Energy and emissions reduction minister Angus Taylor told the Carbon Market Institute Emissions Reduction Summit last week that he remains optimistic about the role offsets will play in industry's efforts to reduce their emissions.
He described the government's role as "an enabler, supporting the private sector's initiative, innovation and drive".
The government's plan relies on voluntary incentives like its Emissions Reduction Fund, which he said had abated 17 million tonnes this year, and both companies and the government purchasing Australian Carbon Credit Units which last month hit a record high of A$36.50.
Taylor said auction volumes have increased fourfold, with more than 20 million tonnes of abatement contracted across the last three auctions, compared to 5MMt for the three auctions before.
He also said that 99% of the abatement contracted in 2021 was through optional delivery contracts.
"So long as spot prices remain above the contract price, more than 13 million tonnes of abatement will be achieved through Commonwealth underwriting, at no cost to the taxpayer," he said.
"The voluntary market is also growing at a rapid rate, with the Clean Energy Regulator's latest forecast for demand to exceed one million tonnes this year."
Taylor announced that the government would consult on a change to the Emissions Reduction Fund to reduce the risk of native vegetation projects having an adverse impact on the regions.
He also said the government would task the Climate Change Authority to review eligible offsets for Commonwealth certifications like Climate Active.
"It is important that claims made through programs like Climate Active are verifiable and robust," Taylor said.
He said the government was developing new forms of recognition for businesses that buy 100% ACCU's or purchase 100% renewable electricity and said this would be expanded to recognise other types of energy including low-carbon hydrogen and biomethane.
Taylor was critical of the opposition's policy to ratchet up the Safeguard Mechanism's power by gradually lowering its emissions baseline on Australia's 200 most polluting facilities, arguing that the costs on companies would eventually be passed down to consumers in the form of higher electricity prices, manufacturing costs, or job losses.
"That's not acceptable to us as a government, and as history has shown, it's not acceptable to the communities we are elected to represent," he said.
In his own address to the summit, opposition energy spokesperson Chris Bowen noted groups like CMI and the Business Council of Australia and the Australian Industry Group have recommended improvements to the Safeguard Mechanism and industry would be heavily consulted on the changes made.
"We'll ask the Department of Industry and the Clean Energy Regulator to advise us on each facility's share of the overall trajectory," Bowen said.
"They will consider each facility with regard to available technology in that sector, and we've committed to tailored treatment for emissions-intensive, trade-exposed facilities.
"Once baselines are set, each facility will be free to choose its own least-cost form of abatement."
"There will inevitably be a mix between direct abatement by investing in technology and efficiency improvements, and offsets."
He argued that lowering the emissions baseline of the Safeguard Mechanism would boost private investment in Australia's carbon markets.
This would be backed up by Labor's plan to direct uncommitted cash from the Emission Reduction Fund and Climate Solutions Fund into a new Powering the Regions Fund as well as directly purchasing ACCUs.
Bowen said Labor would conduct its own review of the ACCU framework, noting that private demand is expected to increase.
"Growing private demand for ACCUs - both the voluntary demand we're already starting to see, and further demand under the Safeguard - represents a big change," he said.
"We want to make sure the ACCU framework is fit-for-purpose for that change."
