2026 ACCU Scheme review FAQs

he carbon market has continued to evolve since the Authority's 2023 review. Reforms to the Safeguard Mechanism mean Australia's largest industrial emitters are now the main buyers of ACCUs, rather than the Australian Government. New policies have been introduced to drive emission reductions across the economy, reducing the range of activities eligible to generate ACCUs.

As a result, ACCUs now play a significant role in helping Safeguard facilities manage their emissions obligations. This raises new questions about how the scheme should operate, including whether existing permanence settings remain fit for purpose, and whether credits from projects with shorter (25 year rather than 100 year) permanence periods should be used for Safeguard compliance. 

The growing policy mix also raises questions about where crediting is the preferred tool to drive action – and where other policy tools might be a better fit. 

The Australian Government is progressing legislative reforms that would implement many recommendations from the Authority's 2023 review and the 2022 Chubb Review. 

As at late August 2026, 2 related bills were before the Parliament:

• Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026(Opens in a new tab/window) – which amends the:
  • Carbon Credits (Carbon Farming Initiative) Act 2011
  • National Greenhouse and Energy Reporting Act 2007
  • New Vehicle Efficiency Standard Act 2024
• Carbon Credits (Carbon Farming Initiative) Amendment Bill 2026(Opens in a new tab/window) – which amends the Carbon Credits (Carbon Farming Initiative) Act 2011 to require the Minister to consider additional matters before making or varying a methodology determination for a carbon offset project. 

The reforms include measures to strengthen integrity and transparency, improve scheme administration, establish the Carbon Abatement Integrity Committee and strengthen native title consent requirements.

Importantly, this review reinforces the findings of previous reviews that the ACCU Scheme is fundamentally sound. The focus is on targeted improvements, recognising that policy stability and predictability is crucial to unlocking investment in large scale abatement.

The review was guided by the principles set out in the Climate Change Authority Act 2011, including environmental effectiveness, economic efficiency, equity and the public interest. 

Public consultation was central to the review.

The Authority received 91 submissions in response to an issues paper released in October 2025, and engaged with hundreds of stakeholders through webinars, roundtables and other events. Contributors included ACCU Scheme participants, investors, industry groups, environmental organisations, First Nations organisations and members of the public. What we heard is outlined in our listening report, and addressed in our report. 

The review finds the ACCU Scheme continues to provide valuable opportunities for landholders and project proponents.

Carbon projects can create new income streams, support more resilient and diversified farm businesses, strengthen natural capital and contribute to regional employment.

The review finds that projects with shorter (25-year) permanence periods have a valid place in the scheme, and should continue. This flexibility encourages broader participation, and recognises that storing carbon now can help reduce climate risks by slowing warming sooner. The review recommends further work on the appropriate rules for and use of credits from these projects. 

The report recognises First Nations peoples as rights holders and finds that their participation is central to the scheme’s public value. It supports stronger consent, trusted advice, benefit sharing and involvement in method development. First Nations-led projects demonstrate how carbon projects can support cultural land management while delivering emissions reductions and broader community benefits.

The Authority has not made additional legislative recommendations on consent because the Government is already progressing reforms to strengthen native title consent arrangements. The report recognises that further work may still be needed to align the scheme more closely with Free, Prior and Informed Consent principles.

The report recommends that any future government purchasing prioritise projects with credible First Nations benefits. It also recommends better project information, which could include selected First Nations project attributes where appropriate.

The review finds the ACCU Scheme remains fundamentally sound and an important part of Australia's climate policy framework. 

It recognises the ACCU Scheme and the Safeguard Mechanism are closely linked and that safeguard facilities are now the largest source of demand for ACCUs.

The review recommends assessing whether ACCUs from 25-year permanence projects are appropriate for Safeguard Mechanism compliance. This is intended to ensure the scheme continues to support Australia's climate goals.

The review does not recommend a major redesign of the scheme. Instead, it proposes practical improvements that build confidence, maintain integrity and support a stable market.

Broader questions about the design of the Safeguard Mechanism are being considered through the Government's 2026-27 review and the Authority's Annual Progress Advice.

Recent reforms have strengthened governance, transparency, consent and integrity arrangements, and further legislative changes are underway. Many of these reforms have not operated long enough to evaluate their impact. Through our consultation and engagement activities for this review we also heard from stakeholders that they want policy stability and predictability. These are crucial for investment and policy effectiveness.

The Authority therefore focused on areas where the evidence supports action now: permanence, public value, market information and strategic method development. Other issues require further analysis and consideration through the Safeguard Mechanism review and broader climate policy processes. The Authority will continue to monitor progress through its Annual Progress Advice. 

The scheme makes a significant contribution to Australia’s climate action – with 190.5m credits issued since it was established in 2011. This is roughly equivalent to 2 years of emissions from Australia’s transport sector.

The links between the ACCU scheme and Safeguard Mechanism give Safeguard facilities flexibility to meet declining emissions baselines through a combination of onsite reductions and abatement delivered elsewhere. This reduces compliance costs and helps support stronger Safeguard settings.

The scheme is only one part of Australia’s climate policy framework. Not every activity is suited to project-based crediting. Additional policies will be needed, including to realise more of the land sector’s potential contribution to net zero. We recommend that the government publish a method roadmap that provides a forward view of method development priorities and expected timelines.
 

No. The Authority is not recommending the removal of 25-year projects or an immediate change to the ACCUs that Safeguard facilities can use.

The 25-year permanence period option enables broader landholder and First Nations participation. The report identifies a separate question: whether the current 20% discount adequately reflects the shorter storage period, and whether these ACCUs provide sufficient durability when used to offset long-lived industrial emissions.

The Authority recommends further assessment, including through the Government’s Safeguard Mechanism review. Any future change would need further analysis, consultation and appropriate transition arrangements, including consideration of existing projects, issued ACCUs and investment decisions.

ACCUs give Safeguard facilities flexibility to meet declining emissions baselines through a combination of onsite reductions and verified emissions reductions or removals elsewhere in the economy.

For any given Safeguard baseline, greater ACCU use changes where emissions reductions occur, but does not change the overall emissions outcome. Access to ACCUs reduces compliance costs for Safeguard facilities – and for that reason, can enable stronger baseline settings over time.

The Authority finds that achieving the 2035 target and net zero will require policies that drive emissions reductions across the economy, alongside supporting sequestration and other carbon removals.

The Australian Government has 6 months to respond to the review's recommendations, with a response due by February 2027.

The review acknowledges that many competing demands are being placed on the land sector, including producing food, supporting new housing, storing carbon, supporting biodiversity, hosting energy infrastructure and creating other opportunities for regional communities.

The Authority believes policy options to increase carbon storage also need to consider these different land uses. It plans to look at this issue further in its 2026 Annual Progress Advice and consider whether additional work is needed to help guide future policy decisions.