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Australia permanently cancels 700 million mt Kyoto-era carbon credits: Minister

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Australia permanently cancels 700 million mt Kyoto-era carbon credits: Minister


Move prevents future governments from using outdated credits to meet climate targets

Other developed nations have already cancelled Kyoto-era credits

New guidelines for proponent-led emissions reduction methodologies

  • Author
  • Ivy Yin    Eric Yep
  • Editor
  • Sarah Mishra
  • Commodity
  • Energy Transition

Australia has permanently cancelled 700 million mtCO2e of carbon credits carried forward from the Kyoto-era that will prevent future governments from using the offsets to meet the country's climate targets, Chris Bowen, Minister for Climate Change & Energy, said Sept. 15 in a speech at the 10th Australasian Emissions Reduction Summit.

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One of the overhangs of the previous era has been the carryover of Kyoto credits, a remnant of the climate wars and a symbol of the internal division which divided the previous government and dragged Australia back on the international stage, Bowen said.

"They were never more than an accounting trick to try and make it look like we're on track to make commitments and targets," Bowen said.

He said the previous government had kept the carryover credits as an option to be used if they're needed in the future and the credits have been very alive on Australia's books.

While the current government has committed to never use the Kyoto-rea credits to achieve emissions reductions goals, there was nothing preventing a future government from doing so, Bowen said, calling the use of the credits "dodgy accounting tricks rather than genuine abatement."

"So today I'm pleased to announce that those carryover credits for the last decade, equaling more than 700 million mt representing more than a year's worth of national emissions, have now been permanently canceled," Bowen said.

"They're gone because we know that good climate policy and energy policy is good for the economy as well," he added.

Under the Kyoto protocol, established in 1997, developed countries were allowed to carry forward their surplus carbon credits when they achieved more emission reductions than their committed targets.

But over the years, developed countries such as Germany, the UK, Denmark, the Netherlands and Sweden have already announced voluntary cancellations of their remaining Kyoto-era credits. The use of an accounting scheme to meet climate targets instead of actual emissions reductions has been criticized as a loophole by climate experts.

Without the cancellation, future governments of Australia would have been allowed to use these outdated credits to meet the nation's future climate targets.

New guidelines

In August, the Australian government released a consultation paper on proposed amendments to the country's carbon market called the Australian Carbon Credit Unit or ACCU Scheme, that covered several recommendations from an expert review called the Chubb Review conducted earlier to address integrity concerns.

The paper is open for feedback until October and covers several topics including the establishment of basic principles for new emissions reduction methodologies, improving transparency and introducing a new process for developing new methodologies.

One recommendation was to allow project proponents to lead the introduction of new methods instead of the government doing so, under a system that would involve issuing expressions of interest (EOIs) and subsequent regulatory approvals.

In his speech, Bowen announced the launch of interim guidelines for people seeking to put forward new methods for emission reduction projects.

"The better proponents can make use of this guidance in their expressions of interest, the quicker it will be to make high integrity methods that work and unlock innovative new abatement technologies," Bowen said.

Bowen said the nation needs to achieve its climate targets through investments that drive future competitiveness enhancement and economic growth, noting the $1.7 billion energy savings package, and $20 billion Rewiring the Nation plan and Capacity Investment Scheme that enable cleaner, cheaper renewables.

He also pointed out the recent reform of the nation's compliance emission trading scheme, called Safeguard Mechanism, is a landmark that will drive concrete actions and deliver 200 million mt of emissions reduction by 2030.

Platts, parts of S&P Global, assessed Australian Carbon Credit Units, the instrument used under Safeguard Mechanism, at AU$34.95/mtCO2e ($22.57/mtCO2e) as of Sept. 14.