The claims and promises of carbon offset schemes are falling so deep into the category of being ‘too good to be true’, that it’s becoming a genuine consumer protection concern.
Climate Integrity’s recent investigation into a new Australian carbon offsetting platform, Aetium, is just the latest example of the ongoing integrity crisis that has plagued carbon markets and how dismissing key integrity protections can work to undermine any role carbon credits could play as a solution to the climate crisis.
Problems establishing the environmental integrity of carbon credits have mounted in recent years, with multiple academic studies demonstrating that the emissions claimed to have been reduced or avoided by many projects have not materialised or are grossly overestimated. One study found that as much as 90 per cent of carbon credits issued under some methods were not backed by real world emissions reductions.
It is in this context that Climate Integrity identified and raised concerns about Aetium, investigating the new Australian-headquartered carbon credit platform and its potential to mislead everyday consumers about the contributions they may be making towards solving the climate crisis.
Aetium offers to issue carbon credits – in the form of non-fungible tokens (NFTs) – to owners of rooftop solar, electric vehicles, and properties with established trees.
Aetium will ultimately charge participants to register their activities – and take a small share of the carbon credits issued – while offering the prospect that they could sell the credits for cash.
Being rewarded for doing the right thing sounds great, but the core problem is that Aetium issues carbon credits for existing actions – to existing rooftop solar systems (no matter how old), for existing EV ownership (the more you drive, the more credits you can claim) and for existing trees.
This approach is effectively awarding ‘business-as-usual’ actions, and is out-of-step with virtually every carbon credit verification scheme, jettisoning an essential integrity pillar of carbon markets called ‘additionality’.
The requirement to achieve ‘additionality’ has been adopted more-or-less universally by government-run and voluntary carbon crediting regimes and is backed by climate scientists. It seeks to ensure carbon credits are only awarded for the reduction of emissions beyond ‘business as usual’ practices.
Aetium also skirts another key integrity pillar, that carbon offset projects demonstrate the long-term permanency of emissions reductions (this is particularly important for forestry projects), and heavily relies on the flawed concept of ‘avoided emissions’.
This is when the emissions reductions of one activity are calculated with reference to a hypothetical emissions-intensive alternative, an approach that cannot simply “cancel out” the emissions caused by fossil fuel use.
Even the process of facilitating consumers to turn their potential emissions reductions into carbon credits can cancel out the positive environmental benefits they sought to achieve by installing solar or switching to an electric vehicle. The companies that ultimately purchase the credits, which may include fossil fuel companies, could use them to ‘offset’ their continued emission of greenhouse gases.
We raised these issues directly with Aetium, as well as key oversight bodies that included the Clean Energy Regulator and the Carbon Market Institute.
But neither of these bodies regulate voluntary carbon markets – highlighting a clear governance gap that can leave consumers vulnerable to greenwashing or other misleading claims.
Concerningly, despite Aetium being a signatory of the ‘Australian Carbon Industry Code of Conduct’, the code does not impose any obligations on signatories to guarantee that offsets issued under a voluntary carbon credit scheme achieve tangible climate benefits.
Following these consultations, Climate Integrity proceeded to lodge a complaint with the ACCC and Ad Standards.
It would not be the first time carbon credits have become a consumer protection issue.
Millions of international carbon credits have been used by Australian companies under the federal government-backed carbon neutral certification scheme, Climate Active. Such is the depth of the integrity crisis facing international carbon credits, that there has been a mass exodus of companies from Climate Active.
In August last year, the group Parents for Climate secured a landmark legal settlement with the largest participant in the Climate Active program, EnergyAustralia, challenging its marketing of ‘carbon neutral’ energy, and forcing the company to concede that ‘offsets do not prevent or undo the harms caused by burning fossil fuels’.
Parents for Climate has alleged that ‘carbon neutral’ products offered by other energy companies, based on the use of offsets, are also misleading or deceptive.
Climate Integrity has raised similar concerns about Qantas’ marketing of its own carbon offset products. Qantas tells consumers they can ‘Fly Carbon Neutral,’ despite analysis showing that offsets cannot undo the climate impacts caused by flights.
There may have been a time and place for the broadscale use of carbon offsets – about two decades ago when companies were first seeking immediate measures to address their contributions to the climate crisis while identifying how more meaningful, systemic emissions reductions could be achieved.
That time has long passed and the increased urgency of the climate crisis means we cannot shortcut our way to transitioning the global economy to zero emissions and preserve our ability to live on a safe and healthy planet.
The integrity flaws are well documented, and become doubly problematic when offsets are used to pardon other emissions-intensive activities, such as long-haul flights, fossil fuelled electricity consumption, or petrol fuels.
In our submission to the Climate Change Authority’s review of the ACCU scheme, Climate Integrity reiterated that carbon credits are a finite resource and must play an extremely limited role in decarbonisation strategies – reserved for offsetting only the most difficult to abate emissions and emissions with a significant social imperative (such as food production) and based on the most effective crediting methodologies.
Of course, innovation will be necessary if we are to solve the climate crisis. New technologies, new business models and new ways of incentivising zero carbon investment will all be necessary if we are to successfully tackle the increasingly urgent transition to a decarbonised economy that we need to make.
But that innovation must be a means of delivering solutions with environmental integrity. In the haste to deploy technologies like AI, blockchain, or tapping into as yet untapped markets, we cannot lose sight of the ultimate goal of saving the planet.
Michael Mazengarb is the head of corporate accountability with Climate Integrity.
