June 10, 2010 / 9:24 AM / 9 years ago

Australia CO2 offset industry fears market to vanish

* Australia under pressure to save voluntary CO2 scheme

* A$150 million offset industry under threat

* Government says willing to listen to options

By Bruce Hextall

SYDNEY, June 10 (Reuters) - The Australian government is under pressure to preserve a respected voluntary scheme to cut greenhouse gas emissions and rescue a multi-million dollar industry from extinction.

Australia’s voluntary carbon market is worth more than A$150 million ($126 million) a year and has cut Australia’s greenhouse gas emissions by more than 6 million tonnes annually, the Voluntary Carbon Markets Association says, or roughly 1 percent of the country’s total.

Now the government wants to launch a new national carbon offset scheme that many in the voluntary offset sector say won’t be as broad as the existing scheme and could kill their business.

In the unregulated voluntary offset market, corporates, individuals and even local councils can choose to reduce their emissions by investing in, or buying carbon offsets from, projects that cut greenhouse gas pollution.

These projects include tree planting schemes that soak up planet-warming carbon dioxide. The current government-backed Greenhouse Friendly scheme sets strict standards for the projects and an industry has grown around this scheme.

With the Greenhouse Friendly scheme set to be scrapped from July 1, many carbon offset producers, such as large-scale tree plantations, for instance, will see their only market disappear.

The government is aware of a lack of domestically generated carbon offset permits due to policy changes, Assistant Climate Change Minister Greg Combet said on Thursday.

“I can assure you we are actively considering this issue,” Combet told Australia’s Voluntary Carbon Markets Annual conference in Melbourne, but declined to talk about the outcome.

Some in the market want the government to extend the Greenhouse Friendly scheme.


Australia’s ratification of the Kyoto Protocol in late 2007 meant that emissions abatement under the greenhouse friendly scheme was no more considered additional to its Kyoto target.

Instead, the scheme will be replaced by the National Carbon Offset Standard (NCOS) that cuts out some offset projects.

Tree-planting offsets were meant to eventually be included under the government’s planned emissions trading scheme (ETS).

But faced with a political backlash, the government in April delayed introducing the ETS until at least 2013, disrupting the investment plans of many firms readying to trade carbon or green their businesses.

Combet said the NCOS opened up new opportunities besides setting a government-endorsed national benchmark to guide firms.

“The NCOS also allows firms to come forward with new approaches for other domestic offsets that are not currently counted towards our Kyoto target, including soil carbon and forest management,” Combet told the conferrence.

But Ric Brazzale, president of the Voluntary Carbon Markets body, said firms that wanted to voluntarily cut their carbon footprint would be left no choice but to import Kyoto approved offsets, such as those from the U.N.’s Clean Development Mechanism.

“There’s a whole lot of projects that aren’t viable any more but people committed to them in good faith — we now don’t have a voluntary market that will allow these and we don’t have a mandated market,” Brazzale told Reuters.

“Companies that set themselves up to provide offsets are now looking for survival strategies.”

Brazzale said for the domestic carbon offset market to thrive the government must recognise voluntary offsets from verified projects and then use these to give up its own units under Kyoto. (Editing by David Fogarty)

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