A new UN report has exposed carbon credits, bought and sold as offsets in carbon trading markets, as a false solution. And Australia’s system, from the Safeguard Mechanism to the approval of new coal and gas, relies on unlimited use of them.
Mon 9 Nov 2026 09.40 AEDT
Photo: AAP Image/Mick Tsikas
Today, COP31 opens in Antalya. Australia will preside over the negotiations, and we arrive with a problem. A new UN report has exposed carbon credits, bought and sold as offsets in carbon trading markets, as a false solution. And Australia’s system, from the Safeguard Mechanism to the approval of new coal and gas, relies on unlimited use of them.
The UN Special Rapporteur on human rights and climate change has released “Rethinking carbon credits according to climate and human rights obligations”. Its warning is stark. Governments leaning on carbon credits may be breaching their international obligations.
The report finds structural flaws that better rules cannot fix. Conflicts of interest. Weak transparency. Incentives to over-credit. A shaky assumption that emissions released in one place can be cancelled by carbon stored somewhere else. And the evidence that credits deliver real mitigation remains unclear.
Then there is the question of who pays. Major emitting countries can use credits to meet their targets at lower cost, while developing countries can end up carrying extra mitigation burdens and the risks of projects on their land. Benefits tend to flow to project developers and intermediaries, not the communities whose lands underpin the credits. The report documents land dispossession, restrictions on livelihoods and cultural practices, and violations of the rights of Indigenous Peoples. And credits must never replace the climate finance rich countries owe.
This is not just a UN finding. The Transition Away from Fossil Fuels (TAFF) process, a coalition of 57 countries including Australia, has also named carbon credits used as offsets a false solution, a way of prolonging fossil fuel dependence and enabling new approvals, rather than ending it.
In a statement released just days before COP31 started, UN Special Rapporteur on the promotion and protection of human rights in the context of climate change, Elisa Morgera and other experts said our offer of global leadership as COP31 Co-President must be backed by ambitious, human rights-based climate action, including phasing out fossil fuels. Warming across the Australian continent has already reached 1.5°C, and our 2035 target is misaligned with the 1.5°C pathway. That raises concerns about our commitment to Pacific Island neighbours, who are among those most affected and least responsible.
The experts note that the Australian Human Rights Commission has called for a fossil fuel phase-out. Yet the government has approved 38 new fossil fuel projects since 2022.
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They also welcomed the recent NSW court decision requiring authorities to assess all climate harm, including overseas emissions from Australian coal, before approving a project. Courts, they said, must not be undermined or disregarded. These concerns have been put to the Australian Government, which has replied. The experts will continue the dialogue at COP31.
The Australia Institute’s report Safeguarding the Fossil Fuel Industry shows how our flagship climate policy for big polluters really works. The Safeguard Mechanism lets facilities meet their limits by buying unlimited offsets instead of cutting their own pollution. Fossil fuel companies have used more than two-thirds of the offsets surrendered under the reformed scheme. Meanwhile, the government has approved 38 new coal and gas projects, extensions and expansions. The offsets balance the books. They don’t balance the atmosphere. Land-based credits are at best temporary, while fossil carbon lasts for centuries.
The Great Koala National Park shows how far this logic reaches. NSW has made the park conditional on a carbon credit method that doesn’t require projects to deliver anything beyond what a standing public forest was already doing. Even the NSW Government accepts the problem, promising park credits won’t be sold to coal and gas companies. That is the Minns Principle, and it belongs in federal law. If coal and gas shouldn’t be buying koala credits to use as offsets, they shouldn’t be buying any.
Two decisions now test us. Hunter Valley Operations has NSW approval to 2045, with conditions that include buying additional offsets, and would emit around 809 million tonnes over its life. It still needs federal approval by the end of the year.
Woodside’s Browse gas project would extend North West Shelf production from 2030 to 2070, with emissions equal to 33 years of Australia’s entire emissions, according to Australia Institute research. Its answer to the climate problem is carbon capture and storage, which generates the credits a project needs to look compliant under the Safeguard Mechanism. Offsets are how fossil fuel expansion gets a green light and greenwashed, while our Pacific neighbours wear the consequences.
Australia can still show it means what it signed. In November 2025, we joined the Belém Declaration, committing to a just, orderly transition away from fossil fuels, and we backed the TAFF process in Santa Marta. Signing is the easy part. This COP is the chance to release a transition roadmap, and that roadmap must start with no new approvals. The UN experts hope the NSW court ruling is the first of many steps toward Australia meeting its legal duty to prevent harm by phasing out fossil fuels.
Louise Morris is an award-winning advocate with 20 years’ experience encompassing climate, energy, forest protection, and law reform in the not-for-profit sector, and federal politics before joining The Australia Institute.
