Energy Australia, one of the nation’s largest energy retailers, has today issued a formal apology to more than 400,000 customers and acknowledged that its “go neutral” carbon-offset program did not prevent or reverse the climate harms caused by fossil-fuel consumption. The retailer’s statement, part of a confidential settlement with advocacy group Parents for Climate, represents the first time a major Australian energy provider has admitted to misleading marketing around carbon neutrality. The move follows legal action launched in 2023 under Australia’s consumer-protection laws, alleging deceptive and misleading conduct by the company.
Background: The “Go Neutral” Program and Parents for Climate’s Lawsuit
Launch and Marketing of the Offset Scheme
In 2016, Energy Australia introduced its “go neutral” option, allowing residential electricity and gas customers to pay an additional fee in exchange for carbon offsets. The marketing materials promised that customers’ greenhouse-gas emissions would be fully offset through international projects—primarily tree-planting, renewable-energy installations and methane-capture initiatives overseas. Advertisements and website copy described the offering as an effective way for households to reduce their carbon footprint, framing it as a form of “climate action” that consumers could undertake simply by switching to the “go neutral” tariff.
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Parents for Climate’s Legal Challenge
Parents for Climate, a grassroots advocacy group focused on climate-friendly policy, filed proceedings in the Federal Court in August 2023. The group alleged that Energy Australia’s marketing was misleadingly designed to give customers the impression that their domestic energy use would become harmless to the environment once offset, thereby enabling continued or expanded fossil-fuel consumption under the guise of neutrality. The action relied on the Australian Consumer Law’s prohibitions on misleading or deceptive conduct. Parents for Climate sought declarations, injunctions and refunds for affected customers.
Settlement Terms and Public Apology
Key Admissions by Energy Australia
In a joint court filing made public today, Energy Australia has conceded several critical points:
• Carbon offsets do not “prevent or undo the harms caused by burning fossil fuels.”
• Offsets, even when certified under government-approved schemes, merely “invest in worthwhile projects elsewhere” rather than neutralize the customer’s on-site emissions.
• Offsets should not serve as a “license to pollute,” nor as a substitute for direct emissions reductions through energy efficiency, electrification or renewable-energy purchasing.
Formal Apology to Customers
Energy Australia’s chief customer officer, Kate Gibson, issued the following statement, agreed as part of the settlement:
“Energy Australia apologises to any customer who felt that the way we marketed our ‘go neutral’ products was unclear or misleading. Greenhouse gases are harmful to the environment and contribute to climate change. While offsets can help people invest in worthwhile emissions-reduction projects elsewhere, they do not prevent or undo the harms caused by burning fossil fuels for a customer’s energy use. Even with offsets, the emissions released still contribute to climate change.”
Parents for Climate Response
Parents for Climate CEO Nic Seton described the settlement as “historic” and a “huge step forward” for consumers and the broader climate movement. He praised Energy Australia’s acknowledgement that “offsets should not be used as a license to pollute” and declared that “the era of unchecked greenwashing is over.” Seton emphasised that the ruling was not limited to Energy Australia’s now-discontinued program, but would send a clear message that all companies must be held to higher standards in environmental claims.
Legal and Regulatory Implications
Impact on Consumer-Protection Jurisprudence
Legal experts note that this case marks a watershed moment in Australian consumer law. The Federal Court has yet to issue a final order, but the settlement admissions are likely to influence future rulings on greenwashing. Professor Anna Grear, an environmental law scholar at the University of Sydney, commented: “Energy Australia’s concession sets a powerful precedent. It signals to all businesses that overstating the environmental efficacy of offset schemes will not be tolerated and can attract significant reputational and financial consequences.”
Pressure on Climate Active Certification
Both Parents for Climate and Energy Australia highlighted concerns about the federal government’s Climate Active program—the voluntary certification scheme that approves corporate carbon-neutral claims. Under the program, companies must retire offsets in a publicly verifiable registry. However, critics argue that Climate Active’s rules focus narrowly on offset procurement rather than on actual decarbonisation pathways. As part of the settlement, both parties urged the Department of Climate Change, Energy, the Environment and Water to review the program, shifting its emphasis toward encouraging direct emissions reductions and net-zero transition plans.
