An Albanese government environment plan to encourage companies to invest in nature merely expands a Coalition proposal under Scott Morrison and is at risk of failing due to a lack of business interest, experts say.
The federal government is consulting on legislation to establish a scheme to incentivise investment in nature restoration by creating tradable certificates for projects that protect and restore biodiversity.
An exposure draft, published shortly before Christmas, is similarly worded to legislation proposed by the previous government and would establish governance arrangements for the scheme.
It follows a speech by the environment and water minister, Tanya Plibersek, last year in which she said she hoped Australia may one day be home to a “green Wall Street” that attracted conservation investment from around the world.
Andrew Macintosh, an Australian National University professor and former head of the government’s emissions reduction assurance committee, said although a nature repair market presented opportunities, there were several issues that could “impede the realisation of its potential”.
“Most obvious is the absence of a source of demand,” he said.
“The government is expecting the private sector to be the main buyer but the private sector is not yet there, at least not at scale.
“If this market is going to work, governments need to be the primary buyer for the foreseeable future.”
Macintosh also said there were governance issues in the draft that could create similar problems to those seen in the carbon offset market.
Megan Evans, a senior lecturer at the University of New South Wales in Canberra, said one concern was the draft only required the environment minister to “have regard” to integrity standards when making a method under the legislation, rather than making the endorsement of methods contingent on compliance with integrity standards.
Evans said she also disagreed with government’s proposal to have the Clean Energy Regulator administer the scheme. She said the environment protection agency, when established, would be better placed to do this work.
The former government proposed a land stewardship scheme that would reward farmers who restored and protected nature on their properties.
The Albanese government’s proposal expands the proposal to all landholders and would apply to terrestrial as well as coastal and marine areas.
Plibersek has put private investment at the centre of the government’s plans for the environment, which include a zero-extinctions target and a commitment to protect 30% of Australia’s land and sea areas by 2030.
But Evans agreed with Macintosh that the private market demand for certificates was “untested and likely overestimated”.
“[The government] haven’t committed any money to kickstart this market so it’s very likely it will be a thin, low-activity market,” she said.
Tim Beshara, manager of policy and strategy of the Wilderness Society, was critical that the government’s first proposal for new biodiversity legislation was “near word-for-word identical” to the land stewardship bill put forward by David Littleproud, the former government’s agriculture minister.
He said the proposal was an attempt to financialise Australia’s nature and outsource its repair to the corporate sector.
Beshara said he was concerned the most likely outcome was the market would become a biodiversity offset market that was by driven by nature destruction elsewhere.
“The government has clearly indicated that while this is not its intention, if regulators choose to use this scheme as part of offset requirements, then that is OK by government,” he said.
“What follows from that is that the only way the market would grow is if the amount of destruction also grows.”
An audit of the NSW biodiversity market, which functions as an offset scheme, found that scheme had serious performance and integrity concerns.
The Greens’ environment spokesperson, Sarah Hanson-Young, said the party would review the legislation carefully but said it was “delusional” to suggest the market would repair Australia’s biodiversity crisis while habitat clearing continued.
Plibersek said once the market was properly structured and running: “I’m confident we will see increasing investment in nature repair.”
She noted a report by the consulting firm PwC had estimated a nature restoration market could inject $137bn into conservation measures by 2050.
“Businesses tell me all the time that they want to invest in nature because their shareholders, customers and staff are demanding it,” she said.
“Global changes to accounting rules make it inevitable that businesses will start reporting on their nature-related risks. There will be an increasing public expectation that businesses act to reduce those risks.”
Plibersek said all feedback on the exposure draft would be considered before legislation was introduced to parliament this year.
