Heavy industry should be able to trade away emissions by investing in environmental projects overseas, a federal review has found.
International carbon markets can “smooth the transition” for Australia, the Climate Change Authority advised in a report to government published on Thursday.
“It can be part of a plan for faster, deeper transition to net zero and beyond,” the review of international offsets found.
But critics say it is unclear how buying cheap carbon credits overseas will bring down emissions or help other countries meet their climate targets.
Climate Change and Energy Minister Chris Bowen told AAP he is considering the recommendations, including the call for a national carbon market strategy.
“This report highlights that international carbon markets are still evolving, and provides recommendations for Australia’s engagement with them,” Mr Bowen said.
He said the government’s immediate focus is on the integrity and growth of the domestic carbon market, and high-quality offsets that are good for the regions as well as the climate.
Labor’s commitment to 43 per cent lower emissions by 2030, to get to net zero by 2050, does not indicate whether international offsets will be used to help meet the targets.
More than 200 industrial facilities are currently covered by a national scheme – also under review – that puts a cap on allowed greenhouse gas emissions and is designed to penalise any breaches.
Refineries, gas firms, mining operations and other heavy industries have plans to retrofit plants and equipment, but new technologies and alternative fuels are not yet commercially viable.
Bridging the gap, many rely on carbon credits.
The review found that while carbon is priced and traded in Australia, the market is “fragmented, inefficient and complicated”.
The authority’s chief executive Brad Archer told AAP Australia must ensure the domestic carbon market has integrity and that units represent genuine benefits.
The review of international carbon offsets was commissioned by former energy minister Angus Taylor, but Mr Archer said the advice was “neutral”, with the outcome of the review unchanged.
Australia’s emitters must also prepare for “net negative”, where the economy is required to remove more carbon than it emits, he said.
Limiting global warming to 1.5 degrees requires net zero carbon emissions by 2050 and net negative emissions in the second half of the century, according to the report.
Set for a budget boost to meet a high-priority federal agenda, the authority plans to hire more staff after being reduced to a rump of less than a dozen under the prior government.
NATIONAL STRATEGY UP TO GOVERNMENT:
* To make Australia’s carbon price more visible, understandable, and certain
* Help embed business and industrial decarbonisation in everyday decision-making
* Uphold the integrity of offsets – how they are generated and used
* Clarify the role of domestic and international units in the mix of voluntary action and compliance mechanisms.
