ACCUs independent review: Investor submissions round-up

The Chubb Review is examining the integrity of Australian Carbon Credit Units after criticism from researchers at two universities earlier in 2022.

An independent expert panel, led by Professor Ian Chubb, is undertaking a review into the integrity of Australian Carbon Credit Units generated as a result of incentives provided by the Australian government’s Emissions Reduction Fund.

The purpose of the review is “to ensure that ACCUs and Australia’s carbon crediting framework are strong and credible and will be supported by participants, purchasers and the broader community.”

The review was commissioned after the former chair of the ERF’s integrity committee, Professor Andrew Macintosh of the Australian National University, labeled the scheme an “environmental and taxpayer fraud” in a series of papers published in 2022 with colleagues.

The terms of reference for the inquiry include:

  • whether the ACCU scheme’s governance under the Emissions Reduction Fund and the Clean Energy Regulator is fit for purpose;
  • whether the scheme is appropriately transparent;
  • whether the methods used to generate ACCUs meet integrity standards;
  • whether current processes are appropriate to manage negative ESG impacts;
  • and the extent to which carbon projects support positive ESG outcomes, including for biodiversity and the participation of First Nations people.

The panel was appointed in July 2022 and will provide a report to the Australian government with recommendations by December 31, 2022. It invited submissions from interested stakeholders, which it has published in full online.

Here are a selection of submissions made by investors or by companies with private equity investor interests – this is not an exhaustive list, but a selection of some of the most relevant submissions and the most relevant points around integrity and transparency raised within them:

Australian Council of Superannuation Investors

The ACSI represents 26 Australian and international institutional investors on ESG issues. Its members have more than A$1 trillion in funds under management.

The organization said it supported the review because, as long-term investors, ACSI members need accurate information on the sustainability risks and opportunities of the companies they invest in.

The ACSI particularly called for better transparency around how companies use ACCUs, arguing that the “extent to which ACCUs support a company’s emissions reduction target is often unclear. It expressed support for more robust disclosure standards that would include stating whether offsets were generated using nature-based or technology based-methods; how they are verified; whether the offset represents carbon removal or emissions avoidance; the extent to which a project is achieving greater carbon abatement than what would be achieved in its absence; and the permanence of an offset.

It went on: “This information is used to guide stewardship activity, risk assessment and investment decisions. Transparent disclosure of the use of ACCUs would be valuable in assessing a company’s emissions reduction plan.”

Climate Friendly

Climate Friendly is a carbon farming services provider that is majority-owned by private equity firm Adamantem Capital, with Japanese conglomerate Mitsui & Co among its other investors.

Climate Friendly robustly defended the integrity of ACCUs in its submission, especially disputing the use of the word “fraud” by researchers from the ANU, making its number one recommendation that the Chubb Review panel “confirm there is no evidence of fraud, and that ACCUs issued from human-induced regeneration projects are based on credible science, have rigorous technical safeguards, and passed independent audits.”

As other submissions also proposed, Climate Friendly suggested greater transparency and sharing of information would be useful, proposing the creation of a “National Integrated Land Database” to allow sharing of data in a way that protects privacy while enhancing transparency and promoting research capability.

It also called for enhanced regulation of service providers to Australia’s carbon markets and carbon farmers, adding: “Government should provide realistic, unbiased guidance to land managers outlining the true complexity of operating carbon projects, and the full package of expertise required.

“This contrasts with current communications materials published that commonly suggest navigating the scheme is simple and imply land managers could self-service. This would help build trust in the skilled advice provided by the carbon service industry, and enable land managers to conduct an honest appraisal of the trade-offs of self-managing a carbon project, as compared with appointing one or multiple service providers to assist them with project management and administration.”


GreenCollar is a service provider working across carbon, water quality, biodiversity and plastics markets which counts KKR’s Global Impact Fund and Ontario Teachers’ Pension Plan among its significant shareholders.

The firm made a joint submission to the Chubb Review alongside a group of researchers from the ANU and the University of New South Wales – the team behind the initial claims of fraud that prompted the review. It said: “While supporting the carbon market and role of land sector offsets, we have shared concerns about the ERF’s governance arrangements and the integrity of the measurement of sequestration under the human-induced regeneration method.”

The submission said that GreenCollar and the research team agreed on these points following “constructive dialogue,” noting that GreenCollar itself assured the panel that its own projects were delivered in compliance with current regulations and that the research team was not suggesting otherwise.

The GreenCollar/ANU/UNSW submission argues that current legislation does not ensure all methods meet offsets integrity standards, and that the Clean Energy Regulator has too many roles and is potentially conflicted.

In particular, it argued that the human-induced regeneration method, which can credit ACCUs for regenerating native forests through land management practices, is flawed due to concerns over accurate measurement of sequestration levels and concerns over additionality. On the latter point, the submission said: “The primary driver of fluctuations in woody biomass in uncleared rangeland areas is rainfall […] The HIR method does not control for the impacts of rainfall on regeneration. That is, it has no processes for separating out the impacts of management from the impacts of rainfall in any observed increases (or decreases) in woody biomass.”

GreenCollar, among other recommendations, suggested moving from a modeled-only approach on these projects to requiring direct measurement of regeneration.

The submission acknowledged that GreenCollar and the university research team have “differences of opinion” on the best way to resolve issues with the HIR method on additionality, but said they “agree on the need for integrity issues to be resolved as quickly as possible.”

The Nature Conservancy

The Nature Conservancy has been investing in Australian land projects since 2002, often alongside agriculture asset managers.

