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AUSTRALIA’S proposed carbon trading scheme is rife for fraud and companies are set to be hit with class actions by activist groups because they are not adequately protected by proposed laws, a climate change expert has warned.
A “cap and trade” carbon trading scheme is to be introduced next year and lawyer Simon Harrison, a partner at law firm Herbert Geer, has been analysing the draft legislation and following developments in overseas markets.
Under the proposed scheme, if a company reduces emissions by a certain level it is given a credit which it can sell to another company with higher emissions.
The aim is to reduce the amount of carbon pollution.
Mr Harrison said the definition and assessment of what constituted an “emission” was still a matter of scientific dispute and the Australian Federal Police did not have the resources and expertise to properly police the market.
“When you compare this to tax fraud, police and regulators have had many many decades of experience in investigating and prosecuting,” he said.
“But the arguments about the science of emissions will give defence lawyers a field day.”
Fraud on the market could occur if companies were set up to generate carbon credits but planned projects never took place, Mr Harrison said.
He cited a refrigeration gas plant in China that had already come under attack and said some companies could end up making more money from carbon trading than core business.
Another issue was potential legal action by environmental activists.
Overseas companies were already being hit by “a plethora” of class actions over their emissions, Mr Harrison said.
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