Net Zero is a loophole and Australian businesses are exploiting it
As Australia tries to position itself as a global climate leader with a bid to host COP31, an inconvenient truth is emerging: the country’s “net-zero" ambitions are failing to tackle our emissions.
Net zero was initially intended to push countries and non-state actors to reduce their emissions close to zero, with any remaining emissions counterbalanced by projects that remove carbon from the atmosphere, like reforestation and regenerative agriculture. The end goal was genuine decarbonisation at the speed and scale needed to align with the Paris Agreement.
Instead what we are seeing is countries and corporations simply offsetting emissions rather than reducing them. Australian corporations claiming to be on a path to net zero are increasingly relying on carbon credits to balance out emissions rather than making the necessary operational changes to reduce their emissions.
Over reliance on removals in place of true emissions reduction is not unique to Australia, but we are a major part of the problem. Australia is a member of a small group of high-income, high-emitting countries that are responsible for almost 75 percent of land use for carbon removal within climate pledges. Australia’s existing 2050 target relies heavily on both future carbon dioxide removals and low-integrity international carbon markets to meet almost 40% of its pledge.
The same issue exists within the corporate sector. Climate Integrity’s assessment of 10 of Australia’s biggest corporations net-zero pledges (AGL, BlueScope Steel, Cleanaway, Coles, Origin Energy, Qantas, Rio Tinto, South32, Telstra & Woolworths) found half the companies are using voluntary credits to count towards their emissions reduction targets, in place of making real emissions cuts.
Rather than treating offsets as a solution to the climate crisis, they should be reserved for the final, irreducible emissions in a company’s operations - only once all other options have been exhausted.
This won’t happen without government intervention.
For Australia to meet the climate goals the government needs to establish a framework for the sustainable and ethical use of carbon dioxide removals. Without robust oversight, Australia’s largest emitters are free to continue using offsets as a means to claim they are on track with towards their net-zero targets, without doing the work to reduce their emissions. A sustainable national carbon removals budget would allocate removals fairly to the most deserving uses – rather than the highest bidders willing to buy large amounts of carbon credits. For example, companies that grow the food we eat might get priority on using our finite removals because they hold far greater social value than industries that support dangerous fossil fuel expansion, like aviation or mining.
Implementing a carbon removals framework will align Australia with emerging with global trends, where major trading partners are setting the bar high through regulation like the EU’s Carbon Border Adjustment Mechanism. The Climate Change Authority has called for the Australian government to develop a National Carbon Market Strategy that includes setting out how carbon offsetting will be used without substituting or delaying direct emissions reductions.
Last month, more than 60 leading climate scientists from nine countries - including Australia - signed a pledge describing carbon offsets as “ineffectual” and “hindering the energy transition.” They argue that the “only path that can prevent further escalation of climate impacts” is “real zero,” a target that demands genuine emissions reductions without relying on offsets. The statement calls for abandoning net-zero claims and prioritising real emissions cuts.
