Increasing numbers of Australian businesses adopting net zero carbon emission targets and seeking Climate Active certification will drive usage of Australian Carbon Credit Units (ACCUs), according to a new Commonwealth Bank of Australia (CBA) report 'Climate Active - a 101'.
Climate Active is a partnership between the Australian government and Australian businesses to encourage voluntary action to reduce greenhouse gases. Certification is awarded to Australian entities or products that have credibly reached net zero emissions by changing production methods, using new technology and purchasing carbon credits like ACCUs.
The report is part of CBA's Sustainable Economics research series and its author, Senior Economist Kristina Clifton, said offsetting emissions through carbon credits would be an important part of achieving carbon neutrality for many businesses.
"While climate reporting is not yet mandatory in Australia, we expect the quantity and quality of disclosures will improve over time. As more businesses seek to make net zero commitments and action them, we expect the number of Climate Active certifications will increase significantly as they enable consumers and investors to identify entities or goods and services that are carbon neutral.
"In practice, many entities are unable to reduce their emissions entirely through new technologies or changing operations, so purchasing carbon credits like ACCUs is an important part of becoming carbon neutral. Climate Active certification will soon require at least 20% of offset credits purchased to be ACCUs and we expect this rule change will further increase the demand for ACCUs already being driven by Climate Active certification," Ms Clifton said.
Climate Active certification replaces the Australian government's previous National Carbon Offset Standard, which has been available to Australian businesses since 2010. There are currently 382 entities operating in Australia with Climate Active certification.
Climate Active certification requires businesses to take five steps each year to achieve and maintain their certification:
1. Measure: Calculate business emissions for a base year by applying emissions factors to each business activity
2. Reduce: Change production methods or utilise new technology to reduce identified emissions
3. Offset: Following a reduction, the business may offset remaining emissions by purchasing carbon offset units
4. Validate: Engage with an independent third party to have the business's carbon neutral claim confirmed
5. Report: a public disclosure statement is published via the Climate Active website following certification
