Photo by David Clode on Unsplash

While the race to achieving net zero is on, we need to focus on acting.

The recently rebranded Climate Active initiative is one pathway for organisations to go some way towards reaching the Paris Agreement targets. But there is room for improvement.

The program requires participants to measure their carbon footprint, reduce greenhouse gas emissions where possible, and offset residual emissions that cannot be reduced.

But once an organisation achieves that “carbon neutral” status, many think that it has reengineered itself so that it’s no longer contributing to climate change. That’s not necessarily the case.

Contrary to popular belief, going carbon neutral is far more technical and complex than the catchy, but dumbed down, “measure, reduce, offset” rhetoric suggests. We must avoid simplifying the transition to a low-carbon economy with vague claims of carbon neutrality. That talk won’t get us anywhere.

Instead, the development of the carbon footprint, emission reduction activities, and the choice of carbon offsets needs to be robust.

So, how do we do that?

Move away from the market-based reporting approach

Climate Active recently asked stakeholders whether a market-based approach to reporting grid-purchased electricity is necessary.

Many Climate Active participants are supporting their carbon neutral claims by purchasing large amounts of renewable energy credits (or RECs) in the form of GreenPower, renewable energy power purchase agreements (PPAs), or the voluntary surrender of large-scale generation certificates (LGCs). These organisations claim the RECs cancel out the scope 2 component of their carbon footprint.

There are three key issues with this approach:

  1. It breaks the causal link between an organisation’s activities and related GHG emissions;
  2. some renewable energy projects selling LGCs into the voluntary market would have been built regardless, so the revenue from the sale of LGCs helps a renewable energy project developer’s financial performance, but it’s not really funding additional emission reductions; and
  3. a focus on the market-based approach is to the detriment of other, non-electricity related emission reduction strategies.

Instead of the market-based approach, we should focus on good quality carbon offsets. Ideally, offsets would relate to the organisation’s activities and fund actual, calculable emission reductions.

We should also be considering the entire array of emission reduction strategies to make fully informed choices.

What makes a good quality carbon offset?

In the context of Climate Active, carbon offsetting refers to the purchase and surrender of sufficient carbon offset units to compensate for an organisation’s unavoidable GHG emissions.

Of course, Climate Active offers guidance on eligibility requirements and eligible offset units. However, no guidance is provided on what makes a good quality carbon offset.

But carbon offset instruments are becoming more complex. They originate from a great variety of project types and activities, ranging from the installation of wind turbines and solar farms, to fuel switching in the industrial sector, forest management, and energy efficiency projects. This complexity means it’s sometimes difficult for the Climate Active participant to understand what they are actually buying… or offsetting.

There is also increasing risk of double counting. Under the Paris Agreement, countries formulate their own GHG emission reduction targets (Nationally Determined Contributions, or NDCs). Many offset projects may fall within the scope of the host countries’ NDCs. The risk is that emission reductions may be counted towards a country’s NDCs, while the corresponding carbon offsets have actually been sold internationally. However, Climate Active fails to give any guidance on how to avoid offset projects at risk of low environmental integrity.

For some carbon offset projects, there are inherent concerns with respect to additionality, calculation and permanence of emission reductions, leakage risk, and other negative externalities.

This is particularly true with sequestration projects. A common criticism of sequestration projects is that vegetation and soils are susceptible to fires, pests, and illegal logging. Wind farms and other technological changes, by contrast, could be considered more permanent.

Interestingly, while Climate Active does allow the use of vegetation-based sequestration projects, it doesn’t allow the use of temporary certified emissions reductions (CERs) and long-term CERs, which are not that dissimilar.

As such, using sequestration offsets alone may not be effective in mitigating climate change, especially if it’s a direct substitute for avoiding or reducing emissions.

Similarly, many renewable energy projects, such as large-scale wind and solar, can be considered common practice as they are in many sectors and regions, including China and India. In light of environmental and public health issues, as well as commitments under the Paris Agreement, more governments are mandating renewable energy targets or at least supporting the uptake of renewable energy (through feed-in-tariffs, for example) to address climate change, energy security and air quality.

And, for the very common large-scale wind and solar projects, the possibility to earn income through the creation of carbon offsets on the rate of return is generally minimal, and additionality is difficult to demonstrate with high confidence.

