The controversial emissions reduction fund is Australia’s central climate policy. It was introduced by the Abbott government in 2014 after Labor’s so-called “carbon tax” was repealed. The fund gives financial incentives to businesses, landowners and others who reduce carbon emissions through projects such as planting trees, installing more efficient appliances or managing bushfires. About half the 192 million tonnes of emissions cuts pledged under the fund relate to projects using one of two revegetation methods which together have promised abatement worth at least $1.15 billion. Most projects using the methods under review involve regrowing native forest on grazing land. Credit:Louise Kennerley The projects are mostly on grazing land in northwest NSW and southwest Queensland. They involve regrowing native forest by means such as limiting cattle grazing and managing feral animals.

In theory, this revegetation reduces greenhouse gas levels by drawing out carbon dioxide from the atmosphere and storing it as carbon in plants as they grow. A government-appointed expert committee is examining the two methods in what it says is a routine review to ensure emissions reductions "remain genuine". A former official at the regulator, Raphael Wood, told Fairfax Media that the organisation recently began using new satellite imagery of project areas that revealed “issues” with estimations of carbon abatement. He said it showed some land slated for revegetation likely had little forest potential, while forest may have already existed on other land where revegetation had been promised. Mr Wood left the regulator in 2015 and is now an independent consultant. He said the onus was on project proponents to accurately measure carbon abatement and any miscalculation was probably not intentional. However the regulator needed to “tighten up the robustness of the standards” used to estimate carbon reserves. “The regulator is transitioning from a period of participation focus [to attract projects to the scheme] to a compliance focus,” he said, adding the approach taken so far involved “learning by doing”.

Projects are issued with Australian carbon credit units as emission reduction is delivered. More than 12 million credits, each representing one tonne of carbon abatement, have been issued to projects using the methods that are under a cloud. Credits are mostly purchased by the regulator at a reverse auction, seven of which have been held so far. Fairfax Media is aware of concerns held by other former regulator staff that projects using the methods under review continue to be approved and issued with carbon credits, despite questions over their robustness. Such fears were underlined by the Climate Change Authority’s review of the fund in December last year, which cited concerns including that "vegetation on the ground may not match assumptions in the model". Mr Wood said while some claimed carbon abatement may not have actually been achieved, other projects had created more emissions cuts than they were credited for, or would do so in future. He said assumptions underpinning the methods allow for variations in carbon estimation areas, projects were audited and if forest did not regrow in a particular area that land would be removed from the project. Revegetation projects under the fund aim to draw carbon dioxide out of the atmosphere. Credit:MICK TSIKAS Tim Baxter, a researcher at Melbourne University's Australian-German Climate and Energy College, has closely examined the emissions reduction fund.

He said while it was one of the world’s strongest offsetting regimes, there was still “a huge problem with integrity under most methods” and “[taxpayers] don’t know how badly we are getting ripped off”. “The government then uses those figures to say ‘look how much [carbon abatement] we’ve bought’, which is to some degree a furphy, and we are also reporting those under our Kyoto commitments ... when in actual fact there are really serious questions about how much carbon is coming out,” he said. In a statement, the Clean Energy Regulator said it “continues to focus on compliance activities” as the scheme matures and requests for carbon credits increase. The regulator would not guarantee that all emissions reduction credited under the fund so far was genuine but said it “has a number of processes in place to address this risk, including an internal audit program, use of high resolution imagery and other evidence to validate claims”. Projects are subject to at least three audits however physical inspections of projects are not mandatory and "auditors will use their professional judgment and will undertake a risk assessment for the project to determine when a site visit is required".

The regulator was “working with industry to co-design technical guidance” relating to the two methods under review, it said.