Chubb dismisses fraud but fails to convince carbon markets are working Down Under

The Chubb Review into the framework surrounding ACCUs has produced 16 recommendations that will help to increase certainty in Australia’s carbon market.

The Independent Review of Australian Carbon Credit Units – or the Chubb Review as it is more commonly known – published its final report this week, providing what looks on the face of it to be a welcome set of conclusions to all participants in Australia’s still-nascent carbon market.

The biggest headline to come out of the report was that former national chief scientist Professor Ian Chubb and his panel effectively dismissed claims of fraud in the generation of ACCUs. The claims were raised in 2022 by another academic, Professor Andrew Macintosh, who also happened to be a former chair of the carbon scheme’s integrity committee.

This was rightly celebrated as a win in many quarters and will lead to increased confidence in ACCUs and, by extension, the carbon market more broadly.

The review also made a set of 16 recommendations which broadly add up to an effort to increase regulation and oversight of the sector, remove any perceived or actual conflicts of interest among the sector’s regulatory and administrative bodies, and generally improve transparency.

This is certainly all very welcome. Any investors who are involved in generating ACCUs will be pleased with this, as it will help the market become more mature and provide greater certainty that each ACCU represents exactly what it is supposed to – which in turn should lead to ACCUs increasing in value.

The results of the review should also mean that carbon farming schemes will expand in the coming years, as the current federal government has promised to explore funding options to implement the Chubb Review’s recommendations in full.

But it should be noted that it not everyone has welcomed the findings of this report with open arms. Some, such as Macintosh, have openly criticized the results, saying that it is something of a contradiction for the review to find that carbon projects in their current form are mostly fine, while simultaneously recommending a set of major reforms to improve the system.

Farmers for Climate Action strategy director Campbell Klose struck a similar note when he said: “It is contradictory to offer solutions without acknowledging the problem. This review skates over the idea that there are any issues with the current market. Australian farmers who have invested in growing carbon crops are the ones who pay the price when integrity issues with carbon credits are revealed because it reduces confidence in the market and the price paid for carbon credits.”

While Chubb was right in a sense to say we shouldn’t throw the baby out with the bathwater just because the ACCUs systems is a bit “frayed at the edges,” no-one is asking him or the government to do that. Rather everyone involved in the market wants certainty that every ACCU produced is genuine, so as not to undermine all ACCUs when claims of fraud arise that are not always easily debunked.

The report calls to mind the most recent major review into Australia’s water markets conducted by the Australian Competition and Consumer Commission, published in 2021, which did a much more thorough job of setting out why it reached the conclusions it did, which was backed up by data.

That review put to bed suggestions that untoward manipulation of markets was keeping the price of water artificially high because of how its final report was framed.

It’s less clear that the Chubb Review will have such a final and definitive say on carbon markets. But at the very least, its recommendations are sensible and will help to increase confidence in ACCUs as the task of emissions reduction grows ever more urgent.