Australians are being misled by ‘dodgy’ offsets, say Fortescue

Under the Safeguard Mechanism, companies that cannot meet legislated emissions reduction targets – by actually reducing their emissions or shutting down – are legally required to buy Australian offsets, including those generated by farmers allegedly growing forests on Australia’s dry rangeland farms.

These HIR credits now make up about a third of the total Australian Carbon Credit Units available on the market and will grow to be around half in future years.

As a result of the Safeguard Mechanism policy, big mining companies such as Fortescue are required to spend millions of dollars a year buying these offsets. Fortescue says this is a bridging issue until it can reach “real zero” in 2030.

Barley hinted in her speech that this might, in future, prompt legal action, as companies could explore the legal implications of being required to buy products that “aren’t doing what they say on the tin”.

A community group recently launched legal action in the Federal Court, alleging misleading and deceptive conduct against Energy Australia over its claim its power – generated largely by coal and gas – was carbon-neutral because it had bought offsets on the voluntary market.

No company has yet sued over the offsets they are forced to buy on the compulsory or “compliance” market.

In her speech, Barley drew particular attention to HIR offsets – including questions raised in a series of articles in this masthead over recent days. She also said there were integrity concerns over other government-approved offset methods, including landfill gas, carbon capture and storage and herd management.

Barley said the answer was for the government to cap the number of offsets that companies could use in pursuit of reducing emissions. In Australia, there is no cap on the use of offsets, but in other territories’ carbon reduction schemes, including in California and the European Union, the use of offsets is limited.

“If 90 per cent of our decarbonisation had to be real, a few dodgy offsets wouldn’t matter. We would laugh them off,” Barley said. “The problem lies in the fact that there are currently no limits to using them.”

In answer to questions from this masthead recently, a spokesperson for Environment Minister Chris Bowen said carbon credits such as those derived from HIR – one-third of the total in Australia – were “a critical part of the ‘net’ in net zero”.

According to Barley, with a profit of $9 billion per year, Fortescue could easily afford a few million for offsets to allow it to claim it has decarbonised.

“At the end of the day, the financial impost placed by offsets on big companies is water off a duck’s back. To force companies to do the right thing, many countries have had to set strict limits on offset use. Australia should consider doing the same.”

Fortescue this week organised an open letter, signed by multiple companies, which now includes $49 billion technology company Canva, calling for “real zero” policy that would “mandate clear phase-out timelines for fossil fuel use”.

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