Overview
- The Climate Change Authority published its fifth review finding the Australian carbon credit system broadly sound but changed in use, with heavy industrial firms now accounting for roughly 80% of demand for credits.
- The report raised a new durability concern that many credits come from projects with 25‑year storage promises rather than much longer commitments, and noted such credits made up more than one in five surrendered under the Safeguard Mechanism in 2024/25.
- Authority leaders warned firms are using these credits to meet excess‑emissions obligations under the Safeguard Mechanism, which creates a risk that shorter storage terms do not permanently offset industrial emissions.
- The review recommended clearer public transparency, prioritising projects that deliver public and First Nations benefits, and a formal roadmap for approving new credit methods to protect environmental integrity.
- The government says it will consider the recommendations while parliamentary reforms from the Chubb review process and an ongoing Safeguard Mechanism limits review continue, and changes to credit rules could affect how industry meets compliance obligations.