Broader Corporate Greenwashing Risks
The settlement is expected to trigger a reevaluation across industries that rely heavily on offsetting to bolster sustainability credentials—including airlines, finance companies and consumer-goods brands. The Australian Competition and Consumer Commission (ACCC) and state fair-trading authorities have already signalled increased scrutiny of environmental claims. This case will likely embolden regulators to launch inquiries and take enforcement action under the Australian Consumer Law.
Moving Forward: Energy Australia’s New Climate Strategy
Commitment to Direct Emissions Reduction
In her statement, Kate Gibson outlined Energy Australia’s new approach:
“Carbon offsets should not be used to delay or diminish the important work needed to decarbonise. Energy Australia is now focused on more effective ways to help our customers directly reduce emissions—via energy-efficiency programs, rooftop solar offerings, battery-storage packages and time-of-use tariffs that encourage load shifting to renewable-rich periods.”
Expansion of Customer-Centric Decarbonisation Tools
The company plans to roll out:
• Smart Home Energy Audits: Free virtual and in-home assessments to identify opportunities for insulation, LED lighting upgrades and appliance electrification.
• GreenPay: A tariff that combines fixed discounts on electricity bills with on-site solar installations at minimal upfront cost.
• EcoRewards: Loyalty points redeemable for electric-vehicle charging credits, heat-pump rebates or climate-friendly home improvements.
These initiatives aim to shift the focus from offsetting to direct footprint reduction—helping households track and lower their energy-related emissions in real time.
Reactions from the Carbon-Offset Industry
Carbon Market Institute Perspective
The Carbon Market Institute, representing offset generators and buyers, welcomed the settlement’s recognition that offsets can play a “necessary role” in reaching net-zero emissions when used correctly. CEO John Connor urged policymakers to refine the Climate Active framework to better integrate offsets with robust decarbonisation pathways. He remarked: “Well-designed land-based and technological offsets are vital to sequester residual emissions, but they must complement—not replace—direct emission-cutting measures.”
Offset Project Developers’ Concerns
Developers of abatement projects—from reforestation to landfill-gas capture—expressed mixed feelings. While some praised the clarity brought by the settlement, others worried it could depress offset demand, undermining funding for rural and Indigenous communities that rely on carbon-credit revenues. Industry associations are calling for transitional support mechanisms and policy certainty to ensure offset markets remain viable as direct decarbonisation accelerates.
Consumer Perspectives and Trust Restoration
Refunds and Customer Redress
Under the settlement, Energy Australia has committed to:
• Refunding Unsatisfied Customers: Customers who opted into the “go neutral” program between 2016 and its closure in July 2024 may claim partial or full refunds of the offset premium they paid.
• Clear Future Disclosures: All marketing materials, bills and online portals will feature transparent explanations of any environmental offerings, accompanied by independent third-party verification statements.
• Dedicated Support Line: A hotline and website FAQ to assist customers in understanding the settlement, the limits of offsets and alternatives for reducing their emissions.
Restoring Consumer Confidence
Consumer advocates underscore the importance of the refunds and transparent communications. Sarah Wilson, director of the Australian Consumers’ Association, remarked: “Refunds are crucial, but rebuilding trust will require sustained action. Companies must demonstrate through measurable reductions that they are serious about climate responsibility, rather than resorting to greenwash fixes.”
Conclusion: A Turning Point in Corporate Climate Accountability
Energy Australia’s apology and settlement with Parents for Climate mark a pivotal moment in Australia’s grappling with greenwashing. The company’s admission that its carbon-offset program fell short highlights the inadequacy of relying on offsets alone to address the climate crisis. The legal outcome signals to businesses and regulators alike that environmental claims will face rigorous scrutiny and that direct emissions reductions must take precedence.
For consumers, the settlement offers both redress and a pathway toward genuine decarbonisation tools. For policymakers, it provides the impetus to reform voluntary certification schemes and enforce more stringent consumer-protection standards. And for the energy sector, it underscores the urgent need to shift from symbolic offset promises to substantive, measurable progress in the transition to a net-zero economy.
As Energy Australia embarks on its renewed climate strategy, the settlement reminds all stakeholders that credible, science-based action—not marketing spin—will drive the sustainable future Australians demand and deserve.