TNC submitted that recent public debate about the integrity of the ERF’s governance and methods has had a “significant detrimental impact on the carbon industry and the reputational standing of ACCUs.” It suggested de-coupling the CER’s regulatory function and its role as issuer of ACCUs from its role as a buyer of ACCUs, and called for the Emissions Reduction Assurance Committee, the body that carries out assessments to ensure integrity of the ERF, to be made fully independent of the regulator.

It also suggested that, as a general rule, any ACCU issuance should be based on publicly-available data, and that any ‘bring-your-own’ models or measurement approaches used for crediting and issuance of ACCUs under the ERF scheme should also be made publicly available and freely accessible to any ERF participant.

“This is in the interest of the integrity, transparency and equity of what is an Australian government-run scheme that should not ‘pick winners’ […] We would argue public interest outweights any potential concerns in relation to commercial intellectual property, and the integrity of the Australian carbon market […] should take precedence,” it said.

TNC said that the ERF scheme and its governance and regulation have “increasingly become dominated by a small number of large, national carbon project developers/aggregators which have developed significant capacity and capability and shaped the system” over the last five years.

New Forests

New Forests is a global asset manager, headquartered in Sydney, with more than A$8.7 billion ($5.8 billion; €5.7 billion) of assets under management across a portfolio of sustainable timber plantations, carbon projects, agricultural assets, timber processing and infrastructure.

The firm said it supported the integrity of the existing methodology used for plantation forestry and that it believed different approaches around how to quantify abatement should also be explored.

Specifically, New Forests addressed several concerns over integrity raised in a paper published by researchers from the ANU, which was partially responsible for prompting the government to launch a review of the ERF scheme.

New Forests said: “The ANU paper states that ‘there is no credible evidence that there is likely to be a significant contraction in the plantation estate any time in the foreseeable future’. New Forests is aware of substantial evidence that there will be a significant contraction of the Australian plantation estate and refutes this claim.” It pointed to ERF projects developed in New Forests-managed assets that would otherwise be converted to non-forest land.

It also said that concerns around a lack of proof that plantations would be converted to non-forest land were not well-founded, arguing that forecasting of the economics of land use in Australia was well-established and robust; that the payment of expert consultants for economic or financial assessments (including to assess carbon project finance) was a well-established practice; and that the large amount of freehold land ownership of plantation estates in Australia – much of which is owned by institutional investors who make decisions based upon the highest and best use of land from an investment return perspective – meant that a material threat exists to a large proportion of this land should ERF incentives not exist.

Northern Australia Pastoral Company

NAPCo is one of the oldest and largest cattle companies in Australia, with a landholding of more than 6.1 million ha across the Northern Territory and Queensland. It is owned by funds managed by QIC.

In response to a question from the panel about the appropriateness of the current eligibility criteria for creating ACCUs, the firm said that the requirement for ERF projects to meet ‘additionality’ and ‘newness’ tests creates significant barriers to participation for cattle companies, particularly with respect to vegetation and land management methods.

“International voluntary carbon markets (such as VERRA) currently offer the ability to generate credits from feeding methane mitigating additives. The ‘newness’ requirement is exempted for supplementary feeding in some markets and a retrospective period of two years is applied in others. Both are approaches that should be given consideration for the Australian context,” it said.


Pollination is a specialist climate change investment and advisory firm, launched in 2019. It partnered with HSBC to launch Climate Asset Management in 2020, which has ambitions to raise as much as $1 billion for its inaugural natural capital fund. The firm said it currently has no interests in ACCUs or ACCU-generating businesses at the time of its submissions.

Pollination expressed the view that the Clean Energy Regulator’s role as both regulator and purchaser of ACCUs was “not considered by many in the market to be a best-practice governance arrangement,” and this “at least” created a perception of a conflict of interest which is damaging to the scheme’s perceived integrity.

The firm said it felt current integrity standards are “robust,” but that they could be enhanced by introducing a review cycle at regular intervals with public consultation. Pollination also suggested the CER might consider reviewing standards against emerging international standards in voluntary markets.

On transparency, Pollination said that the ACCU project register as currently formed “does not provide an adequate level of transparency to maintain public confidence in the legitimacy of the scheme,” suggesting the government could amend privacy to allow for more public disclosure of project documentation.


Quintis owns and operates more than 12,000 ha of Indian sandalwood plantations in Western Australia, the Northern Territory and Queensland. It is majority-owned by funds managed by BlackRock, which took over the firm after it fell into administration in 2018.

The firm pointed out that most of its growth in regional Australia has been supported by foreign investment, but that the FIRB process does not place any emphasis on environmental benefits resulting from that investment. It suggested: “Approvals by FIRB for foreign investment could include a focus on the potential for carbon credits being earned by the particular project under consideration […] If this were to be the case, future investment consideration of projects attracting carbon credits would be therefore more attractive to overseas investors.”

On integrity, Quintis discussed the Emissions Reduction Assurance Committee’s test for assessing additionality of carbon offsets, which requires that a substantial majority of carbon abatement likely to be credited under the assessment method would not have occurred in the absence of the incentive provided by the ERF. Quintis argued this test was “somewhat binary” as the carbon credit incentive would determine whether a project proceeds or not, regardless of the project’s wider business case.

Instead, Quintis argued it would be better if ERF incentives worked as “an added incentive to the project proceeding, rather than it being determinative […] Rather than having the additionality question solely rely on carbon credits determining the viability of a proposed project, Quintis proposes that the question could be framed as to whether the incentive of carbon credits was a contributing factor to the project going ahead.”