Panel given less than a month to provide recommendations, despite government’s claims on meeting Paris target

The Morrison government has quietly appointed an expert panel to come up with new ways to cut greenhouse gas emissions and given it less than a month to come up with recommendations.

In what is being seen by observers as an acknowledgment that its main climate change policy, the $2.55bn emissions reduction fund, is failing to cut national pollution, the government has appointed a panel of four business leaders and policy experts to suggest options to expand it.

The panel is headed by Grant King, the outgoing president of the Business Council of Australia and a former chief executive of Origin Energy. It was appointed by the minister for emissions reduction, Angus Taylor, in mid-October but has not been made public.

Business sources say the Morrison government, via officials, has been privately sounding out various groups about an overhaul of the fund for months. But stakeholders were taken aback when the King panel approached them to provide detailed comments on options in less than two weeks.

A letter from King to interest groups, seen by Guardian Australia, apologises implicitly for the compressed timeframe, acknowledging “it may not be possible to fully consult across your membership before providing your response”. But he argues there will be time for follow-up discussions as a final report is prepared.

Coalition's emissions reduction fund labelled 'a joke' after first post-election auction Read more

The letter was sent with a discussion paper headed “Expert panel examining opportunities for further abatement” that critiques and sets out options “to enhance” the fund.

The panel has been established despite Morrison and Taylor maintaining they have set out “to the last tonne” of carbon dioxide how Australia will meet the 2030 emissions target announced before the Paris climate conference. In reality, national emissions have risen each year since 2015 and most analyses suggest the government will not reach the goal, a 26%-28% cut below 2005 levels, under current policies.

The discussion paper, first reported by Footprint, says the emissions reduction fund has been successful in generating carbon offsets from native vegetation and landfill projects, largely because they cost relatively little and do not require businesses to make substantial operational changes.

But it says the scheme has done little to cut emissions through energy efficiency projects and from industry, agriculture and transport, in part due to high upfront and transaction costs.

The emissions reduction fund works as a reverse auction, rewarding landowners and businesses that make cheap, viable bids for taxpayers’ support to cut pollution. The most recent auction bought emissions cuts equivalent to only 0.01% of Australia’s annual greenhouse gas pollution after officials found just three projects worth backing.

The paper says the government is looking at ways to attract more participants from industry and agricultural businesses.

It is also considering new incentives to complement the fund, including partnerships with other tiers of government and the private sector and reconsidering how to best spend “existing financing resources”. Those resources include an additional $2bn committed to the fund before the election (when the government rebranded it as part of what it calls a climate solutions fund) and money allocated to the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.

Up in smoke: what did taxpayers get for their $2bn emissions fund? Read more

Possible emissions reduction options listed include:

Changing the scheme known as the safeguard mechanism, which was supposed to limit emissions from big industry but in practice has allowed pollution to increase, so companies that emit less than their limit are awarded carbon credits they could sell to the government or business. Companies now have limits based on emissions intensity (how much they emit for every dollar earned) rather than outright pollution.

Offering companies cash to help pay for technology-focused emissions reduction projects that would otherwise struggle to be financially viable.

Boosting energy efficiency by giving smaller operators better access to expert advice and providing incentives to reduce energy use in commercial buildings and low-income housing.

There is a view among some stakeholders that the Morrison government is trying to pull together a policy reboot before a meeting of energy ministers at the Council of Australian Governments energy council in November. The meeting has been delayed for months because of wrangling among the participants.

Guardian Australia revealed in August that the New South Wales government had asked Canberra to provide an alternative to the dumped national energy guarantee. It would see the Morrison government underwrite both new generation to replace the Liddell power station, probably firmed renewables, and new investments in transmission.

Energy stakeholders are speculating that some states may also pursue money from the fund to drive abatement .

Questions raised over how $1bn of emissions funding have been allocated Read more

In response to questions about the panel, Taylor said the environment department and expert panel were working together to ensure the $2bn climate solutions fund would deliver the most emissions abatement possible.

He said the commonwealth conservatively estimated the fund would deliver at least 103m tonnes of cuts by 2030. “This is a minimum target, not a cap,” he said.

Interest groups were asked to give quick feedback last week before the panel submits advice to Taylor next month. The other panel members are Susie Smith, chief executive of the Australian Industry Greenhouse Network, Prof Andrew Macintosh, head of the Emissions Reduction Assurance Committee, and David Parker, the Clean Energy Regulator chairman.

The fund has faced consistent criticism since it replaced the Gillard-era carbon pricing scheme. A Guardian Australia investigation found while the type of vegetation projects it supports were worthwhile it was often difficult to know what taxpayers were getting for their money.

There have been problems with how emissions cuts from some projects have been calculated and some methodologies have paid for cuts that would have happened anyway. Others have supported fossil fuel projects.

The government has also been criticised for planning to reduce the difficulty of meeting its 2030 target by using what are known as “carryover credits”, which it has claimed for Australia surpassing the targets it set under the Kyoto protocol (an 8% increase in emissions between 1990 and 2012, and a 5% reduction between 2000 and 2020).

The environment department has conceded it is not aware of any other country planning to use carryover credits to meet a target under the Paris agreement.