Types of Credits
What types of carbon credits are available in Australia?
There are several types of carbon credits that are currently being generated by projects undertaken in Australia and around the world. Each credit, represents one tonne of carbon dioxide equivalent (tCO2-e). Credits are able to be used to offset emissions against compliance liabilities (in accordance with Australian Government emissions reduction related legislation) or to make voluntary carbon neutral claims and/or become carbon neutral certified.
Credits eligibile for carbon neutral claims against the National Carbon Offset Standard
Organisations wishing to offset their emissions for a carbon neutral claim against the Australian Government’s National Carbon Offset Standard (NCOS), are able to use a variety of different credits. Carbon credits currently eligible are listed below. When using a carbon credit to make a carbon neutral claim, that unit must be cancelled or retired in a public registry at the time of the claim.
Australian Carbon Credit Units (ACCU)
An ACCU is a carbon credit unit issued to a person by the Clean Energy Regulator (Regulator) by making an entry for the unit in an account kept by the person in the electronic Australian National Registry of Emissions Units (Registry).
Each ACCU issued represents one tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. An ACCU can only be issued to a person if the person has a Registry account, and a Registry account can only be opened by a person after the Regulator has considered whether they are a ‘fit and proper person’.
ACCUs represent the majority of units issued by projects in Australia; their creation and issuance are guided by the Carbon Credits (Carbon Farming Initiative) Act 2011, with industry methods, land sector methods, and market activity overseen and administered by the Clean Energy Regulator.
Voluntary Emissions Reduction Units (VER)
The Gold Standard is the first independent best practice benchmark for carbon offset projects and oversees the creation and issuance of Voluntary Emission Reductions units or VERs. It ensures that carbon credits are not only real and verifiable but that they make measurable contributions to sustainable development worldwide.
The Gold Standard’s objective is to add branding, a label to existing and new Carbon Credits generated by projects which can then be bought and traded by countries that have a binding legal commitment according to the Kyoto Protocol. It is important to note that verified Gold Standard VERs are acceptable under NCOS, however validated Gold Standard VERs are not as they cannot be cancelled. For more information on this distinction click here.
Verified Carbon Standard Units (VCU)
VCS develops and manages standards and frameworks to vet environmental and sustainable development efforts, build their capacity and connect them to funding.
Under the VCS Program, projects are issued unique carbon credits known as Verified Carbon Units or VCUs. Each VCU represents a reduction or removal of 1tCO2-e achieved by a project. VCUs are characterized by a number of quality assurance principles which are confirmed through the project validation and verification process.
Certified Emission Reductions Units (CER)
CERs are equal to 1tCO2-e. CERs are issued for emission reductions under the Kyoto Protocol‘s Clean Development Mechanism (CDM).
Projects registered under the CDM operate in non-Annex I Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol (essentially Developing Countries). Annex I Parties to the UNFCCC and the Kyoto Protocol (developed countries) can use CERs to meet their emissions reduction or limitation commitments.
Eligibility for Trade & Compliance
For the purposes of compliance with national emissions reduction legislation (for Australian business) and managing its emission reduction obligations under the Paris Agreement, the Australian Government tracks the movement of carbon credits through the Australian National Registry of Emissions Units (ANREU). You can find further information about the types of units that can be held and traded through the ANREU here.