What's the point of offsets?

On this episode of What’s the Point?, Richard Denniss discusses how the Federal Government’s new carbon credits method for ‘protecting’ native forests will allow fossil fuel companies to greenwash their climate pollution and expand coal and gas production.

This episode was recorded on Friday 10 July.

Host: Richard Denniss, co-Chief Executive Officer, the Australia Institute // @richarddenniss

Host: Anna Chang, Managing Editor, The Point // @annachang

Show notes:

Climate Integrity Summit 2026 tickets: https://events.humanitix.com/sydney-climate-integrity-summit-2026?c=website

The Point: https://thepoint.com.au/ 

We’d love to hear your feedback on this series, so send in your questions, comments or suggestions for future episodes to podcasts@australiainstitute.org.au. Subscribe to What’s the Point? with Richard Denniss on YouTube, Apple Podcasts, Spotify or wherever you get your favourite podcasts.

Transcript:

Richard Denniss:

The gas industry has pulled off perhaps the greatest con in our country’s history and it’s Australians like you and me living with the consequences. I’m Richard Denniss, and my latest Vantage Point essay, More Fool Me: How the Gas Industry Tricked Australia, is available for pre-order now. 

We’re constantly told that we can’t afford to have better schools and hospitals. Yet our governments give away billions of dollars worth of our gas to multinational companies every year. 

In the essay I pull back the curtain to show how the gas industry got away with it and I show the simple steps we can take to fix this mess. 

You can pre-order More Fool Me now for just $19.95. Or why not subscribe to the Vantage Point series? For just $64.95 you’ll get four engaging essays per year on some of the most pressing issues facing Australia and the world.

Use the code ‘FOOLME’ to receive a free copy of my book, Econobabble, along with your Vantage Point subscription. Available for a limited time only.

Visit australiainstitue.org.au/store to pre-order now.

What’s the Point is made on the lands of the Ngunnawal and Nambri peoples. We pay our respects to elders past and present, and acknowledge that sovereignty was never ceded. 

Hi, and welcome to What’s the Point? I’m Richard Denniss. 

Every week on this show, I’ll take a look at the big political and economic conversations and decisions that are shaping the lives of everyday Australians, and answer key questions along the way. 

This week, we’re talking about offsets, and specifically, how the great Kuala National Park ended up having dodgy offsets tied to its funding and creation.

Basically, the Federal Government’s new carbon credits method for protecting native forests will allow fossil fuel companies to green wash their climate pollution and actually expand gas and coal production. Let’s get into it.

Questions have come in, and if you’ve got questions of your own, or indeed a topic you want me to cover, please send us a DM on Facebook or Instagram. I’ve got producer Anna Chang here with me for the first question. Fire away, Anna.

Anna Chang:

Most listeners are probably wondering this, so I’m just going to straight up and ask, why are we even talking about this?

Richard Denniss:

Good question. I wish we weren’t talking about carbon credits and offsets again. But here we are in Australia, watching heat waves hit in Europe, being told that this summer is going to be a terribly hot summer, yet again. 

For decades we’ve been talking about tackling climate change, and for decades we’ve been told we know from the science what we need to do. We need to burn less fossil fuels, and we need to store more carbon in trees and in soils. 

This is not complicated. We know what we’re going to do.

The reason we’re talking about offsets today, Anna, the reason we’re talking about a Koala National Park, is because unfortunately in Australia, four years after Scott Morrison lost office, this government is still approving enormous new gas and coal projects. 

Greenhouse gas emissions have barely fallen at all since the Albanese government won, and here we are still saying it’s okay to open new gas and coal. It’s okay for pollution to go up because we’re going to have some carbon offsets.

Don’t worry about the fossil fuel production. Don’t worry about all the gas and coal getting exported. It’s fine. We’ve got some offsets that are going to make everything okay. 

So sadly, for listeners who might have thought that labour winning in 2022 meant, oh, we’re going to tackle climate change now. Alas, here we are again, talking about the kind of dodgy offsets that fired up under the previous coalition government. They’re still at the heart of this labour government’s policy.

Anna Chang:

A lot of people won’t know how carbon credits and carbon offsets actually work. Can you explain that for listeners?

Richard Denniss:

Absolutely. And to be clear, I don’t think anyone really understands how they work. Indeed, I don’t think most people realise that carbon credits are quite different from carbon offsets.

The government talks about them as if they’re the same, the fossil fuel industry talks about them as if they’re the same, and they’re actually quite different things. So let me explain the difference first. 

Carbon credits are when we pay someone cash to store a particular amount of carbon. In a tree, in some soil, anywhere, we say, “oh that’s a good thing you did, here have some money.” 

Now, this is not an unusual thing. We kind of give money to people to do good things all the time.

Governments give grants to community organisations to do a good thing. The government gives money to volunteer lifesavers to patrol a beach. So the idea of paying someone to do a good thing is not unusual.

