Key Changes to the Carbon Credits (Carbon Farming Initiative) Act 2011
The Federal Government released the exposure draft of the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026 on 20 May 2026, marking the first substantive legislative overhaul of the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) in more than a decade. The Bill implements recommendations from the independent review led by Professor Ian Chubb (the Chubb Review) and the Climate Change Authority’s 2023 review of the Australian Carbon Credit Unit (ACCU) Scheme, responding to sustained criticism about methodological rigour, project additionality, and governance transparency that has affected market confidence since at least 2022. For environmental professionals advising developers, landholders, infrastructure proponents, and corporate clients managing emissions liabilities, this draft legislation introduces a structural reset of the rules governing carbon project registration, credit issuance, and method integrity.
The timing is not coincidental. The Bill’s consultation window overlaps with two other consequential regulatory events: the commencement of the National Environmental Protection Agency (NEPA) on 1 July 2026 under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) reform programme, and the open consultation period for the National Environmental Standard for Environmental Offsets, which closes on 9 June 2026. The first tranche of EPBC Act reforms commenced on 20 February 2026. Taken together, these three developments are reshaping the regulatory environment for any project that generates, purchases, or relies on environmental credits, whether carbon, biodiversity, or water-related. Practitioners who treat these reforms as separate workstreams are likely to miss the cumulative compliance exposure they create for project proponents.
For Australian environmental consultants, solicitors advising on project financing and transactions, and councils assessing development applications with offset conditions, the Bill introduces specific new mechanisms that require immediate attention. The most operationally significant are the expanded native title consent requirements, the new method declaration power, and the establishment of the Carbon Abatement Integrity Committee. Each of these creates new procedural obligations and introduces fresh categories of project risk that were not present under the existing CFI Act framework.
Key details of the Carbon Credits Amendment Bill 2026
The exposure draft introduces what it terms an “integrity risk power,” which allows the Minister to issue a method declaration that can pause, modify, or revoke an approved carbon methodology where there is evidence that the method no longer meets scientific standards or where integrity concerns have emerged. This is a material departure from the current framework, where approved methods have generally remained operative unless formally disaccredited through a separate and lengthy regulatory process. Under the new power, project proponents relying on existing approved methods cannot assume those methods will remain valid for the full crediting period of their project, which can extend to 25 years for some vegetation and soil carbon methods. The practical consequence is that baseline assessments, credit forecasts, and project financial models built on current methodologies carry a new category of regulatory obsolescence risk.
The Bill also significantly strengthens native title consent requirements for carbon projects registered on land where native title exists or may exist. The existing framework requires notification and, in some circumstances, consultation, but the amendments elevate this to a more substantive consent requirement, ensuring that registered native title holders and claimants have a mandated participatory role in both project approval and ongoing management decisions. This has direct implications for project timelines and feasibility assessments, particularly for large-scale vegetation management, savanna burning, and human-induced regeneration projects across northern Australia and parts of Queensland, Western Australia, and the Northern Territory, where native title coverage is extensive. Project proponents who have not yet engaged with native title processes as a core component of their carbon project development risk substantial delays in registration.
The establishment of the Carbon Abatement Integrity Committee introduces a new institutional layer into the governance of the ACCU Scheme. The Committee is designed to provide independent scientific and technical oversight of carbon methods, effectively creating a peer-review body with advisory functions that will inform ministerial decisions on method integrity. Enhanced compliance and auditing tools included in the Bill will allow the Clean Energy Regulator to conduct more targeted and more frequent compliance audits against verified abatement claims. The Explanatory Materials accompanying the exposure draft reference the Chubb Review finding that some categories of carbon projects, particularly those relying on avoided deforestation and soil carbon sequestration, had not demonstrated additionality to the standard required for a high-integrity market. The Bill’s audit provisions are specifically designed to address this gap.
These ACCU Scheme reforms are also occurring in parallel with the 2026 to 2027 Safeguard Mechanism review, which governs emissions reduction obligations for Australia’s largest industrial facilities (those emitting more than 100,000 tonnes of carbon dioxide equivalent per year). Facilities subject to the Safeguard Mechanism can surrender ACCUs to meet their declining baselines. If the integrity reforms result in tighter method standards or method revocations, the effective supply of credible ACCUs available to Safeguard Mechanism facilities could tighten, with corresponding price implications for the broader carbon market.
References and related sources
- Primary source: www.minterellison.com
- EPBC Act
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This is an iEnvi Machete news summary. Prepared by iEnvi to summarise the source article for contaminated land, groundwater, remediation, approvals and site risk professionals.
Published: 25 May 2026
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