“Offsets do not prevent or undo the harms caused by burning fossil fuels,” Energy Australia admits
Energy Australia’s statement is part of a settlement in a legal case about greenwashing brought by Parents for Climate.
Last week, the two sides in a greenwashing case in Australia settled out-of-court. The case was brought by Parents for Climate against Energy Australia, one of Australia’s largest electricity and gas providers. In 2023-2024, Energy Australia was the country’s third-highest greenhouse gas emitter. The company sources most of its energy from coal-fired power stations.
Parents for Climate accused Energy Australia of misleading more than 400,000 customers about its “Go Neutral” product.
This is the first case in Australia brought against a company for “carbon neutral” marketing. It’s also the first time an Australian energy corporation has faced a legal case for greenwashing.
Energy Australia launched its “Go Neutral” product in 2016. Parents for Climate started the legal case against Energy Australia in 2023.
Parents for Climate argued that Energy Australia’s “Go Neutral” product was marketed by telling consumers that their electricity and gas would be “carbon neutral” because of the carbon offsets that Energy Australia was buying.
That’s exactly what Energy Australia did. Here’s a screenshot from an archived copy of Energy Australia’s website:
David Hertzberg of Equity Generation Lawyers was the lead lawyer in the case. Hertzberg told The Guardian that the key argument was that Energy Australia engaged in misleading or deceptive conduct, in breach of the Australian Consumer Law, because burning fossil fuels results in greenhouse gas emissions and carbon offsets do not permanently remove them.
Before the settlement, Nic Seton, chief executive of Parents for Climate told The Guardian that,
“We argue that the way in which these companies are using offsets to make carbon neutral claims is potentially false and misleading. There’s a little bit of creative marketing. The worst case scenario is it’s being deliberately used as a licence to pollute.”
After Parents for Climate filed its legal case, Energy Australia stopped providing “Go Neutral” for new customers. On its website the company stated that it would be “progressively ending our Go Neutral product” for customers who had already opted in.
Energy Australia’s statement
Following the out of court settlement, Energy Australia issued a statement in which it admits that “offsets do not prevent or undo the harms caused by burning fossil fuels”.
In the statement, Energy Australia says that,
Energy Australia acknowledges that carbon offsetting is not the most effective way to assist customers to reduce their emissions and apologises to any customer who felt that the way it marketed its Go Neutral products was unclear. Energy Australia has now shifted its focus to direct emissions reductions.
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.
Energy Australia also confirms that, “Burning fossil fuels creates greenhouse gas emissions that are not prevented or undone by carbon offsets.”
And the company admits that, “offsets are not the most effective means of reducing greenhouse gas emissions”.
Energy Australia’s statement continues:
There are legitimate concerns about organisations:
using offsets instead of reducing their own emissions;
using offset projects that do not permanently remove carbon from the atmosphere;
supporting offset projects where climate benefits are uncertain or would happen anyway; and
using carbon neutrality marketing claims based on the use of carbon offsets, which may cause some consumers to think there is no environmental impact from a product or service offered by a business.
The statement points out the difference between the fast and slow cycles of carbon:
Some carbon offsets claim to remove carbon dioxide from the atmosphere by planting trees or forest regeneration. However, EnergyAustralia today accepts the scientific consensus that these “offsets” do not indefinitely remove greenhouse gas emissions from burning fossil fuels, because carbon is stored in plants for a substantially shorter time than those emissions remain in the atmosphere. Storing carbon in plants is not equivalent to keeping it stored in fossil fuels (by not burning those fossil fuels in the first place).
Parents for Climate’s Nic Seton describes this as a “historic acknowledgement”, that sends “a powerful message that the era of unchecked greenwashing is over”. He adds that, “Climate claims must be backed by real action — not marketing spin.”
“Energy Australia’s statement makes clear that offsets should not be used as a license to pollute. 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.”
Climate Active: “government-sponsored greenwashing”
Energy Australia’s greenwashing “climate neutral” claim was certified by the Australian government through its Climate Active programme.
Climate Active is a government-run voluntary register that companies can join to report their greenhouse gas emissions and the carbon offsets they have bought. Having done so they can claim to be “carbon neutral”.
In February 2025, The Australian reported that “more than 100 companies have left the Climate Active scheme in the past two years” over integrity concerns.
“This is little more than government-sponsored greenwashing,” Stephen Long, Senior Fellow and Contributing Editor at the Australia Institute, said in a statement.
“Instead of protecting Australian consumers from misleading claims and harmful practices, the government is promoting them through Climate Active.
“The Australia Institute has reported the Climate Active scheme to the ACCC [Australian Competition and Consumer Commission] and recommended that the scheme be referred to the National Audit Office.
“Climate Active has enabled big polluters like Energy Australia to promote themselves as leaders in the fight against climate change when, in fact, it’s the exact opposite.
“Dozens of huge corporations have withdrawn from Climate Active, yet the government still encourages consumers to support companies which use it, without offering any proof those companies are taking meaningful climate action or verifying that any emissions are offset”.
Wonderful news and it shows that going to court can be a successful form of activism!
This is great news and all NBS promoters should read this. Another issue is that "Climate Active" was likely part of Australia's commitments system to reach Paris climate goals of "net zero" by a certain date. Speaking of offsets which do not permanently remove CO2 from the atmosphere, DYK that some carbon capture schemes are selling offsets? The IPCC says negative emissions are needed along with not burning fossil fuels - so how can they sell offsets from removals? Oh, yes, I forgot - carbon cowboys.