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RUBY:

From Schwartz Media, I’m Ruby Jones. This 7am.

Australia has to act fast to help cut emissions and avoid global climate catastrophe. After decades of inaction, the Labor Government have brought their proposal forward, adjusting the awkwardly named “Safeguard mechanism”. This bets our climate future heavily on emission offsets – or carbon credits. They’re a mysterious and strange method of making up for emissions by doing good elsewhere. But are they actually a scam?

Today, contributor to The Monthly, Nick Feik on whether we are betting our climate future on a scam.

It’s Monday, March 13.

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RUBY:

Nick, you’ve recently been looking into the relationship between the fossil fuel industry and the carbon credit industry. What drew you to this? Why did you want to look into it?

NICK:

Like a lot of people, I greeted the arrival of a new government as a sign of positive change in terms of climate policy.

Archival Tape - Anthony Albanese:

“Together we can take advantage of the opportunity for Australia to be a renewable energy super power.”

NICK:

And I was a bit shocked that as soon as Madeleine King, the new energy minister, was appointed, almost the first thing she did was express her support for the new Woodside project, the Scarborough project.

Archival Tape - Madeleine King:

“If Woodside prepared and they are prepared and have guaranteed to the WA State Government to implement the appropriate offsets for the development of the Scarborough gas field, then we support that because it absolutely fits within our ambitions for net zero emissions by 2050 as well.”

NICK:

And I wondered, how does it work that you can be reducing emissions while bringing so much new gas online? What's the system behind this? Like everywhere else in the world, Australia has an obligation to reduce emissions rapidly to limit heating to 1.5 degrees. The world needs to reduce emissions rapidly rapidly. And you know, Australia is a country that has more obligation than most, as in we are the third largest exporter of fossil fuels. But instead of reducing our emissions, the Albanese government and you know, the former Coalition government had built this very, very complex edifice of offsets, which are essentially financial mechanisms. It's an extremely complicated system which I would argue is avoiding reducing emissions. It's pushing pieces of paper around instead of actually doing the hard yards of actually cutting emissions. The more I looked into offsets and the relationship between carbon traders and government regulators, between carbon traders and fossil fuel companies, between fossil fuel companies and the Labor Party, you realise that there's an immensely complicated system, a policy mechanism being built up. The more I looked into it, the more I realise that the entire scheme is farcical.

RUBY:

And so how did this system sort of become baked into our climate policy response? You mentioned that offsets first sort of became part of what Australia's response to climate under the Coalition and under their safeguard mechanism. Can you take me back a bit and just explain how that evolved into the system that we see today?

NICK:

Yeah, we had a carbon price and it was an economy wide. Carbon price was introduced by the Gillard government. Tony Abbott came in, got rid of it. That was an extremely successful mechanism, right. When the Coalition came in, they trashed it and they introduced something called Direct Action, which is where instead of taxing people, you'd actually pay polluters to reduce their emissions. So some of that money went into like carbon sequestration projects, some of it went to buy off farmers. You know, it was about spending money with your favoured constituents. Over time, Angus Taylor and the Morrison government introduced a safeguard mechanism. It's only for the biggest polluters. So the system now, and this is the one that the Labour Party has carried on, only applies to the top 215 polluters, the biggest polluters. Those polluters can meet their emissions reduction obligations by using offsets entirely. They have unlimited use of offsets. The other thing that's not talked about in this whole world is that you only count a certain subset of your company's emissions. I mean, this becomes most egregious when it comes to gas and coal miners. So a gas company like Woodside, they only have to count the emissions produced when they produce the gas. The 90% that they sell, which is then burnt overseas or wherever is not counted. So our entire climate change policy mechanism is disregarding the fact that 90% of the emissions that are coming from Australian gas and coal is not being counted. All of that exported gas is not being counted. Now the issue for me, for most environmentalists, for most scientists, for the Greens, for David Pocock, for the vast majority of the public, is that if you're not reducing emissions and you're not counting new gas that's coming on line. It's a mechanism that's built to not deliver climate change action. It's a mechanism that's designed to allow gas companies and coal companies to continue to operate and to buy off their obligations. This is the policy basis upon which the safeguard mechanism today is built on. It's a very small change from what the Coalition proposed to what the Albanese Government is proposing. It's a tightening of a rotten system.

RUBY:

And were there warnings along the way that this system wasn't or isn't actually working? Did we hear kind of alarm bells from journalists, from universities, from scientific organisations that relying on carbon credits and offsets was not actually going to help us in the way that might be hoped?

NICK:

Look, it actually snuck up on a lot of people because these things are so hard to measure. It's so hard to measure how much abatement you're getting from a forest. It's so hard to measure how many trees are on a particular piece of land. None of the data is being made available by the government. So it was really only at the start of last year that this story started to come out because there were some academics through ANU and then others from UNSW, University of Sydney. Eventually their criticisms of the effectiveness of offsets were echoed by a bunch of other scientific organisations. The UN has basically said that offsets, while they're a part of the mix, they have to be the last resort. So you have a, what we call a mitigation hierarchy where the first thing you need to do is reduce emissions. Offsets are at the very bottom of this. The worst possible way to cut emissions is to equate them with emissions abatement and offsets, because fundamentally trees don't store carbon as well as coal stores carbon or gas underground stores carbon. It's limited. You know, when there's a bushfire, when land is degraded, you lose those emissions. The best estimate that I've come across in all of my reading is that 70 to 80% of the most commonly used credit methods are bogus. It means that we've built a scheme in which farmers are making money from generating credits, traders are making money from the credits. The government gets to say We've reached our emissions abatement tasks. Gas companies get to buy the credits for pocket change and not reduce their emissions. And everyone turns around and says, We have a system that's working. Vote for it. Please pass this. And if you don't, you're irresponsible. This is where the politics are at the moment.

