Carbon Upsetting: Parents for Climate and EnergyAustralia Settlement

EnergyAustralia has settled the case brought against it by Parents for Climate Ltd (‘Parents for Climate’) alleging that it had engaged in misleading and deceptive conduct in relation to the way in which it had marketed its ‘Go Neutral’ carbon offsetting product. EnergyAustralia has acknowledged that carbon offsetting is not the most effective way to assist customers to reduce their greenhouse gas (‘GHG’) emissions and apologised to any customer who felt that the way it marketed its ‘Go Neutral’ product was unclear. EnergyAustralia has stated that its focus prospectively will be on direct decarbonisation by way of net-zero GHG emissions for its generation operations and reducing the consumption of energy by customers.

The litigation

On 9 August 2023, Parents for Climate (then Australia Parents for Climate Action) commenced a proceeding in the Federal Court of Australia against EnergyAustralia alleging that EnergyAustralia engaged in misleading and deceptive conduct in relation to its ‘Go Neutral’ and ‘PureEnergy’ programs. Parents for Climate sought:

• a declaration that EnergyAustralia has misled its customers since 2019 about the GHG emissions associated with their electricity and gas usage; and
• 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.

‘Go Neutral’

EnergyAustralia electricity and gas customers could opt-in to the ‘Go Neutral’ program. EnergyAustralia purported to offset the carbon emissions from ‘Go Neutral’ customers by purchasing carbon credits, which represented an equivalent number of carbon credits to their energy consumption at no extra cost.

Parents for Climate alleged that EnergyAustralia — through the information about the ‘Go Neutral’ program on its website — represented that the electricity and gas purchased by ‘Go Neutral’ program participants is 100% carbon neutral with all GHG emissions cancelled out or negated, and does not result in an increase in atmospheric GHG concentration. Parents for Climate also alleged that the promotion of the ‘Go Neutral’ program represented that program participants would not cause any additional harm to the climate or the environment by using electricity or gas from fossil fuels. EnergyAustralia denied that it made such representations, stating in its defence that the promotional material must be considered as a whole and in its context, and would be understood as expressions of EnergyAustralia’s opinion.

Parents for Climate alleged that the representations were misleading and deceptive because they were not true on the basis that over 99% of ‘Go Neutral’ carbon credits were avoidance credits (with over 96% from international projects). Avoidance credits reduce forecasted GHG emissions (e.g. by renewable energy replacing fossil fuels) and are distinct from removal credits, which take existing carbon dioxide from the atmosphere (e.g. by tree planting or carbon capture and storage). Parents for Climate also alleged that many of the avoidance credits lacked ‘additionality’ — which requires that carbon credits reflect GHG reductions that would not otherwise have occurred — and that other credits were removal credits with short-lived storage. EnergyAustralia denied Parents for Climate’s allegations [SP1] [GL2] and stated that all its offsets were purchased under the Climate Active Carbon Neutral Organisation Standard.

‘PureEnergy’

In parallel, EnergyAustralia had another program known as ‘PureEnergy’, which allowed customers to choose a percentage of their energy usage to be accredited with energy from Australian renewable sources. Parents for Climate alleged that EnergyAustralia did not market the existence of the PureEnergy program prominently on its website, such that customers and potential customers were unable to make an informed choice about which of the ‘Go Neutral’ or ‘PureEnergy’ programs best addressed the climate change impacts associated with the customer’s electricity usage.

EnergyAustralia denied that it was deliberately obscuring or downplaying the ‘PureEnergy’ program, and stated that its presentation on its website was a result of compliance with the Australian Government accreditation program, Green Power, for the purchase of net-zero emission energy.

Settlement

On 15 May 2025, Parents for Climate and EnergyAustralia agreed to settle the proceeding, with a joint statement released on 19 May 2025.[SP3] [GL4] [1] In the statement, EnergyAustralia acknowledged that carbon offsetting is not the most effective way to assist customers to reduce their emissions and apologised to any customer who felt that the way EnergyAustralia marketed its Go Neutral product was unclear. The statement also provided that:

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 also recognised that 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.

EnergyAustralia accepted the scientific consensus that offsets involving planting trees or forest regeneration: “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).”

Notably, the statement included comments from EnergyAustralia’s Chief Customer Officer to the effect that the company had participated in the Climate Active carbon offset program in good faith but accepted that there is a legitimate public concern about the efficacy of these programs.

EnergyAustralia also stated that its future focus is on direct decarbonisation initiatives and that it no longer offers its Go Neutral products.

Implications

This case is another reminder of the rigour that companies need to adopt when making public claims as regards the environmental benefits or credentials of their products or services. The settlement comes two years after the Australian Securities and Investments Commission identified greenwashing as one of its top enforcement priorities, as it continues to focus on market integrity to ensure that retail consumers can participate in the financial system in a confident and informed manner. Greenwashing is also a top enforcement priority for the Australian Competition and Consumer Commission. It further highlights the willingness of NGOs, not-for-profit organisations and individuals to seek to achieve climate outcomes through court processes.

The settlement has particular implications for all organisations who rely on carbon credits as part of their decarbonisation strategies and claims concerning carbon neutrality.

In addition, it raises further questions in relation to the extent to which private companies can rely upon the efficacy of the Federal Government’s voluntary carbon neutral certification program, Climate Active, and other carbon offset schemes. GreenCollar, Australia’s largest environmental markets investor withdrew from Climate Active on 5 May 2025 (before the settlement). The Commonwealth Department of Climate Change, Energy, the Environment and Water is responsible for Climate Active and has said that it recognises that “that Climate Active needs reform and that work is under way as a priority that will involve proper consultation.”[2]

[1] https://www.energyaustralia.co....

[2] https://theconversation.com/as....

By Hamish McAvaney and Georgina Long  23 June 2025