The Price of Green: City of Sydney pays Chinese, Turks to get net zero

by Callum Foote | Aug 30, 2023 | Energy & Environment, Latest Posts

The City of Sydney and City of Melbourne have been relying heavily on cheap Chinese and Turkish carbon offsets to get to net zero. Does it make sense to pay foreign governments for projects which they would operate regardless? Callum Foote investigates.

The City of Sydney is relying on lower-cost overseas carbon credits to maintain its carbon-neutral certification. Most of the carbon credits that the city relied on in 2022 came from a Turkish wind farm and those in 2021 from a solar project in China.

Effectively, ratepayers of Australia’s most densely populated local council are paying a Chinese government corporation to keep the Three Gorges dam running in central China, as well as wind turbines spinning in Turkey.

The projects in question produce offsets in a way that the Clean Energy Regulator doesn’t recognise for Australian Certified Carbon Units (ACCU).

Carbon offsets stampede: Australian polluters are spending big in Indonesia

ACCUs are Australia’s gold standard carbon credits used to meet government-mandated emissions reduction targets. There is no recognised methodology for ACCUs to be produced from renewable energy generation.

In 2022, 62% of offsets came from the Kavakli Wind Power Plant located in Turkey’s Balikesir Province. An additional 17% came from wetland conservation projects in Indonesia, and clean burning cookstoves in Nepal.

In 2021, 89% of the City of Sydney’s offsets, some 11,549 tons worth of carbon dioxide, were sourced from the Three Gorges New Energy 100MW Solar Power Project located in Gansu, Central China. 

The solar power project is run by the Chinese state-owned China Three Gorges Corp.

How it works

Audrey van Herwaarden, a corporate environmental performance analyst at the Australian Conservation Foundation, said “The difference is that there are carbon offsets which are additional offsets and there are carbon offsets which are avoidance offsets.”

“Offsets produced from renewable energy projects are avoidance credits. They are offsets from a project, such as a renewable project like a solar farm, which avoids emissions from fossil fuel generation.”

It doesn’t appear as though the program that the City of Sydney relied upon in 2021, the Three Georges Solar project, needed any assistance from the international carbon market. In 2021, the state-owned company raised $US3.5 billion by issuing 8.571 billion shares.

A spokesperson for the city of Sydney told MWM “We have been measuring, reducing and offsetting all of our operational greenhouse gas emissions since 2007. In 2011, the City was certified carbon neutral by the Australian Government and was the first local government in Australia to be carbon neutral.

 The latest data shows organisational emissions were 77% below 2006 levels. This was achieved through energy savings, fuel switching and renewable energy and does not include offsets. We are on track to achieving our target to reduce emissions by 80% by 2025.”

Does it work?

According to van Herwaarden “In the Climate Active program, companies can claim carbon neutral through offset programs which have been proven to be of low integrity. Therefore, the net impact in the change real-world emissions is questionable.”

The City of Sydney spokesperson told MWM, “A key goal in our Environmental Strategy 2021-2025 is to purchase 100% high quality Australian regenerative offsets by 2025.

In the past three years, the City has purchased an increasing percentage of its offsets from Australian Indigenous projects, and a lesser percentage of offsets from overseas. Over the next few years, the City will aim to transition away from purchasing overseas offsets and instead use 100% high-quality Australian regenerative offsets.”

Transparency and the middle people

The latest purchase of international offsets was through Tasman Environmental Markets which applied its own due diligence process that goes beyond government regulation.

The City of Sydney did not disclose how much was spent on international offsets when asked.

The City of Melbourne, likewise, relies on international offsets to meet its commitments under the Climate Active program.

Melbourne buys Chinese too

In 2022, the City of Melbourne used offsets produced by a group of small hydropower plants in southern China. These represented 89% of the city’s carbon offsets for the year, accounting for 9,934 tons of CO-2.

In a submission to the Senate Enquiry into Greenwashing in July this year, former ACCC boss Allan Fels wrote “Climate Active seems to have a low standard for substantiation of claims. There is no verification of whether these businesses are indeed “progressive climate leaders”. Nor is there any substantiation of the veracity of the offsets they are buying.”

The Climate Active program has certified either products or companies in the fossil fuel industry as “carbon neutral”. These include Ampol and AGL, Australia’s largest corporate emitter.

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Callum Foote was a reporter for Michael West Media for four years.

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