Carbon credits and offsets – What’s the scam?

by Kim Wingerei | Mar 8, 2023 | What's the scam?

As the Labor Government seeks to get the “Safeguard Mechanism” through Parliament, the opposition to it is getting louder both inside and outside of Parliament. It’s complicated, they say. Or is it? What is the scam behind carbon offsets and credits?

When wanting to get away with a simple fraud or scam, make it look complicated. And that’s exactly what the Government and the fossil fuel industry want us to believe that it is. Fact is, carbon offsets and credits are not that complicated at all!

Carbon offset is replacing the pollution of one company with the non-pollution of another. Carbon credits are the trading mechanism for carbon offsets. Or put another way, a company that directly or indirectly emits a lot of carbon dioxide has two choices. It can continue to do so, and be penalised for not helping to reduce its carbon footprint (e.g. by regulators, government or shareholders), or, it can buy carbon credits to offset its own emission from someone who have earned such credits.

Safeguard Mechanism is great … for big polluters and landowners, not so much for the planet

In short, one company offsets its own pollution by the non-pollution by another. At best, it’s a zero-sum game for the planet.

This wouldn’t be all bad if the offsets were always real reductions in pollution. But they are not. For instance, landowners can produce offsets simply by agreeing not to clear land. That creates a credit that has a value only because someone is prepared to buy it. Again, it does nothing for the planet.

An even more egregious example of how this works was recently exposed by ABC’s Four Corners. In Papua New Guinea, an American company pays indigenous landowners for the right to use their vast forrest reserves so they can sell it on world markets as carbon credits. To add insult to injury, the same company also appeared to be selling logging rights, the very thing that their scheme was supposed to avoid.

All of this is what the so called Safeguard Mechanism is supposed to mitigate against for the largest polluters in Australia. But it doesn’t. All it does is to allow the biggest polluters in the land to continue to pollute and buy carbon credits to make them look like they don’t. And it only applies to pollution emanating in Australia. If the coal or gas or product is exported, the pollution is not counted at all. That’s the scam. Not complicated at all.

Rex Patrick on Labor’s Safeguard Bill: bigger holes than the Ozone but not beyond repair


Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.

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