Australia to prioritize 4 new proponent led methods under ACCU scheme

Australia’s Department of Climate Change, Energy, the Environment and Water has decided to prioritize the development of four new proponent led methods under the Safeguard Mechanism’s Australian Carbon Credit Unit scheme for robust forward issuances of high integrity ACCUs to meet demand in the mid-to-long term, according to a release Oct. 30.

The Safeguard Mechanism requires entities in Australia with the highest greenhouse gas emissions to cut their emissions to align with the county’s emission reduction targets of 43% below 2005 levels by 2030, as well as a target of net zero by 2050.

ACCUs are a tradable environmental product that facilitates carbon abatement activities through various types of projects, extending from energy efficiency to reforestation. One ACCU represents one metric ton of carbon dioxide equivalent that would have been released into the atmosphere.

The country’s independent Emissions Reduction Assurance Committee, or ERAC, evaluated 39 new method submissions and identified four methods for prioritization -- improved native forest management in multiple-use public forests, extending Savanna Fire Management to the northern arid zone, improved avoided clearing of native regrowth, and reducing disturbance of coastal and floodplain wetlands by managing ungulates.

In a speech on Oct. 30, Minister for Climate Change and Energy Chris Bowen said that almost three quarters of carbon credits produced by the SFM method are generated by Indigenous carbon businesses, with the Indigenous carbon industry valued at an estimated A$59 million per annum ($39 million per annum).

The government has set aside more than A$12 million to support First Nations people in participating in upfront negotiations for ACCU projects and is looking to release its First Nations Clean Energy strategy in the near term, with no definitive timeline yet.

"A remake of the Environmental Plantings method, to make it easier for landholders to undertake projects, is progressing well and should be finalized by the end of the year [2024]," the minister said.

However, the exposure drafts for the remaining three methods are expected to be delivered by June 2025 after further design work with relevant stakeholders and experts, including the new SFM method, Integrated Farm and Land Management method, as well as a reformed landfill gas method.

IFLM was set to allow the registration of new vegetation-based projects following the expiration of the popular Human-Induced Regeneration method in 2023, which accounted for one of the highest numbers of registrations among Australia's vegetation-based projects. However, the method was delayed due to the need for more consultation.

With advice from the Independent ERAC, the government will continue to work on these highlighted methods with their respective developers for further progress of their proposals.

The government launched the new process to allow any market participant to propose new methodologies for the generation of local carbon credits, marking a move away from the previous approach under which the government prioritized and developed new methods, S&P Global Commodity Insights reported previously.

The new process was implemented after being recommended by a government-backed independent panel, led by Australia’s former chief scientist Ian Chubb, which was set up to assess the integrity of the ACCU scheme.

The new process comes after the HIR method expired in September 2023, and the EP method retired in September. Additionally, the Clean Energy recently updated Oct. 25 that several methods will also expire by the end of March 2025.

Platts, part of Commodity Insights, assessed Generic ACCU at A$38.50/mtCO2e on Oct. 29, up 30 Australian cents/mtCO2e day on day, while HIR ACCU was assessed at A$38.45/mtCO2e, up 25 Australian cents/mtCO2e.