What does “carbon neutral” mean? It is generally accepted that “carbon neutral” refers to the neutrality of carbon rather than to the neutrality of all greenhouse gases. The neutrality of all greenhouse gases is captured by the term “net zero”. State and Commonwealth climate legislation use the term “net zero greenhouse gas emissions” to make clear the inter-relationship between net zero and greenhouse gases.
How is “carbon neutral” to be achieved? Another difficult question. Can the term be used without a greenwashing risk? Possibly. The ACCC in its guidance (“Making Environmental Claims”) acknowledges this risk and warns that consumers “are unlikely to readily understand what is meant” by the term.
What are some of the common pitfalls with using the term “carbon neutral”? The use of third party certifiers, use of offsets and proper disclosure are recurring pitfalls. These issues have been litigated predominantly in the US and Europe. There is one ongoing case in Australia (EnergyAustralia over its claims that its Go Neutral program is “carbon neutral”).
Is carbon neutrality limited to verification by a third party certifier? Not always. Government sponsored certifiers that apply international best practice and GHG protocols such as Climate Active, can provide a level of protection against greenwashing. However, not all third party certifiers are equal. The plastic bottles and packaging of Evian water carry the logo of a third party certifier and the term “carbon neutral”. A class action has been filed against Evian’s parent company in the US District Court alleging that the term and logo are misleading. On a dismissal application, the Court ruled that consumers are unlikely to understand the meaning of the logo and the words “carbon neutral” and so are capable of being misleading. This conclusion is consistent with the ACCC’s guidance.
Carbon offsets from the voluntary carbon markets, particularly those from nature based projects, have been beset with additionality, permanence and accounting issues. Last year, the Guardian newspaper reported that more than 90% of Verra’s (world’s largest third party verifier) rainforest offset credits are not genuine. Disney, Shell and Gucci were some of the prominent companies that had purchased Verra’s offset credits. Verra has announced it will phase out its rainforest offset program.
The ACCC’s guidance recommends verification and the avoidance of double counting when using offsets. In a class action against Delta Air Lines, the use of carbon offsets has been alleged to be misleading because of the use of unverified carbon offsets. A further interesting issue is whether carbon offsets can be the sole emissions mitigation strategy. The UN (among others) are opposed to the use of offsets without first genuinely seeking to mitigate or avoid emissions. The argument being there is simply not sufficient offsets available to achieve carbon neutrality worldwide (among other concerns). The ACCC’s guidance appears to accept that at least for its regulatory standpoint, “carbon neutrality” can be achieved either through emissions reduction or purchased offsets. The ACCC’s focus being on proper disclosure rather than prescribing a path to carbon neutrality.
Another form of offsetting occurs where companies sell an additional carbon offsetting product to its consumers as a way to achieving carbon neutrality. This approach has been criticised as a form of greenwashing called “greenshifting” because the company is making the consumer pay for the company’s emission reduction program, sometimes without the company reducing its own emissions. One example is KLM (the Dutch airline). It is now the subject of litigation over the sale of its “CO2Zero” product to its customers. KLM advertised that it would use the sale funds to invest in reforestation projects or the purchase of biofuels. The adequacy of these measures to in fact offset the emissions from air travel is also at issue.
There are a number of cases in the UK and Europe in which the adequacy of a company disclosure around how it will achieve its advertised carbon neutrality has been in issue. For example, DUH (a German environmental action group) has pursued TotalEnergies and Nivea for advertising their products as “carbon neutral” without disclosing any information from which this claim can be verified.
