Energy giants Woodside and Origin have distanced themselves from a controversial carbon offsetting technique that has been banned for future projects after a government review found it would be ineffective at reducing emissions.

The credits, which are based on a technique called avoided deforestation, accounted for almost a third of offsets purchased by companies operating under the government’s safeguard mechanism in 2023-24. The method allows landowners to earn carbon credits for not clearing native forests over which they hold clearing permits.