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.

AGREED PUBLIC STATEMENT   

Date: 16 October 2023

  1. This statement is made by the Commonwealth of Australia in settlement of the proceeding commenced in the Federal Court of Australia by Kathleen O’Donnell against the Commonwealth (Proceeding No VID482/2020). This statement is published on the websites of the Department of Treasury and Ms O’Donnell’s solicitors (Equity Generation Lawyers).
  2. In the proceeding in the Federal Court, Ms O’Donnell claimed that the Commonwealth failed to disclose information relating to climate change in connection with the issue of Exchange­traded Australian Government Bonds (eAGBs).
  3. The parties have agreed that Ms O’Donnell will discontinue the proceeding with no order as to costs when the Court has approved this settlement.
  4. Climate change is a systemic risk that presents significant risks and opportunities for Australia’s economy, regions, industries, and communities. Achieving Australia’s emissions reduction commitments and realising the opportunities that accompany the transition will require significant investment by governments and the private sector. Uncertainty around the magnitude and timing of the physical impacts of climate change and the global transition to net zero emissions translates to uncertainty about the fiscal impacts of climate change. And, as a consequence, there is uncertainty about whether the fiscal impacts of climate change may affect (if at all) the value of Commonwealth Government Securities (also known as Australian Government Bonds or AGBs) and, in turn, eAGBs.
  5. The economic and climatic changes brought about by climate change will have fiscal impacts. For example, the new industries and jobs emerging from the net zero transformation will impact the structure of the economy and, in turn, the tax base. Extreme weather events are also expected to occur with increased severity and frequency, which will increase demand for disaster relief payments and infrastructure repairs. Statement 3 of the 2022-23 October Budget outlined the drivers and nature of these fiscal impacts in detail, as well as the climate-related spending being undertaken by the Australian Government to respond to climate change.
  6. The 2023-24 Budget continues this practice by transparently reporting $4.6 billion in new climate-related expenditure. This is further to the historic $24.9 billion in new climate-related spending announced in the October 2022-23 Budget and is additional to ongoing climate-related expenditure initiated prior to these budgets. The Government’s approach to reporting climate-related spending is informed by the climate-reporting practices of international peers and is presented within the context of international best practice, as well as contributing to work underway to strengthen transparency in future budgets.
  7. The Government is developing a package of sustainable finance reforms, including the establishment of a sovereign green bonds program and regulatory reforms, to increase the transparency and credibility of Australia’s growing sustainable finance market. The Government’s intention is that these reforms will assist investors to align their investment decisions with net zero emissions targets and increase the flow of capital toward new opportunities that support Australia’s net zero pathway.
  8. In accordance with the requirements of the Climate Change Act 2022 (Cth), the Commonwealth will continue to publish an Annual Climate Change Statement. Among other things, the Annual Climate Change Statement addresses the risks to Australia from climate change impacts, such as those relating to Australia’s economy. The first Annual Climate Change Statement was tabled in Parliament on 1 December 2022 and may be found here.
  9. The Commonwealth acknowledges that:

a. As part of investors’ strategic responses to the risks and opportunities presented by climate change, investors are making commitments to reduce emissions associated with their investment portfolios.

b. Credit rating agencies and other stakeholders are increasingly examining the relationship between climate change and sovereign bonds.

c. There is currently no internationally agreed framework for assessing any climate­related risks and opportunities associated with sovereign debt instruments.

d. The Commonwealth will continue to engage with asset owners and relevant stakeholders to ensure that investors are informed as to the Commonwealth’s policy settings and actions in relation to the risks and opportunities posed by climate change.

STATEMENT FROM REST

2 November 2020

The parties have agreed to settle litigation brought by one of its members, Mark McVeigh, in respect of its handling of climate change risk.

Consistent with the Task Force on Climate-related Financial Disclosures (TCFD), Rest acknowledges that climate change could lead to catastrophic economic and social consequences and is an important concern of Rest’s members. The superannuation industry is a cornerstone of the Australian economy—an economy that is exposed to the financial, physical and transition impacts associated with climate change.

Climate change is a material, direct and current financial risk to the superannuation fund across many risk categories, including investment, market, reputational, strategic, governance and third party risks. Accordingly, Rest, as a superannuation trustee, considers that it is important to actively identify and manage these issues, and continue to develop the systems, policies and processes to ensure that the financial risks of climate change are:

  • identified and, to the extent possible, quantified in respect of both individual assets and the fund’s portfolio as a whole;
  • considered in the context of the fund’s investment strategy and asset allocation mix (including in respect of Australian and international shares, cash securities, bonds, alternatives, infrastructure and property); and
  • otherwise appropriately mitigated and managed, having regard to the goals of the Paris Agreement and other international efforts to limit climate change.

As part of this, Rest will take further steps to ensure that investment managers take active steps to consider, measure and manage financial risks posed by climate change and other relevant ESG risks. As the trustee, Rest requires that compliance with these efforts be reported back to it and will use a variety of mechanisms to assess and, if necessary, take steps to improve, the compliance of its investment managers.

Rest’s policy requires that the management of climate change risks also involves the disclosure to members of those risks, as well as the systems, policies and procedures maintained by the trustee to address those risks.

Rest agrees with Mr McVeigh to continue to develop its management processes for dealing with the financial risks of climate change on behalf of its members.

Mr McVeigh acknowledges and supports Rest’s initiatives to:

  1. implement a long-term objective to achieve a net zero carbon footprint for the fund by 2050;
  2. measure, monitoring and reporting outcomes on its climate related progress and actions in line with the recommendations of the TCFD;
  3. encourage its investee companies to disclose in line with the TCFD recommendations;
  4. publicly disclose the fund’s portfolio holdings;
  5. enhance its consideration of climate change risks when setting its investment strategy and asset allocation positions, including by undertaking scenario analysis in respect of at least two climate change scenarios (including one scenario consistent with a lower-carbon economy well below 2oC this century);
  6. actively consider all climate change related shareholder resolutions of investee companies and otherwise continue to engage with investee companies and industry associations to promote business plans and government policies to be effective and reflect the climate goals of the Paris Agreement;
  7. conduct due diligence and monitoring of investment managers and their approach to climate risk;
  8. continue to develop its management processes and implementing changes to its climate change policy and internal risk framework, which apply to all of the fund’s investments, to reflect the above; and
  9. seek to require that its investment managers and advisers comply with the above.

ACKNOWLEDGEMENT OF COUNTRY
Equity Generation Lawyers acknowledges and respects the Australian First Nations traditional custodians of the lands upon which our offices are located. We extend our respect to First Nations Elders – past, present and emerging – and to all First Nations people.