The way forward

The question of offset quality is of widespread interest to participants, investors and stakeholders and was brought up in a recent article on The Fifth Estate. We know we need to make some changes, but what?

The Climate Active initiative needs to develop some clear guidance on what makes a good quality offset and how participants can demonstrate additionality and high confidence in their compliance with the quality criteria. They also must encourage participants to not only purchase carbon offset units that were created from 2013 onwards, but to use offsets that were created within the last three to five years.

But this isn’t only the responsibility of the Climate Active initiative. Conducting offset quality due diligence is everyone’s responsibility, and inevitably contains elements of subjectivity and varying risk tolerance. But attention must be paid to additionality questions.

Won’t somebody please think of the emission reductions?

While the Climate Active Standards (yes, there are five, but they all say the same thing) state that participants must develop and maintain an emissions reduction strategy, there is no requirement whatsoever to actually achieve emission reductions. Instead, the language uses the insipid “could”, “should”, and “may”.

There is much talk about climate science, reaching the Paris Agreement targets and of tackling climate change, but activities are mostly limited to buying carbon offsets and ticking that yes-I-want-Green Power box.

It’s not enough action.

That’s not to take away from the exciting projects that have eventuated at some participating organisations. But if we want to move away from indulgences reminiscent of medieval times – absolution from carbon sins and reduced time in customer boycott purgatory – we must commit to emission reductions that are more than just contractual agreements.

We have to change how we get our electricity and how much electricity we are consuming. We need to expect participants to show that electricity consumption has decreased year-on-year, or at least not increased, and to prove they’ve achieved annual absolute scope 1 and 2 emission reductions as the result of energy efficiency and/or emission reduction activities.

We could also consider aligning with the Science Based Targets initiative, which is fast becoming the standard methodology for organisations because it offers a logical pathway to emissions reductions while still giving flexibility to respond to climate change risks, stakeholder expectations and the necessity of building a resilient business.

Other voluntary programs have also established such requirements. It doesn’t make it easy to achieve those reductions but achieving carbon neutrality should be more than just doing what is necessary to meet a voluntary program’s minimum requirements.

We can do more

Carbon offsets, used responsibly, can be an effective tool to achieve net-zero by 2050 and to cut emissions in half to maintain a 50 per cent chance of avoiding the worst effects of climate change.

But carbon offsets alone are not enough. Priority needs to be given to actual emission reductions within every organisation.

Alex Stathakis is director and founder of Conversio Pty Ltd, a Brisbane-based carbon and energy management consultancy. 

Spinifex is an opinion column open to all, so called because it’s at the “spiky” end of sustainability. Spinifex may be inconvenient or annoying at times, but in fact, it’s highly resilient in a hostile environment and essential to nurturing biodiversity and holding the topsoil together. If you would like to contribute, we require 700+ words. For a more detailed brief please email

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  1. LGCs have no attributes. None described in the Renewable Energy (*Electricity Act) 2000 and none described in the NGER Act or its legislative instruments. The NGER Framework only has one method using state based grid average emissions to allocate electricity emissions to end users. That is why GreenPower and LGC surrender double count emissions reductions and why there are so many PPAs now claimed as n renewable but without voluntary surrender of LGCs. Anyone can claim anything with a story.

    I say this as a 100% accredited GreenPower customer that has been requesting that the Australian Government, the ACCC, & AER, DEH, DCC, DCCEE, DCCSRTE, DEE & DISER, the CER, Ministers, PMs, Climate Change Authority and GreePower to sort out this mess for 15 years.

    Yes I agree that the systems are imperfect (in fact no whole of market accounting framework exists) which is why NGER reform is needed for offsets, renewables and non NGER liable participants.

    Consultation on the 2020 NGER Determination opened on Friday (29 May 2020)for a short period until June 10. What could really help is for the low carbon market participants to call out that the current system is actually non existent and this needs to be fixed to support the whole low carbon market.

  2. Climate active is itself just a scheme that is largely not underpinned by any legal GHG allocation and accounting framework. There is no point at directing comment against Climate Active.
    The real issue is about Australia not having a GHG accounting and allocation framework that applies across the whole market and underpins market based accounting. The NGER Framework only applies to NGER liable corporations and only for reporting.

    And yes, we need market based accounting for any kind of transaction. It is required for carbon offsets and renewable electricity alike and reform of the NGER Framework is essential to underpin a future low carbon economy.

