Parents took an energy giant to court over "carbon neutral". The government just scrapped the scheme that made it possible

Three years ago, a plucky grassroots group of mums, dads and grandparents did something no-one had done before.

We took one of Australia’s largest energy retailers, EnergyAustralia, to the Federal Court because we didn’t believe its “carbon neutral” claim – a claim the Australian Government had certified.

And last week, the government came round to our view.

The Department of Climate Change, Energy, the Environment and Water (DCCEEW) has confirmed it will close Climate Active and stop certifying voluntary “carbon neutral” claims. Under the heading of integrity concerns, its consultation paper points to falling public trust in the term, a rising number of legal challenges to the marketing of “carbon neutral” products, and a shift towards direct emissions reductions.

These are the arguments we, and many more – including the Australia Institute, and over a hundred former Climate Active participants – have been making.

Now, Assistant Minister for Climate Change and Energy, Josh Wilson, and the department have listened and acted. I say that plainly, because too often advocacy organisations only speak up when governments get it wrong.

But it’s worth being clear about what Climate Active actually was. This was not a harmless labelling scheme. It was a Commonwealth trademark that allowed companies selling fossil fuels to market those products as “carbon neutral” simply on the questionable promise of so-called “offsets”. In the worst of cases, it was state-sponsored greenwashing. And for years, it has been the shield companies held up whenever anyone questioned their claims.

We know, because we spent three years testing it.

Parents for Climate began raising these concerns in early 2023, after researchers and the Australia Institute exposed the integrity problems in Australia’s carbon credit market. We made submissions. We met relevant ministries, including Josh Wilson. We gave evidence to the Climate Active consultation. We surveyed consumers and we surveyed energy retailers, publishing Climate Nonsense, which found more than one in three of Australia’s major energy retailers at risk of misleading customers with “carbon neutral” and “offset” claims. Many of them pointed straight to Climate Active certification as their defence.

And, represented by Equity Generation Lawyers, we sued EnergyAustralia, Climate Active’s biggest participant.

We settled our case in May 2025. EnergyAustralia apologised to all of their customers, including more than 400,000 who had “Go Neutral” plans. And it put in writing the words that have done more work in this debate than any report we could have written: “offsets do not prevent or undo the harms caused by burning fossil fuels“.

That is the whole argument, conceded by the company with the most to lose from conceding it. The case remains the first and only one in Australia to target the marketing of consumer products as “carbon neutral”, or claims related to Climate Active certification, and it was reported around the world.

So, we welcome the acknowledgement and action from the federal government to close this greenwashing loophole.

But scrapping a broken scheme is only half the job, and there is a real risk that government and companies now do less rather than better.

The government has put two options on the table: close the program with nothing in its place, or close certification while keeping high-integrity voluntary standards and guidance. Only the second is defensible. Walk away entirely and “carbon neutral” claims simply migrate offshore or behind private labels, with no register, no disclosure and no one to complain to. Families would be left with no trustworthy signal at all about which companies are actually cutting pollution.

There’s a harder question underneath this, too. The government is ending its own certification of offset-based “carbon neutral” claims in the voluntary market while continuing to let Australia’s largest industrial polluters use Australian Carbon Credit Units. These same ‘offset’ instruments that Climate Active relied on are being used by companies to meet their obligations under the Safeguard Mechanism. Indeed, the government points to the Safeguard’s success as part of its reasoning for closing Climate Active. But if offsets don’t undo the harm of burning fossil fuels. And EnergyAustralia has now conceded that they don’t. Then they don’t undo it for coal mines, gas plants, or any fossil fuel use either.

The direction of travel elsewhere is clear enough. In June, a São Paulo state court ordered the airline Gol to pay 5 million reais in collective moral damages over carbon offset claims sold to passengers, in response to action brought by the consumer organisation Idec. In the EU, the Empowering Consumers for the Green Transition Directive bans generic claims and offset-based “climate neutral” product labels. Courts, regulators and consumers are converging on the same conclusion.

Carbon credits cannot be a licence to pollute. Ending Climate Active should be the start of truth in climate advertising, not the end of oversight.

Parents will be watching which one it turns out to be.

Nic Seton is the CEO of Parents for Climate.