EnergyAustralia will stop offering its "Go Neutral" carbon offset product after admitting offsets "do not prevent or undo the harms caused by burning fossil fuels".
The decision follows a 2023 lawsuit from the advocacy organisation Parents for Climate, which alleged the carbon offset product was misleading and deceptive and EnergyAustralia engaged in "greenwashing".
On Monday, the case was settled in the Federal Court, with the energy giant acknowledging that offsets weren't the most effective way to reduce emissions and may have given customers a false impression of environmental benefit.
Greenwashing is when a company exaggerates or misrepresents the environmental benefits of its products and practices, often to appear more environmentally friendly than it is.
Carbon offsets 'do not prevent or undo harms' caused by fossil fuels
In a statement release on Monday as part of the settlement, EnergyAustraia said it "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".
"While high-quality carbon offsets may play a role for hard-to-abate residual emissions, it is important for organisations to provide clear and transparent information to consumers on where and how offsets have been used and what those offsets can achieve."
The Go Neutral scheme was introduced in 2016 and allowed residential customers to pay to offset emissions associated with their electricity and gas use.
But the energy provider has now admitted that it cannot fully cancel out or prevent the harm caused by fossil fuels.
EnergyAustralia's chief customer officer, Kate Gibson, said a decision was made to withdraw the Go Neutral product from the market in July 2024.
"In recent years, questions have begun to emerge about the benefits of carbon offsets, including those offered as part of certified Government programs such as Climate Active and whether they are having the impact intended," Gibson said.
"While EnergyAustralia participated in the Climate Active certified carbon offset program in good faith, today EnergyAustralia accepts that 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.
"EnergyAustralia is now focused on more effective ways of helping its customers to directly reduce the emissions associated with their energy use."
Parents for Climate CEO Nic Seton says the acknowledgement will "set a new standard" for the way carbon offset products are sold to customers. Source: AAP / Bianca De Marchi
'Will set a new standard'
Parents for Climate said the acknowledgement from the energy giant was a "major win" and the "first legal case of its kind in the country to protect the public from 'carbon neutral' greenwashing".
"Not only does this acknowledgement send a powerful message that the era of unchecked greenwashing is over, but it’s incredibly reassuring to see the commitment from one of the largest energy retailers in the country to want to do better for their customers and the climate," Nic Seton, CEO of Parents for Climate, said in a statement.
"This isn't just about EnergyAustralia — it's about holding companies to a higher standard across the board.
"Greenwashing isn’t harmless. It’s costing families money, delaying climate action, and eroding trust."
