Parents for Climate v EnergyAustralia (Offsets Greenwashing)
Email to Customers
Federal Court of Australia l NSD833/2023
Thursday morning, 15 May 2025: After nearly two years of litigation, the parties have settled a case where our client, Parents for Climate, alleged that EnergyAustralia’s marketing of its ‘Go Neutral’ carbon offsetting product was misleading or deceptive. Settlement was reached as the final hearing was about to commence.
The settlement statement can be accessed here or by clicking on the “Settlement Statement” tab above.
EnergyAustralia agreed to send an email addressing the settlement to current and former customers of the Go Neutral product. The email can be accessed by clicking on the “Email to Customers” tab above.
EnergyAustralia – Australia’s third largest domestic emitter and the largest participant in the government’s Climate Active carbon neutral certification scheme – has now acknowledged Parents for Climate’s key factual argument: that “offsets do not prevent or undo the harms caused by burning fossil fuels”.
EnergyAustralia has admitted that, even with carbon offsetting, burning fossil fuels still contributes to climate change. It has apologised to its customers “who felt that the way it marketed its Go Neutral products was unclear”.
EnergyAustralia no longer offers the Go Neutral products to new customers and has removed all marketing in relation to this product from its website. It has acknowledged that “Carbon offsets should not be used to delay or diminish the important work that needs to be done to actively decarbonise.”
Nic Seton, CEO of Parents for Climate said “We welcome the acknowledgement and agreement from EnergyAustralia. Not only does it 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.,
“At Parents for Climate, we consider the approach and conduct that was taken by the company to be greenwashing. Climate claims must be backed by real action – not marketing spin. Today, EnergyAustralia’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. ”
David Hertzberg, Principal Lawyer at Equity Generation Lawyers, said: “This was the first case in Australia targeting the marketing of consumer products as ‘carbon neutral’. And today’s outcome is a watershed moment in greenwashing litigation in Australia.”
“EnergyAustralia’s statement makes clear that “carbon neutral” products based on “offsetting” still contribute to climate change.”
“Companies need to seriously consider whether the environmental claims they make stack up – particularly, as this case shows, when claiming that their polluting products are “carbon neutral”.”
“It took a lot of courage for Parents for Climate to stand up and take legal action against EnergyAustralia. And that courage has paid off.”
A link to our client’s, Parents for Climate’s, press release can be accessed here.
About the case
On 9 August 2023, Equity Generation Lawyers represented Parents for Climate in filing a landmark action challenging allegedly misleading statements made by EnergyAustralia about its “carbon neutral” energy products.
Parents for Climate is a climate advocacy organisation that works for parents, carers and families who want to create a safer future for their children.
The action was filed in the Federal Court of Australia. The pleadings are available for download at the end of this page.
Background
EnergyAustralia produces and sells electricity and is Australia’s third largest domestic greenhouse gas emitter, producing 16.2 million tonnes of CO2 equivalent in 2021/22 and 17.4 million tonnes of CO2 equivalent in 2022/23.
EnergyAustralia offered “Go Neutral Electricity” and “Go Neutral Gas” products. “Go Neutral” customers purchase energy which is mainly sourced from burning fossil fuels and EnergyAustralia promises to purchase carbon credits to “offset” the associated emissions.
The “Go Neutral” products require consumers to opt-in but there is no additional cost to the consumer.
EnergyAustralia on its website claimed that:
- “Go Neutral” electricity and gas is “carbon neutral”;
- Emissions created by “Go Neutral” electricity and gas are “cancelled out” or “negated”;
- By opting into “Go Neutral” products, consumers “have a positive impact on the environment”.
EnergyAustralia has now ceased to offer the “Go Neutral” product to new customers, and has removed the “Go Neutral” page from its website.
What the claim alleged
Parents for Climate argued that EnergyAustralia’s marketing of its “Go Neutral” products amounted to misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law.
Parents for Climate argued that carbon offsets do not “cancel out” or “neutralise” the emissions generated by “Go Neutral” energy, and that using “Go Neutral” energy does not have a positive impact on the environment. This is because, in summary:
- Paying someone else to avoid generating emissions (known as an “avoidance” credit) does not undo the impact of the emissions generated from “Go Neutral” energy. This is because avoidance credits do not involve removing any CO2 from the atmosphere, and there is inherent uncertainty in whether avoidance credits have achieved what they claim to achieve. Almost 99% of EnergyAustralia’s carbon credits are avoidance credits;
- To provide any benefit to the climate or the environment, the carbon credit must add climate benefits that would not otherwise have occurred without the carbon credit project (known as “additionality”). Otherwise, purporting to “offset” GHG emissions by purchasing carbon credits which lack additionality ultimately results in further increases in the atmospheric concentration of GHGs. Parents for Climate argued that the avoidance credits purchased by EnergyAustralia lacked additionality;
- Paying someone else to flare methane (which is a type of “avoidance” credits) not only suffers from the same problems that all avoidance credits have, it results in a significant additional increase in the concentration of greenhouse gases because there is a lack of equivalence between short-lived methane and effectively permanent CO2 emissions;
- Paying someone else to remove carbon emissions from the atmosphere (known as a “removal” credit) does not cancel out or negate the emissions generated from “Go Neutral” energy because the carbon removal projects EnergyAustralia buys are short-lived and not permanent;
- The emissions from “Go Neutral” ultimately result in an increase in the concentration of greenhouse gases in the atmosphere, which exacerbates climate change and global warming.