A carbon credit is a bit different to a grant to a lifesaver or a grant to someone who’s doing something nice in the community because a carbon credit is like, “wel, if you can prove you saved a tonne of carbon dioxide, I’ll give you X amount of dollars per tonne.” 

So the idea of a carbon credit is that basically we can pay people to do a good thing. And there’s problems with carbon credits, but the principle is pretty straightforward: If we want to save trees, maybe we pay someone to plant a tree,  if we want people to not chop trees down, maybe we pay someone to not chop a tree down. 

There’s all sorts of problems with it. But sometimes we spend money on things and it doesn’t work the way we want. When we pay people to save carbon, maybe some of it’s wasted, but we’re not doing much harm. 

Offsets are radically different. Offsets are quite a different kettle of fish.

What a carbon offset is, is the idea that it’s okay for me to pollute. It’s okay for me to do harm to the environment because you did something good. So your good thing offsets my bad thing.

Now they might sound like similar concepts. A carbon credit is the government is paying you to do a good thing. An offset is a polluter paying you to do a good thing, so that the polluter can do a bad thing.

Now, there’s all sorts of moral and economic and scientific problems with the idea of these offsets. But the main problem I think people need to realize, is that what the climate science tells us, is that what we need to do to have any chance of a safe climate, is to burn less fossil fuels, to put less carbon dioxide into the atmosphere, and store as much carbon as we can in trees and soil. 

And, the ‘and’ does all the work.

The science says we need to pollute less, and store as much carbon as we can in trees and soils. And, I know I’m repeating myself, the ‘and’ does all the work. Offsets rip out and, and substitute or.

Offsets are saying, “oh, it’s okay if I pollute more because someone else didn’t chop down a tree. It’s okay if I pollute more because someone planted a tree.” That’s not science. That’s not science.

There’s no science that says it’s okay that it’s a good way to tackle climate change to let the polluters increase their pollution because someone planted a tree. So it’s a very small, subtle rhetorical trick.

Credits and offsets kind of sound like the same. And how could ‘and’ and ‘or’ drive such radically different policies? But again, to be clear, carbon credits is the idea that a government or a philanthropist is paying someone to do a good thing.

It’s not the best idea in the world, but it’s not the worst idea in the world. 

But the idea that the fossil fuel industry can pay someone to not chop down a tree so that they can go and pump more carbon dioxide into the atmosphere. It’s not just morally repugnant, it absolutely contradicts what the science of climate change says, which is if, and it’s a big if, we’re serious about tackling climate change, we have to do both.

We have to stop putting so much carbon dioxide into the atmosphere, and we need to store as much as we can in trees. 

Sorry to correct you there, Anna, but credits are one thing, and they’re imperfect but not too dangerous, but offsets, they’re a radically different thing, and they’re far, far more dangerous. Unfortunately, carbon offsets are now the main climate policy in Australia.

We might have changed government in 2022, but our climate change policy barely changed at all.

Anna Chang:

So let me get this straight, carbon credits? Okay, question mark, carbon offsets, terrible, terrible. Is that right?

Richard Denniss:

Yeah, that’s a pretty good takeout message. I mean, imagine you went to the doctor and they said, “look, you are in poor health, but we can fix you up. What you need to do is walk more and stop smoking.”

Then you walked out of the doctor’s surgery, lit up a cigarette and thought, “well, I’m walking now, so it’s okay if I smoke. The more I walk, the more I can smoke. The doctor said, do both. I’m going to translate that and to say, I’m just going to do one. Indeed, it’s okay if I keep smoking as long as I walk a bit more.” 

You might come to that conclusion, but that’s not science, that’s not medicine, that’s just a rationalization for an unhealthy habit. And unfortunately, in Australia, we’re sticking with the unhealthy fossil fuel habit by pretending, it’s all right, someone saved a tree somewhere.

Anna Chang:

So Richard, what does this have to do with koalas?

Richard Denniss:

Well, good segue. So these offsets are problematic. I just explained why.

Carbon credits can be really problematic as well, because often we end up paying people to do something that they were already going to do. So this is where carbon credits and offsets have got something in common, they can both be quite dodgy. And a very good example of this is happening right now.

Ten years ago, the New South Wales opposition, the then Labor opposition said, we needed enormous national park in New South Wales to save koalas. We’re going to call it the Great Koala National Park. This is over 10 years ago, Labor committed to doing this.

Before the last New South Wales state election, the New South Wales government said, we’re going to set up this Great Koala National Park. After the last election, they said, we’re going to set up this Great Koala National Park. They’ve been promising to do this for over a decade.

But then in the last year or so, the New South Wales government started to say, “oh what I meant to say was, I might set up a national park, but only if I get some sweet, juicy carbon credit cash from the Federal Government. So, hey, Federal Government, you know how I said 11 years ago, I want to set up a park, ignore that. You know how I said four years ago, I want to set up a park, ignore that. What I’m saying now is, if you give me some carbon credit money, I’ll set up a national park.” 

