Labor assures industry carbon active scheme is safe but changes are coming

Labor to continue with voluntary emission offset scheme despite a spate of companies leaving amid concerns about the validity of some credits.

Some carbon credits can be developed for planing trees or not clearing land.

The Albanese government has assured Australia’s carbon industry that its flagship voluntary emission reduction scheme will be maintained despite an explosion of some of the nation’s biggest companies exiting the program in recent years over concerns about “greenwashing” and potential reputational damage.

More than 100 companies have left the Climate Active scheme, which offers certificates to those engaged in carbon abatement and allows users to purchase carbon credits to offset their emissions to hit net-zero targets.

But the use of carbon abatement contracts is controversial, with critics arguing emitters should be taking more active steps to reduce their carbon dioxide output, rather than offset it.

Speculation over the credibility of some credits being purchased has also been raised, with the legal and reputational ramifications presented to companies as a result prompting large corporates such as Telstra, NRMA and Australia Post to pull out of the program.

The series of exits fuelled expectations that the federal Labor government could move to scrap the scheme, but Assistant Climate Change and Energy Minister Josh Wilson held a series of meetings this week with organisations such as the Carbon Market Institute, assuring the industry that there were no plans to dismantle Climate Active.

A government spokesman said the Coalition had established Climate Active, and that Labor was now trying to fix the growing issues in the scheme.

“We are actively considering the future direction of the Climate Active program,” he said.

The Weekend Australian understands the government is awaiting a parliamentary inquiry report due next Wednesday into greenwashing – where a company uses dubious claims to make a product or service appear environmentally friendly – before finalising its plans on how to improve Climate Active.

Opposition climate change and energy spokesman Ted O’Brien was approached for comment.

One change that could be made is removing the capacity of users to use international credits.

“Some credits are rubbish,” a senior industry source said. “There are Certified Emission Reduction credits that might cost $1 a tonne, much cheaper than the local Australian Carbon Credit Units which are trading at $35 a tonne. There are significant questions about whether those should be accepted.”

A senior government source said while some concerns around the dodgy use of carbon credits were valid, the integrity challenges of Climate Active were being seized upon by left-leaning groups to call for the end of offset schemes. “People are attacking the dodgy offsets because they want to spear the whole thing, and then they want to use that as a Trojan horse to basically make it hard for Chevron, Santos, all of those players who legitimately participate in this and … are part of the safeguard mechanism and compliance market,” the source said. “We shouldn’t throw the baby out with the bathwater.”

Australia's northernmost cattle property, the spectacular 131,900ha Bramwell Station, is on the market. It has multi-income streams from a tourist park, roadhouse and carbon credits scheme and areas of high conservation value.

Australia Institute climate and energy program director Polly Hemming, who formerly worked at Climate Active, said the scheme had always been flawed and was critical of certifications continuing to be issued even after the government admitted there were issues with it.

“Companies are walking away, because it’s just too risky to be associated with climate active now,” she said.

“The thing is, if the government was to acknowledge this scheme is rubbish and the offsets aren’t working … and allowing fossil fuel companies to greenwash that would be an acknowledgment that the safeguard mechanism is the same.

“Even though they’re two totally separate schemes, they work in the same way.”

The number of certifications issued under Climate Active have remained steady in recent years.

After sitting at just 96 certifications in 2018-19, that number exploded in the following six years to hit 741 in 2022-23, 720 in 2023-24 and 750 in 2024-25.

Originally published as Labor assures industry carbon active scheme is safe but changes are coming