A major Australian energy company has acknowledged that carbon offsets do not prevent or undo damage caused by greenhouse gas emissions and apologised to its customers for allegedly misleading marketing.
More than 400,000 Australians had signed up toEnergyAustralia’s “go neutral” carbon offset program that since 2016 had promised to offset emissions released due to their electricity and gas consumption.
The advocacy group Parents for Climate launched legal action in the federal court in 2023 alleging the company had engaged in misleading and deceptive conduct by claiming it was reducing emissions on behalf of its customers, including by buying international carbon offsets.
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The case, which was the first time a large Australian energy company had faced legal action for alleged greenwashing, was set to begin last week but the parties agreed to a settlement instead.
In a statement on Monday, Energy Australia said it acknowledged that carbon offsetting was “not the most effective way to assist customers to reduce their emissions” and apologised to “any customer who felt that the way it marketed its go neutral products was unclear”.
The company’s statement, agreed as part of the settlement said: “Greenhouse gases are harmful to the environment and contribute to climate change. While offsets can help people to invest in worthwhile projects that may reduce greenhouse gas emissions elsewhere, offsets do not prevent or undo the harms caused by burning fossil fuels for a customer’s energy use. Even with carbon offsetting, the emissions released from burning fossil fuels for a customer’s energy use still contribute to climate change.”
Parents for Climate’s chief executive, Nic Seton, said it was a “historic acknowledgement”, a “huge step forward” for the company’s 1.6 million customers and sent “a powerful message that the era of unchecked greenwashing is over”.
“Energy Australia’s statement makes clear that offsets should not be used as a license to pollute,” Seton said. “It is no longer tenable to market polluting products as ‘carbon neutral’ and lead customers to believe that by signing up they are doing good for the planet.”
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Seton said the case was not just Energy Australia’s program, which ended in July 2024. “It’s about holding companies to a higher standard across the board,” he said. “Greenwashing isn’t harmless. It’s costing families money, delaying climate action, and eroding trust.”
Both Parents for Climate and Energy Australia said the settlement followed questions about whether the federal government Climate Active program, which certifies carbon offsets, was delivering what it promised.
Energy Australia’s chief customer officer, Kate Gibson, said the company participated in the Climate Active certified carbon offset program “in good faith” but now accepted there is “legitimate public concern about the efficacy of these programs”.“Carbon offsets should not be used to delay or diminish the important work that needs to be done to actively decarbonise,” she said. “Energy Australia is now focused on more effective ways of helping its customers to directly reduce the emissions associated with their energy use.”