LULUCF: Australia’s carbon scam

Feature Story - 16 February, 2011
According to a new Greenpeace-commissioned research paper from ANU, almost half of the emissions reductions required to meet Australia’s 5% climate target could be achieved using sub-prime offsets from the land sector.

Hazelwood, in Victoria, is Australia's most greenhouse polluting power station, producing about the same greenhouse emissions as 3.95 million cars per year.

Relying on land sector offsets to meet greenhouse gas targets risks increasing emissions from the fossil fuel sectors, locking in polluting electricity production and passing up the opportunity for a transition to a low carbon economy. Many land sector offsets also lack environmental integrity and could threaten the effectiveness of the international climate regime.

According to the research:

Sub-prime cuts dwarf a 5% reduction target

To meet its 5% target, Australia has to reduce its emissions from current levels, of 577 MtCO2-e, to around 520 MtCO2-e in 2020; a cut of almost 60 MtCO2-e. The maximum theoretical LULUCF offsets Australia could obtain by 2020 is 370 MtCO2-e/yr, which dwarfs the cuts Australia needs to meet its 5% target.

Even if Australia managed only to access 10% of the theoretical potential, LULUCF offsets could still exceed 125 MtCO2-e/yr by 2020. With Australia promising to use LULUCF 'as fully as possible' in the coming commitment period, it is clear that LULUCF is where the government is looking for loopholes.

Australia grossly underestimates the benefits of LULUCF to justify weak targets

The Treasury has estimated that, with a 5% mitigation target, only 6% of Australia's emissions reductions will come from LULUCF, most of which are projected to arise from reforestation. This estimate underestimates the potential for cuts from deforestation and fails to include reductions from Article 3.4 activities, which are likely to be the most fertile terrain for LULUCF offsets over the 2012-2020 period.

But why bother hiding these benefits? Simple. Because with limited LULUCF bounty, Australia can claim it is making 'economically onerous' cuts to emissions from coal-fired electricity generation and other emissions-intensive industries. Hence the government can argue that our mitigation targets should be small, as they are painful.

While this may seem like a harmless rort, the result is a complete lack of incentive to decarbonise the Australian economy, which remains one of the most fossil-fuel reliant on the globe. It also leaves us wheezing at the back of the race for clean energy technology.

Something for nothing

Emissions reductions only count when they are 'additional' to business-as-usual; that is, we do something new to achieve them. Despite this, Australia is set to claim a number of 'free kicks' stemming from unrelated structural changes in the forestry industry. These 'hot air' offsets from forest management are likely to amount to at least 12 MtCO2-e/yr by 2020. That is equivalent to making a more than 2% reduction against today's levels by doing nothing at all.

If Australia was planning to increase its mitigation target to account for these and other 'free kick' offsets, the problem would be substantially avoided. However, to date, the government has said nothing about how it plans to account for these freebies.


Despite the fact it is in large part responsible for Australia meeting its Kyoto emissions reduction target, LULUCF is the least known and least understood area of carbon accounting. Measuring fluxes in terrestrial carbon stocks is an inexact science. But when used honestly, LULUCF projects have the potential to make an important contribution to mitigate climate change.

However, for the unscrupulous, LULUCF's complexity makes it ripe for abuse, and as such, the perfect place for Australia to hide its rising industrial emissions. Under Kyoto, a LULUCF rort (better known as the 'Australia Clause') allowed Australia to effectively convert its 108% target into a 142% target. This provision is the primary reason Australia will likely meet its Kyoto obligations, despite significant emissions increases.

History is repeating itself. With LULUCF included, a 5% emissions reduction target is meaningless. Unless changes are made, Australia will not only fail to do its bit to cut global emissions, but will increasingly be left behind in the race for clean energy.

Greenpeace is calling on the Australian Government to:

•    honestly and openly assess the potential for LULUCF offsets;

•    include an accurate estimate of LULUCF offsets from Article 3.3 and 3.4 activities in the economic modelling it is about to undertake on the costs of cutting Australia's emissions;

•    increase its emissions reduction target for 2020 to account for LULUCF offsets; and

•    ensure Australia's 2020 target is in the range 25-40%, not 5-25%.

Read a summary of the report