Parents for Climate filed climate science evidence from Professor David Karoly and carbon markets evidence from Dr Danny Cullenward.
EnergyAustralia’s Defence
In its Defence, EnergyAustralia denied that it made the alleged representations on its website and denied that the representations were misleading or deceptive (if they were made).
It also said that the statements in its website would have been understood as expressions of EnergyAustralia’s opinion rather than as statements of fact.
Parents for Climate, in its Reply, maintained that the statements on EnergyAustralia’s website would have been understood as statements of objective fact. Parents for Climate further argued that, even if the statements would have been understood as expressions of opinion:
- EnergyAustralia’s opinion was not based on reasonable grounds;
- EnergyAustralia misstated the facts on which the opinion was based; and
- The statements were made in circumstances where, to EnergyAustralia’s knowledge, customers had a poor understanding of the term “carbon neutral” and the expression of any opinion on this topic had a tendency to lead those customers into error.
Remedy sought
Parents for Climate sought a declaration that EnergyAustralia has misled its customers since 2019 about the greenhouse gas emissions associated with their electricity and gas usage.
Parents for Climate also sought an order that EnergyAustralia be restrained from making “carbon neutral” or similar statements to describe the “Go Neutral” product, and that it issue a corrective statement to its customers.
Pleadings
You may download copies of the pleadings below:
Further Amended Statement of Claim
Parents for Climate’s Legal Team
Parents for Climate was represented by Equity Generation Lawyers.
Parents for Climate‘s counsel were Robert Dick SC and Jerome Entwisle.
Go Neutral Litigation – EnergyAustralia acknowledges issues with “offsetting” and moves away from carbon offsets for its residential customer products
19 May 2025
In July 2023, the advocacy organisation Parents for Climate launched legal action against EnergyAustralia in the Federal Court of Australia alleging that EnergyAustralia’s marketing of its Go Neutral carbon offset product amounted to misleading or deceptive conduct contrary to the Australian Consumer Law.
Today, EnergyAustralia 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. EnergyAustralia 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.
EnergyAustralia and Parents for Climate have agreed to settle the legal action and to the publication of this statement.
Withdrawal of EnergyAustralia’s Go Neutral product
EnergyAustralia launched its Go Neutral product in 2016 with the objective of providing customers with a way to offset emissions generated by their electricity or gas consumption. However, where a residential customer opted in to the Go Neutral product, their electricity or gas use was still sourced predominantly from fossil fuels. Burning fossil fuels creates greenhouse gas emissions that are not prevented or undone by carbon offsets. This could have been made clearer to customers.
EnergyAustralia acknowledges the importance of consumers understanding the climate impact of products and services offered to them and that offsets are not the most effective means of reducing greenhouse gas emissions. 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.
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).
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.
EnergyAustralia’s Chief Customer Officer, Kate Gibson said a decision was taken to withdraw the Go Neutral product from 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,” said Ms Gibson.
“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.”
EnergyAustralia’s future focus
EnergyAustralia’s future focus is firmly on direct decarbonisation initiatives.
EnergyAustralia no longer offers its Go Neutral products to new residential customers and is phasing the product out for existing residential customers during 2025. Instead, EnergyAustralia’s Climate Action Transition Plan first launched in 2023 is focused on taking steps to offer products and services that lead to direct decarbonisation. As one of Australia’s largest energy companies, EnergyAustralia recognises the crucial role it plays in decarbonisation initiatives and managing the impacts of these initiatives on customers and the Australian community.
EnergyAustralia has made a commitment to net-zero greenhouse gas emissions for its generation operations by 2050 and is on track to reduce those emissions by over 60% in 2028 compared to its 2019 baseline. EnergyAustralia intends to achieve this by reducing its reliance on coal generation including through the closure of its Yallourn coal-fired Power station before 2030 and the closure of its Mt Piper coal fired power station before 2040. EnergyAustralia aims to expand the amount of renewable energy in its portfolio and is investing in technologies like grid scale batteries and pumped hydro to allow more renewable energy into the system.