    There is no point in pitching offsets against renewable electricity for end user action as both are necessary, as is energy efficiency, resource efficiency, new technology and better design.

    The serious problems with both renewables and offset claims are because there is not an economy wide legal set of allocation, accounting and trading rules.
    Accredited renewables (GreenPower and voluntary retirement of LGCs) are at least 100% double counted. Renewable claimed PPAs that do not include voluntary surrender of LGCs are at least triple counted.

    ACCUs from user-producer organisations are also double counted where they come from methods that allow the system user to claim reduced emissions from say energy efficiency projects, but create and sell those ACCUs for third parties to claim reduced emissions. There are issues with offsets traded across nation borders where the nation selling does not adjust their GHG inventory to reflect the sale. There are issues with vegetation based offset assurances and permanence.

    The solution is to improve the NGER Framework to cover scope 1,2 & 3 emissions across the whole economy. With that, there can be rules to describe how offsets could be created as negative scope 3 emissions, how a producer should add the emissions to their account when selling, how offsets would be traded and how an end user could buy and use a negative scope 3 offset to neutralise their scope 1, 2 and other scope 3 emissions.

    With a no double counting principle introduced for end user claims, there can be continuous improvements for specific methods.

    For renewables, the NGER Framework needs to adopt market based accounting and apply it to all, in accordance with the GHG Protocol Scope 2 guidance, with the location based approach just used as the default comparison if the dual reporting recommendation is followed.

    None of this groundwork has been done by the Australian Government so markets exist in a state of anarchy, confusion, double and triple counting with continuous newly invented conventions and claims that have no foundation in law.

    All actions whether it is the use of renewable electricity, use of carbon offsets, developing policy, developing carbon allocation and accounting frameworks need to be undertaken with integrity and assurance. We are a long way from hat now but the reforms are relatively straight forward and let’s not pitch one part of the solution against another.

    We are going to need everything

  3. Having read Alex’s article and the various comments on it, the key thing that strikes me is the need for our industry to continually work together to maximise the effort and integrity of carbon-related initiatives such as Climate Active. For the good of the Planet we want more and more businesses to jump on board these types of voluntary schemes, in the absence of sensible policy. We must also continue to lobby for the transition to net zero – as quickly as possible because yes, it will be more economically beneficial in the long run and Australia has huge opportunities. Let’s stick together in pursuit of the greater good and also appreciate that freedom of speech and transparency is all good.

  4. 1. Registered consultants do not “represent” the program. And 2., I fail to see where the “attacks” are?! Rather it appears some of us feel pushed out of our comfort zone just because someone said hey, let’s review and try to make it better.

  5. When the offsets, per tonne of abatement, can be bought for a few dollars overseas, and even in the $10-20 bracket in Australia, it’s the cheapest form of reduction.
    Telling management that, no, really you should be doing energy efficiency upgrades, passive thermal treatments, behind-the-meter solar systems, power purchase agreements – at ten times the cost, they aren’t going to listen, because company $ is the bottom line.
    Brisbane city council – carbon neutral – achieved through cheap o/s offsets. State governments (“leading by example” they say?) can’t put together a coherent climate policy or emissions reduction target (excl. ACT) and also use offsets to achieve what they can’t otherwise.
    We don’t have enough space for trees if everyone just buys offsets so reductions are going to have to happen properly, eventually…

  6. Strong advocacy for robust offsets – bravo.
    Advocacy for the Science Based Target Initiative that bans the use of offsets in meeting targets – that’s confusing

    Critical of organisations that buy renewable energy to eliminate scope 2 emissions under Climate Active now…in 2020, instead preferring Science Based Targets like “British multinational pharmaceutical company GSK commits to reduce absolute scope 1 and 2 GHG emissions 10% by 2025 from a 2017 base year. GSK also commits to reduce absolute scope 3 GHG emissions 16% by 2030 from a 2017 base year.”

    Doesn’t the science demand that the world’s leading companies do more than that to avoid the worst climate change scenarios ?

    Let’s encourage early adopters to get on with Climate Active, to act with urgency, that’s what I’ve heard the scientists say we should do.

