Australia risks being a ‘state sponsoring greenwashing’ if it relies on carbon offsets, expert warns

The Australian government risks becoming a "state sponsoring greenwashing" if it keeps allowing companies to use carbon offsets without much tighter regulations, according to a member of an expert panel advising the UN on net zero climate pledges.

The UN panel released recommendations at the Cop27 climate summit in Egypt for corporations, regions and policymakers around the world on credible net zero pledges.

Experts said many Australian companies' pledges would fail to meet the panel's recommendations, which said continued fossil fuel exploration and production and unlimited use of carbon offsets were incompatible with net zero plans.

Dr Bill Hare, an Australian climate scientist, adviser and member of the High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities, told the Guardian the main implication from the report was "whether or not Australia will bite the bullet and move away from relying upon offsets".

"If the government doubles down on the present system whereby offsets are allowed to be used to do all of the so-called emission reductions, then there is a serious risk that the Australian government becomes a state sponsoring greenwashing," he said.

Policymakers, regulators and boardrooms will be examining the expert group's report closely. It stressed companies should be making deep cuts in absolute pollution by 2030, in line with the global goal of aiming to limit heating to 1.5C above pre-industrial levels, and using high-integrity offsets only for additional reductions beyond that to "balance out" remaining emissions.

The report also said companies with net zero plans must building or investing in new coal, oil and gas supplies, and fossil fuel businesses need to account for "scope 3" emissions - those released through the use of their products by their customers - as well as their direct pollution.