Almost 90 per cent of Australia's carbon neutral claims underpinned by 'junk' international offsets

Big businesses are going 'carbon neutral' to show they care about climate change. But data shows their carbon neutral claims are overwhelmingly based on highly dubious international offsets.

Most of Australia’s ‘carbon neutral’ certifications are backed by questionable international offset credits.

You're hearing it more and more: a major corporate brand, or your local city council, proudly declaring they've committed to net zero and gone 'carbon neutral'.

The corporate sector is facing mounting pressure to show that it is helping to tackle the climate crisis and supporting efforts to decarbonise its activities. But with some exhibiting a real reluctance to change their behaviour, carbon offsets are becoming the preferred option for quickly achieving a net zero target (rather than a last resort). 

So this week, I took a deep dive into Australia's government-backed carbon neutral certification scheme, Climate Active, to see how hundreds of Australia's largest brands and more than a dozen local councils set about achieving their 'carbon neutral' status. 

What I found is disappointing. 

As it turns out, almost 90 per cent of carbon neutral certifications are backed by very cheap and very questionable international carbon offsets.

As part of my deep dive, I started by extracting the data from the carbon neutral certification reports published by the Climate Active program. The data draws upon the most recent year of certification - which applies a carbon neutral certification for either the business itself or one or more of the products it sells.

The data details the use of more than 6.3 million carbon offset credits by more than 450 brands, including details of the types of offset credits the brands opted to buy. 

I've made the data available online for anyone to access. 

The largest users of carbon offsets for carbon neutral certification are some of Australia's largest brands. Topping the list are household names like Telstra, Qantas, Australia Post, Powershop and Westpac.

Energy retailer EnergyAustralia ranked as the largest buyer of offsets under the Climate Active program. It purchased almost 1.4 million credits that it used to offset the emissions from the electricity and gas it sold to customers.

EnergyAustralia does this at no added cost to consumers. Amazing! One of Australia's largest greenhouse gas emitters sells carbon-neutral electricity at no extra cost!

How does it do it? Well, 98.7% of the offsets purchased by EnergyAustralia were extremely cheap, and extremely questionable international carbon offsets.

As it turns out, it's just one of many brands that rely on such credits.

---

Pardon the Interruption

I'd just like to say a quick thank you to my very generous paid subscribers. The data used for this analysis was compiled with the help of a researcher, and thanks to support from paid subscribers, I was able to pay them for their time. 

Thank you for your support!

---

Local councils are also turning to offsets

Carbon neutral certification has emerged as a means for companies to demonstrate a level of corporate social responsibility. It has also become a popular option for local councils wanting to demonstrate their own climate leadership.

A total of 15 local councils have received the carbon neutral certification under the Climate Active program, including the city councils of the major capitals of Sydney, Melbourne, Brisbane and Adelaide. 

Across the councils, the data shows international offsets represent 93.6% of the offset credits used towards their carbon neutral certification. Most councils exclusively used international offsets. 

Brisbane City and Logan council stand out for the size of emissions footprints, which is due to both having responsibility for the running of local landfills. Brisbane City Council also runs the public bus network. 

What’s the go with the Climate Active program?

The Climate Active program is run by the Australian Government. It’s effectively a government endorsed ‘carbon neutral’ certification scheme. It works to ensure companies are measuring their emissions properly and purchasing sufficient offset credits to account for those emissions.

However, it places very little by way of limits on the types or amounts of offset credits that groups can use to secure that certification. Climate Active just certifies that the correct number of offsets have been used - it relies entirely on others to verify that those offsets actually represent reductions in emissions.

And it’s because of this flaw that the scheme itself is beginning to attract its own scrutiny.

Think tank The Australia Institute, which has really led efforts to raise concerns about the integrity of Australia’s carbon offsetting regime, recently launched legal action against Climate Active, alleging that the Climate Active program effectively breaches the Australian Consumer Law by enabling “misleading and deceptive” conduct.

“On the one hand government regulators are trying to crack down on greenwash, and on the other hand the government is certifying greenwash. Its no wonder the public don’t know what to believe,” the Australia Institute’s acting climate and energy program director, Polly Hemming, said.

So why are these carbon credits so terrible?

Four types of carbon offset credits are used under the Climate Active certification scheme. These in turn fit into two categories:

Australian sourced offset credits

Australian Carbon Credit Units (ACCUs) are offsets awarded to Australian-based projects under the federal government's Emissions Reduction Fund - they currently cost around $35 per tonne.

Historically, there's been an assumption that because they are regulated by the federal government, ACCUs carry greater environmental integrity (meaning they actually reduce emissions) compared to unregulated international units. 

But this assumption is being challenged by one of the key people that was tasked with overseeing their environmental integrity, who now argues that a large number of ACCUs amount to a 'fraud on the environment'. 

International offset credits

Voluntary Emissions Reductions (VERs) and Verified Carbon Units (VCUs) are two types of 'voluntary' carbon offsets created under the international Gold Standard and VERRA certification schemes, respectively. 

They cost about $5-$10 per tonne, depending type of offset project. They are not government regulated, and serious questions have been raised about the projects certified by these schemes and the extent to which they achieve real-world emissions reductions.

A major Guardian investigation and a recent ABC Four Corners investigation highlighted some of the serious flaws with these schemes, including that they could lead to an overall increase in emissions.

Certified Emissions Reductions (CERs) are another form of international offset credit that were awarded under the Kyoto Protocol. These are arguably the most questionable in quality - with very little basis in actual emissions reductions. They cost about 50 cents to $2 per tonne and are often described as 'junk'.

Bloomberg published an excellent analysis of the extent to which major global brands are reliant on these very cheap and very questionable international units for their carbon neutral claims. It noted that while many companies were beginning to distance themselves from these international carbon credits, some major brands - including Telstra - showed little recognition of their integrity issues.

So, what does this mean for ‘carbon neutral claims?

The data we compiled from the Climate Active program shows that companies overwhelmingly relied on the very cheap and very questionable international units to substantiate their carbon neutral claims.

The most questionable credits, the CERs credits issued under the Kyoto Protocol, made up a whopping 46% of the offsets used to achieve corporate carbon neutrality claims. 

A further 38% per cent of offsets used were VCU credits, the credits at the centre of the Guardian and ABC investigations. VERs contributed a further 4%.

Just 12 per cent of the credits used under the Climate Active program were Australian-sourced ACCUs. 

We don't have time for shortcuts

The outcomes of this deep dive are a bit confronting. 

On one hand, we need corporates to use their significant economic resources to fight climate change - cutting their own emissions and supporting their partners (including customers) to do the same.

As consumers, we need to be using our own purchasing power to push for more action. This includes rewarding the businesses acting to address the climate crisis (and shunning those that aren't).

But to do this, we need to know that when we see a 'carbon neutral' certification from a government-run scheme like Climate Active that it represents real and substantive action and not a shortcut.

Climate Active needs to use the legal action started by The Australia Institute as a prompt to raise the bar on carbon neutral claims. It needs to limit the use of international credits and require companies to prioritise reducing their own emissions before they are allowed to use offsets. 

We don't have time for shortcuts.