Australia's carbon offsets under scrutiny: How the Safeguard Mechanism lets polluters avoid real cuts

A new report from the Australia Institute argues that Australia's Safeguard Mechanism, the country's main climate policy for large industrial emitters, is undermined by its heavy reliance on carbon offsets. The authors explain that most offsets used in the scheme, including Australian Carbon Credit Units (ACCUs) and Safeguard Mechanism Credits (SMCs), do not represent real, additional emissions reductions. They point to research showing vegetation-based offsets store carbon for decades while fossil fuel emissions last millennia, and that many projects are over-credited or fraudulent. The article contrasts Australia's approach with other jurisdictions like the EU and UK, which prohibit offsets in carbon trading schemes, or South Korea and California, which cap them at 5-6%. The authors argue that market dynamics push buyers toward the cheapest, lowest-integrity credits, creating a race to the bottom. They question whether the government's intent is genuine climate action or serving fossil fuel interests.