EnergyAustralia also sees the reduction in emissions created by the consumption of energy by its customers as a key focus area for its future operations. This was outlined in 2024 in its Climate Transition Action Plan. EnergyAustralia is providing options for customers to directly decarbonise including:
- high quality rooftop solar installations and battery products sold through our EA Solar business;
- EnergyAustralia’s Battery Ease, which allows eligible customers to participate in EnergyAustralia’s Virtual Power Plant through a bring-your-own battery arrangement; and
- EnergyAustralia’s Community Battery Ease, which allows eligible customers in 13 NSW postcodes to participate in a lower cost energy plan that EnergyAustralia can offer as a result of the reduced cost to deliver energy to their homes through Community Battery initiatives.
EnergyAustralia is actively seeking to expand its virtual power plant and community battery offerings, commencing initiatives that provide opportunities to store and use more energy at times where renewables are more prevalent in the system. It is also seeking to launch electric vehicle offerings for customers.
Engagement between Parents for Climate and EnergyAustralia
EnergyAustralia recognises the important role that climate advocacy groups play in representing the interests of the Australian community. It proposes to continue to engage constructively with Parents for Climate and other community groups as it navigates the energy transition.
As part of the settlement, on or around 21 May 2025, EnergyAustralia sent the below email to current and former customers of the Go Neutral product.
Subject: Important message: Go Neutral Litigation – EnergyAustralia acknowledges issues with “offsetting” and moves away from its carbon offset product for its gas and electricity retail plans
Text:
Dear [name]
You’ve received this email because you are a current customer of EnergyAustralia’s and have participated in our Go Neutral program. As we previously advised you, we no longer offer our Go Neutral product and do not intend to offer the product in future.
In July 2023, the advocacy organisation Parents for Climate launched legal action against EnergyAustralia in the Federal Court of Australia alleging that EnergyAustralia’s marketing of its Go Neutral carbon offset product amounted to misleading or deceptive conduct contrary to the Australian Consumer Law.
EnergyAustralia and Parents for Climate have agreed to settle the litigation and as part of that settlement EnergyAustralia has agreed to publish a public statement. The public statement is attached to this email and published on our website.
We acknowledge that carbon offsetting is not the most effective way to assist customers to reduce their emissions and we apologise to any customer who felt that the way we marketed our Go Neutral products was unclear. EnergyAustralia 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.
We see this as an opportunity for us to continue to take a leadership role in the renewable energy transition and recognise the important role that climate advocacy groups play in representing the climate interests of the Australian community.
EnergyAustralia’s future focus is firmly on direct carbonisation initiatives including the closure of its Yallourn and Mt Piper coal-fired plants.
Yours sincerely
Kate Gibson
Chief Customer Officer
Why the carbon offset ‘swear jar’ needs an overhaul, Canberra Times, 24 May 2025
EnergyAustralia apologises over offsets after greenwashing lawsuit, Sydney Morning Herald, 19 May 2025
EnergyAustralia Apologizes to Customers After Greenwashing Case, Bloomberg, 19 May 2025
Energy Australia apologises to 400,000 customers and settles greenwashing legal action, The Guardian, 19 May 2025
EnergyAustralia apologises over claims of ‘greenwashing’ with Go Neutral products, ABC News, 19 May 2025
EnergyAustralia accused of misleading customers over ‘carbon-neutral’ bills, The Age, 14 May 2025
Energy Australia is in court accused of greenwashing. What is the case about and why is it significant?, The Guardian, 14 May 2025
Parent group challenges energy giant over carbon claims, Canberra Times, 14 May 2025
Beginning of the end for carbon offsets? Parents take energy giant to court, Renew Economy, 22 April 2025
Australians are being misled by ‘dodgy’ offsets, say Fortescue, Sydney Morning Herald, 13 February 2025
Australians are being misled by ‘dodgy’ offsets, say Fortescue, Sydney Morning Herald, 12 February 2025
One hundred ‘carbon-neutral’ corporates quit government scheme over integrity concerns, Sydney Morning Herald, 7 February 2025
EnergyAustralia drops Go Neutral home energy product for new customers ahead of landmark court case, Daily Telegraph, 20 September 2024
EnergyAustralia’s greenwashing court battle heads to 2025 trial, Capital Brief, 19 June 2024
Fact or opinion? The dispute in EnergyAustralia’s greenwashing court battle, Capital Brief, 22 November 2023
Greenwashed? Australian parents take energy giant to court, LSJ Online, 18 September, 2023
Climate action group sues major energy provider, Utility Magazine, 10 August, 2023
EnergyAustralia to face legal action for alleged greenwashing, Lawyers Weekly, 10 August, 2023
Major energy provider under fire for greenwashing, Energy Magazine, 10 August, 2023
EnergyAustralia accused of false carbon neutral claims, The Canberra Times, 9 August 2023
Australian parents sue EnergyAustralia over ‘carbon neutral’ claims, Lawyerly, 9 August, 2023
EnergyAustralia accused of false carbon neutral claims, The West Australian, 9 August, 2023
