Carbon Credits: Australia’s Next Big Sunrise Industry

As world leaders travel to Glasgow for a crucial meeting of the parties to the Paris Agreement on climate change, they will be acutely aware that the task of reducing global emissions has become more pressing than ever.

The world is not on track to reduce emissions sufficiently to limit global warming to 1.5 degrees Celsius above pre-industrial levels in the 2030s. In fact, based on actions and pledges to date, global temperatures are projected to be more than 2 degrees Celsius above pre-industrial levels by 2100. Global warming of this magnitude would constitute an ecological and humanitarian disaster.

At the Glasgow COP26 meeting, leaders are being urged to make or reaffirm commitments to zero net emissions by 2050 or earlier and to implement policies to back in those commitments. In response, the Australian Government is raising its level of ambition on emissions reduction having announced its firm intent to achieve a net zero by 2050 target.

In making further choices on the pathway towards this target, careful consideration should be given to the benefits to Australia of being part of the emerging system of international carbon credits.

In a new report, Carbon Credits: Australia’s Next Big Sunrise Industry KPMG explains how Australia enjoys a comparative advantage in the removal of carbon over smaller, more densely populated countries.

Australia’s vast tracts of land, extensive coastline and low population density bestow on the continent a natural comparative advantage in carbon removal over smaller, more densely populated countries. KPMG estimates that with current and foreseeable technologies Australia could have long-term carbon removal, capture and sequestration opportunities of up to 100 million tonnes per annum by 2050, which is around one fifth of current Australian emissions.

Further, Australia’s relatively well-developed institutional framework administered by the Clean Energy Regulator offers a level of integrity in its carbon reduction projects, which will be a competitive advantage in this emerging market. Of course, there will always be room for improvement in methodologies and measurement associated with Australian Carbon Credit Units (ACCUs) and this will remain an ongoing project.

Properly regulated ACCUs can be expected to command a price premium over low-integrity alternatives, whose purchase by companies committing to zero net emissions can give rise to accusations of greenwashing their own carbon emissions.

Carbon removal activities earning ACCUs, such as forest regeneration, plantation development and the storage of carbon in soil, offer new income-earning opportunities for Australian farmers, Indigenous communities and country towns, supplementing their incomes from more conventional activities. Our opportunities for geological sequestration and ‘blue carbon offsets’ (marine carbon sequestration) are also adjacent to many of Australia’s regional and Indigenous communities. Some of these are in the midst of the energy transition, and these sunrise opportunities offer valuable long-term job opportunities.

However, the generation of carbon credits should not be used as an easy way out for Australia to reduce its direct emissions. Carbon credits should be seen as a complement to strong decarbonisation efforts and as a way to help meet science-based climate objectives at least cost.

Businesses, particularly those in sectors where emissions abatement is difficult to achieve, need to understand and strategically position within this rapidly growing market.

The Australian Government has an unsurpassed opportunity to create a sunrise industry for regional Australia in carbon credit generation, just as those areas have prospered from wool, wheat, clean, green agricultural produce and resources.

This industry will only meet its full potential if Australia engages fully in global efforts to address the challenge of climate change.

Read the full report.


2 thoughts on “Carbon Credits: Australia’s Next Big Sunrise Industry

  1. This has been tried and failed before. It ends up as just another tax and impacts mostly that part of society who can least afford it. Exactly how does this stop the major corporations from polluting, they simply pay to pollute. Consumerism drives pollution. People wanting the latest and greatest drives pollution, Marketing drives pollution. If KPMG is really intent on helping to reduce pollution, how is it going to actually encourage the reduction of consumerism and wouldn’t this impact on its profitability in the long run? Surely the encouragement of the re-emergence of the repair industry be more sustainable, and hence better for the planet in the long run? Even in the area of electronics – devices are now made non repairable – it is cheaper to throw away than repair. It would use less resources of the planet to change the way they are made and make them repairable. How many people are always wanting the latest phone and indeed telecom companies encourage this by their policies. I have started the process and am now going back and reusing my old phone – which was just sitting in a drawer unused. The saddest thing is that soon the 3g network will be made redundant rendering the phone useless. This is what is driving pollution. and this is what needs to change. Carbon credits to me really are just another green wash of pollution and resource wastage. It is fantastic that KPMG want to help improve our planet and resource management. I am just not sure that carbon credits are the most effective means to the end.

    1. Hi sue, I also love to hear form the expert on how this concept will reduce the pollution, without becoming the stock market where you buy pollution permits?

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