Australia is pushing ahead with the development of a new carbon crediting methodology for alternative waste treatment, a move that could significantly expand the sector's role in the country's emissions reduction efforts.
The proposed methodology would replace an expired scheme and introduce two key changes: a longer period during which projects can earn carbon credits, and the inclusion of biomethane generation as a qualifying activity for the first time.
The Australian Resources Recovery Council has been tapped to lead the development process, which falls under a proponent-led framework introduced in 2024 that allows industry groups — not just government — to drive the creation of new Australian Carbon Credit Unit methods.
The previous alternative waste treatment method lapsed in March 2025 after generating roughly 5.57 million carbon credits across its lifetime, placing it fifth among the largest sources of credits surrendered for compliance purposes in the 2023–24 financial year. Just 11 projects ever participated in the scheme, with major waste operators among the biggest earners.
Industry submissions to a government review argued that a redesigned methodology could unlock substantially more abatement activity, provided two main conditions are met.
First, the crediting period would need to be extended — most submissions called for at least 20 to 25 years, compared to the previous seven-year window — to better reflect the long operational lifespan and higher capital costs of waste treatment facilities.
Second, biomethane production would need to be formally recognised as an eligible activity, with credits issued both for burning biomethane and for displacing fossil gas use.
Proponents noted the disparity with landfill gas projects, which already benefit from a 12-year crediting period despite generally lower infrastructure costs.
Several submissions argued that waste recovery and biomethane should be prioritised over landfill gas capture, as they better align with Australia's recycling and emissions targets.
Interest in biomethane has grown following regulatory changes in 2025 that allow renewable gas certificates to count toward companies' emissions reporting obligations, creating a clearer commercial pathway for project developers.
If a new method is established, industry estimates suggest the sector could abate an additional 13 to 14 million tonnes of carbon dioxide equivalent per year.
A decision on whether to formally proceed with developing the new methodology is subject to ministerial consideration.
