What latest carbon credit scheme reforms mean for Australian businesses

The ACCU Scheme has been in place since 2011, established under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) (CFI Act). Individual crediting methods are made as legislative instruments under section 106 of the CFI Act and must satisfy the Offsets Integrity Standards set out in section 133.

One important feature to be aware of is that ACCUs are recognised as a tradeable financial product under the Corporations Act 2001 (Cth). This means carbon market advisors and traders must hold an Australian Financial Services Licence (AFSL) and comply with the financial services provisions in Part 7.6 of the Corporations Act, including disclosure, conduct and reporting obligations.

The Albanese government has now introduced a suite of new and updated carbon crediting methods, creating fresh opportunities for Australian farmers, businesses and communities to diversify their income while contributing to meaningful emissions reduction.

Chubb, CCA and the road ahead

In December 2022, an independent panel - the Chubb Review - examined the integrity of the ACCU Scheme and found that, while its arrangements are essentially sound, there was room for improvements.

The Climate Change Authority (CCA) is required to review the CFI Act every three years. Its 2023 Review - released in December that year - made 15 recommendations, 12 of which closely aligned with the Chubb Review. The government agreed to three recommendations outright and agreed in principle to the remaining dozen.

The CCA is now preparing its fifth review of the scheme, with a report due to the minister by the end of 2026. The review is being conducted against the backdrop of several key developments:

• Australia’s strengthened emissions reduction targets: a 43% reduction below 2005 levels by 2030 under the Climate Change Act 2022, and a 65% reduction by 2035 under the Paris Agreement.
• Changes to the safeguard mechanism in 2023, which shifted primary demand for ACCUs from the Government to large emitters - facilities producing more than 100,000 tonnes of CO₂-equivalent per year. Where a facility exceeds its emissions baseline, it must either cut emissions directly or surrender ACCUs or Safeguard Mechanism Credits (SMCs) to cover the shortfall.
• Progress on international carbon trading arrangements under article six of the Paris Agreement, which may open up future opportunities for cross-border offset trading through internationally transferred mitigation outcomes (ITMOs).

The ACCU Scheme is currently mid-way through a staged reform programme, implementing recommendations from both the Chubb Review and the 2023 CCA review. The final stage focuses on accrediting and regulating carbon service providers and agents, building capacity in remote and First Nations communities, and enhancing transparency and recognition of co-benefits.

As assistant minister for climate change and energy Josh Wilson observed: "The new method delivers on this goal, advancing the government's commitment to reforms towards a high-integrity carbon trading system in keeping with the Chubb Review recommendations."

Four new and updated ACCU methods have been introduced, covering savanna fire management, livestock, waste management and coal mine waste gas.

Savanna fire management

Australia's savanna landscapes are a significant and growing focus of the ACCU scheme.

The science is straightforward: large, intense fires later in the dry season produce far more greenhouse gas emissions than smaller, cooler burns earlier in the season. Late-season fires also destroy fallen leaves, grass and woody debris, reducing the landscape's capacity to store carbon.

The scheme incentivises strategic fire management across vast areas of northern Australia, drawing on the traditional knowledge and burning practices of First Nations people. Projects involve conducting early dry-season burns to reduce the extent and intensity of late-season fires, cutting emissions and boosting carbon storage.

There are currently 86 savanna fire management projects registered, covering 34.9 million hectares – roughly five time the size of Tasmania. The first method was developed in 2012, with updated versions introduced in 2015 and 2018.

The 2026 version represents the most significant advancement to date. Two new crediting approaches have been introduced:

• A new savanna fire management sequestration and emissions avoidance method, and
• An updated savanna fire management emissions avoidance method.

For the first time, these methods account for carbon stored in specific savanna vegetation - including living biomass and standing dead wood - enabling more accurate crediting.

Importantly, the methods support proven First Nations land stewardship practices. For existing project owners, particularly indigenous savanna fire management businesses, this is expected to unlock additional ACCUs by transitioning to the new methods.

Livestock: New Opportunities for Farmers

The Government is working with industry to develop a new livestock method for the ACCU Scheme, led by Meat and Livestock Australia (MLA).

This follows the expiry on 30 September 2025 of the beef cattle herd management method, which had been in place for 10 years. That allowed beef producers to earn ACCUs by reducing the emissions intensity of their operations through improved herd management, without requiring a reduction in cattle numbers. While no new projects can be registered under the expired method, existing projects can continue generating ACCUs until their crediting periods end.

The new method, if made, is expected to offer several important improvements for producers:

• Incorporating the latest science on methane-reducing feed additives
• Broadening eligibility beyond pasture-based cattle to include feedlot cattle, dairy cattle and sheep, and
• Covering a wider range of herd management practices, including improving feed digestibility, enhancing herd fertility, and pasture and manure management.

Significant government funding is backing this work, including $29 million through the Methane Emissions Reduction in Livestock program and $6.2 million through the Developing Australia's Seaweed Farming grant program to support commercial scale-up of asparagopsis seaweed as a methane-inhibiting feed supplement.

Before the new method can take effect, it will need to be assessed by the Emissions Reduction Assurance Committee (ERAC) against the legislated Offsets Integrity Standards.

New waste revenue streams

Waste management and resource recovery businesses stand to benefit from an updated alternative waste treatment (AWT) method, currently being remade by the Australian Resources Recovery Council.

The updated method will incentivise diverting mixed solid waste from landfill, with the potential to support increased production of fertiliser and biofuels creating a valuable new revenue stream for businesses in the sector.

Meanwhile the coal mine waste gas (CMWG) method expired on 31 March 2025 and will not be remade. The Government's decision reflects the fact that, as Australia's electricity grid continues to decarbonise, the abatement value of flaring or combusting coal mine waste gas has diminished.

Coal mines emitting more than 100,000 tonnes of CO₂-equivalent per year are already subject to the safeguard mechanism, which provides its own incentive to reduce methane emissions. If you have an existing CMWG project, you can continue earning ACCUs for the remainder of your crediting period but no new projects can be registered under this method.

For coal mine operators considering their emissions reduction options going forward, the safeguard mechanism baseline and crediting framework, together with emerging technologies for methane capture and utilisation, remain the primary pathways.

We recommend reviewing any current project registrations and crediting periods to ensure you are maximising the value of any remaining ACCUs.

Looking Ahead

These developments signal a maturing carbon market with expanding opportunities across sectors.

With demand for ACCUs increasingly driven by safeguard mechanism obligations rather than government purchasing, the commercial dynamics of carbon crediting are shifting.

The CCA's fifth review of the ACCU Scheme is due to report to the minister by the end of 2026, with its findings expected to shape the next phase of method development and market design.

Assistant minister Josh Wilson has reflected on the broader significance of these reforms, stating: “Each new method and update improves how we store carbon, avoid emissions, and reward the projects that help us on our way to net zero, recognising that in all cases there are additional benefits in terms of environmental outcomes and economic development in rural and regional Australia."