So a carbon credit that can be accurately verified, that we really know that the tree didn’t used to be there. But because I gave Richard some money and Richard planted the tree and watered the tree and kept pests off the tree, and every year we go and measure the tree, a carbon credit to actually plant a tree can actually help take carbon out of the atmosphere.

So that kind of carbon credit, I can live with. The problem with the great Koala National Park is, no one’s planting a tree. All we’re doing is going, “well, you know how I was going to make a park there? You know how I announced the park a decade ago? You know how I was going to have a park well before anyone was talking about carbon credits? Now, I’m pretending that there’s something additional, something extra happening, something worthy of payment because I’m promising to set up this park.”

So in principle, carbon credits can be okay. I don’t think offsets are ever okay. But this great Koala National Park is both bad credits, because nothing additional, nothing extra is happening, and those bad credits are going to be used to justify the bad activity, the expansion of carbon pollution.

So this is, I think, deeply fraudulent and exposes all that’s wrong with carbon credits. We often end up paying money to someone for doing what they were already going to do. The New South Wales government has been shameless about this.

The Premier even told a parliamentary committee, oh we can’t set the Koala Park up too soon, or we won’t get paid the credits for doing it. So unfortunately, there’s two things going on here. These credits are dodgy.

There’s no way that the New South Wales government should be getting paid to set up a park that had already promised to set up. But worse than that, it’s the fossil fuel industry that’s ending up buying these carbon credits off the New South Wales government and using them to offset their increase in carbon pollution. 

So the New South Wales government is going to get cash from Woodside, Santos, other big fossil fuel producers in exchange for protecting some trees that they committed to protecting over a decade ago.

So yeah, this great Koala National Park is, I think, one of the bigger environmental frauds in Australian history, because what’s a good idea setting up a park is going to be used to justify a bad idea, which is expanding carbon pollution elsewhere in the Australian economy.

Anna Chang:

Okay. So I think we’ve got time for one last question, but it’s a bit of a long one, so stick with me. 

So if we’ve got carbon trading markets being taken over by fossil fuel companies, and the government is trying to fund state forest protection using these carbon trading markets, what’s the point of any of this?

Richard Denniss:

Look, unfortunately, the main point is greenwash. Let’s go back to the science. What does the science tell us? If we want to tackle climate change, we need to put less carbon into the atmosphere, and we need to draw down as much carbon into trees and soils as we can. 

Both of those are pretty simple to do. The economics is simple, the science is simple, the politics is a bit hard.

So, unfortunately, the point of this complicated mess of Great Koala Park, credits, offsets, Woodside, it’s all just to hide the simple fact that we’re not doing the simple things. This is greenwash. If we wanted to take the science of climate change seriously, we wouldn’t be opening new gas and coal projects.

We wouldn’t shut them all down tomorrow, but if we were transitioning away from fossil fuels, the step one is: stop approving new ones. So, if we wanted to listen to the science, we wouldn’t still be approving new gas and coal projects. And if we wanted to listen to the science, we would absolutely be saying, no, you can’t do native forest logging anymore.

Yes, we need to have more national parks. Let me encourage people to plant more trees. We know how to do all those things. But all of this moving feast of koala parks, credit methods, offsets, safeguard mechanism, it’s all a wall of sound. It’s all cover to hide the fact that we’re not doing the simple stuff. 

Indeed, here we are in 2026, not only still opening new gas and coal projects, we’re still subsidising new gas and coal projects.

So, What’s the Point? Unfortunately, the point of all these offsets is to hide something simple. We’re not transitioning away from fossil fuels, we’re expanding them. We’re not listening to climate science, we’re still doing science denial, even though we changed government back in 2022.

Anna Chang:

That sounds pretty dire, so I’m not sure whether to say thanks, Richard.

Richard Denniss:

Well, here’s the thing, we know how to fix this. We just need to make governments more afraid of voters than they are of the logging industry and the fossil fuel industry, who are making money causing us harm.

Anna Chang:

Is that the take home message or what is the take home message for listeners?

Richard Denniss:

That’s pretty much the take home message. We know what we need to do, and if we’re not doing it, things aren’t going to get better. If you’re watching the news or hearing what’s happening in Europe at the moment, you know how bad and dangerous climate change can be.

More fossil fuel production, more native forest logging equals more climate change. If this government or any government’s serious about avoiding climate change, we know what to do. If you don’t understand a word they’re saying, they’re trying to trick you.

Anna Chang:

Great. Well, thank you so much for your time.

Richard Denniss:

Thanks, Anna. 

That’s all for this episode of What’s the Point. But for listeners in New South Wales, I along with a number of other great speakers will be coming to Sydney soon for the Climate Integrity Summit.

The summit will bring together global political leaders, economists, advocates, artists, musicians, all for a day of big ideas and bold conversations about climate change. Tickets are available on our website, australiainstitute.org.au.

And if you’ve got a question you’d like us to tackle, let us know. You can reach us on Facebook and Instagram. 

I’ll be back on Monday next week. Until then, I’m Richard Denniss, and thanks for joining me.