The ‘boom-and-bust’ nature of rangelands makes them ill-suited to nature-based solutions (NbS) involving carbon sequestration in vegetation and soils. The variability in these ecosystems makes it difficult to determine whether carbon stock changes are attributable to project activities, creating additionality risks. Low and variable rainfall also means carbon stock increases will often be impermanent, being susceptible to reversals in droughts, a risk magnified by climate change. The small potential for gains per unit area over vast regions makes it difficult to accurately measure carbon stock changes at low cost. This creates pressure to trade accuracy for simplicity in measurement approaches, increasing the risk of errors. Despite these risks, rangelands have been advanced as suitable for offset projects because of low opportunity cost and a perception they are extensively degraded. The most prominent example globally is human-induced regeneration (HIR) projects under the Australian carbon credit unit (ACCU) scheme, which are purporting to regenerate permanent even-aged native forests (≥20% canopy cover from trees ≥2 metres high) across millions of hectares of largely uncleared rangelands, predominantly by reducing grazing pressure. Previous research found limited forest regeneration in the credited areas of these projects, and that most of the observed changes in tree cover were attributable to factors other than the project activities. Here we extend this research by evaluating compliance of a sample of 116 HIR projects with regulatory requirements and their performance in increasing sequestration in regeneration. The results suggest most HIR projects are non-compliant with key regulatory requirements that are essential to project integrity, and have had minimal impact on woody vegetation cover in credited areas. The findings point to major administrative and governance failings in Australia’s carbon credit scheme, and a significant missed opportunity to restore biodiversity-rich woodlands and forests in previously cleared lands via legitimate carbon offset projects.