Parents for Climate v EnergyAustralia (Offsets Greenwashing)

Federal Court of Australia l NSD833/2023

Equity Generation Lawyers represents Parents for Climate in 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 on 9 August 2023 in the Federal Court of Australia. The pleadings are available for download at the end of this page.

Background to the claim

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 offers “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 claims that:

1. “Go Neutral” electricity and gas is “carbon neutral”;
   
2. Emissions created by “Go Neutral” electricity and gas are “cancelled out” or “negated”;
   
3. 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 alleges

Parents for Climate argues that EnergyAustralia’s marketing of its “Go Neutral” products amounts to misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law.

Parents for Climate argues 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:

1. 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;
2. 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 argues that the avoidance credits purchased by EnergyAustralia lacked additionality;
3. 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;
4. 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; 
5. 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 also argues that EnergyAustralia’s renewable energy product “PureEnergy” was not given the same prominence on its website as “Go Neutral”, meaning customers could not compare both products. 

EnergyAustralia’s Defence

In its Defence, EnergyAustralia denies that it made the alleged representations on its website and denies that the representations were misleading or deceptive (if they were made).

It also says 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, maintains that the statements on EnergyAustralia’s website would have been understood as statements of objective fact. Parents for Climate further argues that, even if the statements would have been understood as expressions of opinion: 

1. EnergyAustralia’s opinion was not based on reasonable grounds;
2. EnergyAustralia misstated the facts on which the opinion was based; and
3. 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 seeks 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 seeks 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

Amended Defence

Amended Reply

Progress of proceeding and next steps

On 19 December 2023, the Court made orders requiring EnergyAustralia to provide discovery of certain categories of documents.  Those orders are available here.

In February, March and April 2024, EnergyAustralia produced several tranches of documents on discovery.

On 3 May 2024, Parents for Climate filed and served its expert evidence.  Parents for Climate has engaged two independent experts: a climate scientist and a carbon markets expert.

In late October 2024, EnergyAustralia filed its lay and expert evidence.

On 12 November 2024, the Court ordered Parents for Climate to file any reply evidence by 20 December 2024.

The proceeding is set down for a two week final hearing commencing on 12 May. 2025.

Parents for Climate’s Legal Team

Parents for Climate is represented by Equity Generation Lawyers.

Parents for Climate‘s counsel are Robert Dick SC and Jerome Entwisle.