  7. I agree with the argument that organisations need to prioritise actual emission reductions, not just offset their way to ‘carbon neutral’, and it’s great to see Science Based Targets initiative getting a mention. SBTi require that the majority of value chain (Scope 3) emissions are included in the target if Scope 3 account for over 40% of total emissions, which they do for most organisations. But the article gives very little attention to Scope 3 emissions besides business travel, and many organisations in their rush to declare themselves carbon neutral have not properly accounted for the substantial emissions in their supply chains. Companies should be recognised for bold action on energy-related emissions, but to treat that as the end of the journey is somewhere misleading.

  8. Rule number 1 in a risk-based approach when dealing with a hazard… eliminate it first, and only after that try to rectify the issues to occur.
    When it comes to emissions from electricity, they can be eliminated by buying the green stuff. Yes… Green Power or retiring LGCs is how we account for it. Just like the bank doesn’t count your money twice, retired LGCs aren’t counted twice.
    But I did have to read this article twice to check I hadn’t misread. What a long winded plug for the idea of continued emissions being better than elimination… so long as you make up for it with good offsets. Sure, buy the best offsets you can for those emissions you can’t eliminate. But eliminating emissions through buying renewables wins hands down on the credibility stakes everyday over continued emissions and then making up for it through offsets.

  9. Matt, Iain… a robust discussion about the effectiveness and opportunities for improvement regarding Climate Active should be possible. If Climate Active is currently standing in for a lack of a federal policy framework, shouldn’t we discuss how to make it even better? Rather than waiting in the wings for the federal government to act, should we not evolve what we currently have so that businesses seeking to engage in real change can do so to the highest standard? Participants are relying on the robustness of the program, they should have access to the best guidance and advice possible. I am putting forward suggestions that I believe will improve the program. I have administered the NCOS Carbon Neutral Program at Low Carbon Australia, I know and care about the carbon neutral program. I wrote this article not because I want the program to fail, but because I want Climate Active to be the best it can, building on existing strengths and addressing some shortcomings which, as mentioned in the article, are dealt with in other voluntary programs.

  10. I believe Alex is a registered consultant for Climate Active. Why attack a program you represent?
    This article doesn’t offer anything constructive. It just attacks.
    I agree that mandated targets are not ambitious enough but this is a voluntary program. I think any business doing anything should be congratulated. What’s the saying? Better to have a majority doing things imperfectly than to have a few doing it perfectly.

  11. Totally agree Matt. It’s the most rigorous scheme I’ve seen globally and all about the bigger picture too. Once companies have made the commitment to certified carbon neutrality we are seeing it’s driving them towards emissions reductions, whether efficiencies, flying less or adding solar panels etc. It’s also having a massive flow on effect through supply chains and their competitors too. Clients who are certified as asking how to source low carbon products and services continually. And yes, in light of political “climate wars” its the next best thing!

  12. This really is the last stretch before it’s too late to reach the Paris Agreement goal (the alternative is unthinkable but looking increasingly likely). Nobody would disagree that we need to focus on our mandated schemes, but in the context of this climate crisis we also need to focus on our voluntary programs if they’re not delivering the climate impact that the government is actively claiming. The Coalition often promotes the Climate Active program to divert attention from its non-existent mandatory schemes. So if we’re going to have the program, and if the government is going to keep promoting it as part of its climate action PR strategy then each certification needs to deliver real emission reductions (noting that some certifications are already delivering this in spades). Alex has good suggestions on how to do this. They’re ‘ideas’ not ‘rocks’, and we need to throw a few so that the standard is raised quick smart. Then we can all hold hands and skip merrily into the sunset.

  13. What’s with the beef against Climate Active in the Fifth Estate of late?! Climate Active may be imperfect, but it’s pretty sound and quite rigorous for a VOLUNTARY scheme. It’s one of the only carbon neutral schemes in the world underpinned by Government and independent third party audit for a start. Rather than throwing rocks at a good news story, why don’t we focus on the fact our MANDATED schemes to reduce emissions are completely inept. The pot shots being had at Climate Active is undermining real initiatives, real abatement and real offsetting that is being delivered by Australian businesses that have no other means to act. Give them and the program a break I say. We should congratulate businesses going beyond BAU voluntarily and focus our attention on the real issue , that being the lack of economy wide climate policy and the fact that on current form we will miss our own (Paris) NDC by ~690 million tonnes of CO2 at 2030.