called Emissions Reduction Assurance Committee had a mix of administrative and resourcing arrangements, which "undermined its capacity" to perform its crucial role.

It cited the decision in late 2020 to shift the committee from the energy department to the Clean Energy Regulator as among the reasons its work had been called into question.

"The ERAC is not widely seen to be what it is expected to be - an independent expert committee, with the responsibility (and the capacity) to ensure that methods are rigorous and lead to real and verifiable [greenhouse gas] abatement," it found.

The review recommended changes to the Clean Energy Regulator after the addition of extra responsibilities "blurred" its role in the scheme and created potential conflicts of interest.

The regulator is currently responsible for co-designing carbon credit methods, registering and regulating projects and buying units.

The panel has recommended that responsibility for buying credits be shifted to another government department, and that proponents take the lead in developing new methods.

Mr Bowen welcomed the report.

"The panel's recommendations will help ensure Australia's carbon crediting scheme has the highest integrity, and contributes to achieving Australia's emission targets," Mr Bowen said.

Opposition climate and energy spokesman Ted O'Brien said the review's findings should provide the public with "supreme confidence" that the carbon credit system was fit for purpose.

"After all, an effective carbon credit scheme will be integral to Australia's ambition to achieve net zero emissions by 2050," he said.

ACT independent senator David Pocock welcomed the proposed governance changes, but said access to carbon credits under the safeguard mechanism should be restricted while the "significant issues" raised in the review were addressed.

"The safeguard mechanism needs to be a significant driver of reducing emissions, and if carbon credits are allowed to be used then they have to have integrity for there to be actual reductions in emissions," he said.