RUBY:

We’ll be back in a moment.

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RUBY:

So Nick, you’ve spoken about how Australia is overly reliant on these carbon offsets. And Labor’s answer to the climate crisis seems to be to double down on that system. But could you just explain to me just how it is that offsets don’t seem to actually work to offset the damage of emissions?

NICK:

I mean, to give you one example, and this is something that just seems completely absurd to me. One of the biggest methods of getting carbon credits is a method called ‘avoided deforestation’. This is where a farmer has a land clearing permit, but they choose not to act on that permit. So essentially what they're saying is, I could have cleared this land, but I didn't. Give me a carbon credit, please. And there are millions of these carbon credits. There are millions of them. This is literally someone from a carbon trading organisation going to a farmer and saying, “if you can tell me that you were going to clear this land, but now you're not. I'll give you money for your land”. This happened over and over and over again. That’s not improving anything. That's literally doing nothing.

RUBY:

Right, and so this carbon offset industry of selling and trading these credits, who’s behind it, how does it actually work?

NICK:

From the sort of 2000’s onward, people realised that you would have to draw down carbon from the atmosphere as well as cutting it. At some point, this became the main game for, you know, gas and fuel companies. They would realise abate instead of cutting their emissions. But in the meantime the whole bunch of projects started up, everyone thinking that they can plant trees on land and then they can actually earn money by doing it. A lot of people didn't think through the implications of the fact that every credit that was sold was being snapped up for continued fossil fuel extraction. There were so many people invested in one way or another into carbon credit schemes that it had the effect of silencing some of the environmental organisations that you would think would be fighting against this.

You'll find people who used to be on the board of the ACF or WWF having commercial interests in carbon offsetting now. And you know, in the same way you had former gas executives going into carbon trading themselves. So most of the big carbon aggregators they either have on their board, ex-gas industry execs or they have shares of their company being bought by gas companies. So Japanese gas companies have shares in several of the largest carbon trading organisations and the Climate Change Authority is being led currently by two people who used to, in one case currently are working with gas industry groups. I mean, Grant King was the head of the Business Council. His whole career has been in fossil fuels and now he's the board of the biggest carbon credit generator in Australia. He's the chair of the board of that and of the Climate Change Authority. I mean, how is that not a conflict of interest? I think the entire policy environment has been warped by these sorts of connections. I'm not alleging that people have sort of, you know, they're not rubbing their hands together and cackling wildly. But I think it's just happened that over time there's been a conflation of the idea that growing trees is good for the environment and that you could make money out of it while doing good for the environment. But as to say, it didn't account for the fact that all of these credits are being snapped up by polluters.

RUBY:

Hmm. I mean, one of the most shocking things about all of this is the idea that coal and gas companies, that they're profiting from the system. Could you take me through that, what this actually means for a polluter? I mean, you talk about Woodside's Scarborough project in your piece, just to kind of underline that.

NICK:

So they're proposing off the coast of Western Australia a gas project that over its lifetime will produce 1.4 billion tonnes of CO2 equivalent emissions. That one project is producing more CO2 emissions than the entire safeguard mechanism abatement. One project would outweigh all of the good that the safeguard mechanism is apparently doing. That's even if you accept that the safeguard mechanism is abating anything and not offsetting them. But since it's in development it has the support of the Albanese Government. There are 100 projects that are in the pipeline. Now how on earth we've got ourselves into a situation where we're saying we're reducing our emissions by 5% per year. Not everyone, just a small subset of polluters. At the same time we're opening massive new gas fields that will absolutely outweigh any good that we're doing. It's crazy.

This is the system that the Labour Party is currently defending furiously. And, you know, and you can understand why the big polluters and big business are saying, let's just pass this legislation. Don't change a thing. They love it.

RUBY:

So Labour's safeguards mechanism, that's the centrepiece of the climate response, when you look at that policy, I suppose in conjunction with with everything else, all of Labour's other climate policies, what conclusions do you come to about how equipped we are or aren't as a country right now when it comes to making meaningful change on emissions?

NICK:

We're at day zero. We're Nowheresville at the moment, unless we can get amendments to this bill that limit the use of offsets, so that it requires actual reductions. Unless we think of a way to stop or radically reduce the number of new coal and gas fields coming online. We're just playing in the kiddie pool. It's like this is all on paper stuff. We're not cutting any emissions. We’re exporting all of our reduction efforts overseas, we're putting it's the drug dealer's defence, it's everyone else's problem. We're happy to make money off it. We're not reducing anything. It's kind of pitiful.

RUBY:

Nick, thank you so much for your time.

NICK:

Thanks Ruby.

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RUBY:

Also in the news today,

The US economy has suffered the largest banking collapse since 2008.

Silicon Valley Bank, a bank that served tech-startups and investors, had grown to be the 16th largest bank in America.

But on Friday regulators shut down the bank and were seizing assets, after a bank run from depositors.

And

Floods in the Gulf of Carpentaria, in far North Queensland, have forced evacuations, with water reaching the roofs of homes in several towns.

Farms and cattle stations are also affected, with local authorities warning the losses of cattle, stock and food could run into the millions of dollars.

I’m Ruby Jones, this is 7am - see you tomorrow.

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