Senate Environment and Communications Legislation Committee [Part 2], , 0:03 to 7:58
The committee examines the Clean Energy Regulator regarding the issuance of Australian Carbon Credit Units and the growth of the secondary market.
Topics: Carbon farming, Emissions reduction
Speakers: Carl Binning, Senator Andrew Bragg, Tony Chappel, Dean Smeulders, Mr. Tony Chappel, Hon Murray Watt, Mr. Dean Smeulders
from the clean energy regulator. Welcome, Mr. Tony Chappel, uh the chief executive officer and chair. Uh and to your colleagues as well. Uh Mr. Chappel, do you wish to make a short opening statement? >> Um very briefly, if I may, uh chair, um >> I'll just join in acknowledging uh the ancestors uh and elders of the Nunal people who walk alongside us and since deep time have cared for country here. Um, I'd like to pay tribute to my predecessor, David Parker, who stewarded Australia's carbon and environmental markets over the past decade. Um, and simply add that I'm humbled to have been appointed to lead the clean energy regulator at this time and commit to playing our part in the productive renewal of Australia's energy systems and industrial capabilities consistent with our obligations as we work to enable a safe climate and sustainable prosperity. Thank you. Senator Bragg,
>> so what can I ask? This is a clean energy regulator, is it?
>> Yes.
>> Okay.
>> I can't ask about regulating clean energy.
>> I can't ask him about um >> Can't ask him about the um DPBC, can I?
>> No, but you won't have to wait long to wait that you're probably thinking of the EPA.
>> Okay. So, um what uh so you issuing the ACUs? Yeah,
>> that's correct.
>> Yeah. How's that going?
in my five weeks to date seems to be progressing uh well.
>> How many have you issued in five weeks?
>> I haven't personally issued any but uh I might pass to my colleague Mr. Binning who can give you some detail on ACU
>> Thank you Carl Binning, executive general manager at the Clean Energy Regulator. Uh so issuances are going well. So um uh we have uh projected uh that we will issue uh between about 21 million and 26 um uh ACUs this year.
>> How many
>> uh between 21 and 26 million
>> and how many of those will be sold to to
Um so that will depend on um uh the carbon abatement contract u process uh senator. So
>> but aren't they units so you can tell who's who you're selling them to?
>> Um yes. So under um uh the previous government as you'd be aware um through the emissions reduction fund there was an arrangement where people could enter into contracts uh to uh deliver ACU uh to uh the government. Um and uh earlier this year the government announced a permanent exit arrangement which would allow people to um deliver um uh 20 uh% 25% of uh the contracts um to uh the Commonwealth and uh be able to be released uh from the other obligations. Um and that process is underway. Um I can't fully quantify the number uh that will be delivered uh but I think to date uh since um the exit arrangement was announced a little over a million ACUs have been uh sold to government um to be placed in the cost containment measure and I will just have that number checked >> uh since the start of this year but I'll just have that number checked um and uh Mr. Smeulders uh can potentially give you uh the precise number.
>> Thanks Carl. Dean Smeulders, acting general manager uh ACU scheme soil emissions avoidance and contracts. So I can advise under the permanent exit arrangement as Carl said uh that started well delivery since 1 January 2025 is when that became eligible to uh contracts under the permanent exit arrangement. Uh we've had 1.598 million ACUs delivered um
>> issued and to state governments.
>> No, so they're ACUs that have been delivered to uh the Commonwealth under the Yeah. under their existing carbon abatement contract. >> What about states? >> Um well, no.
>> So, Senator, I'm not aware um of any accuses that have been issued uh to state governments uh in uh the last 12
months. Okay. So, of that 21 million this year, about 19 million have gone to private enterprise.
>> Yeah. So, the way the ACU scheme uh works uh senator is of course people register projects >> um with us at the clean energy regulator against a methodology uh that has been approved by the emissions reduction uh advisory uh committee. uh and then they implement the project and then when they hit uh particular performance milestones ACUs are issued. >> Uh typically uh if it was a landholder or the owner of a landfill uh for example uh they would um contract with a carbon service provider >> and uh typically uh the ACUs are issued then to the project proponent. Those accuses are then generally um shared uh between the carbon service provider and the project uh proponent and that's a contractual matter between them. So your characterization of in the order of uh 19 million uh accuses uh in in the marketplace uh over the course of the last 12 months uh is correct. Um they can then choose um how they sell those ACUs. uh there's a wide range of of options available to them. >> Uh some proponents choose to hold ACU uh for the future. Others will have sold ACU's forward uh typically to a safeguard uh entity >> um that will use them for compliance uh purposes or they can sell them to an intermediary who may be uh trading on the market.
>> And how regularly does that happen? how I mean I'm just wondering how how we're going with developing a secondary market
>> Um so Senator um I I would characterize the secondary market as uh well established um but relatively thin. Um so we have just under 70 million ACUs in the inventory that have been generated.
>> 70
>> 70 just under.
>> Okay. And you're going to issue 20 million this year. So this has been a big year.
>> Yeah. So the the supply is growing. Do
you do projections over the forwards or
>> Uh sorry Senator I didn't catch that.
>> Do do you do projections over the forward estimates >> or over future years?
>> We we have a broad view. There are a range of organizations uh that do uh forecasting. >> Uh what I'd sort of be comfortable to say is we sort of see steady year-on-year growth. Uh nothing spectacular.
>> Okay.
>> Uh through to about 27 28. uh beyond 2728 um additional supply will start to become dep dependent on new project >> uh development and so I would say the market is in in a good shape uh but there is no uh room for complacency given the lags that are experienced from project conception to generating and registering a project and then ACU's being uh issued >> that would typically be sort of a 3 to five year sort of project cycle. >> So, it's very important that the pipeline remains vibrant and we keep track of all those things and we're broadly comfortable uh that the ACU market remains uh in good health.