Carbon offsets: Australia leads the pursuit of 'greenwashing'

Consumer authorities say "greenwashing" scams in the carbon offset market – such as the Papua New Guinea tribe leader who says he was kidnapped over carbon rights to tribal lands – are proliferating.

This four-month multimedia investigation by reporters on five continents is a joint project of the Monitor and the New England Center for Investigative Reporting. It was funded, in part, by The Deer Creek Foundation.  

GreenSwitch: The name was instantly appealing, and Australians handed over tens of thousands of dollars to offset their emissions with "green power" certificates from the company.

But GreenSwitch executives, says the Australian government, didn't bother to purchase all the renewable energy for the certificates they sold. When the government told them to stop, they kept at it for two more months.

In January, the Australian Competition and Consumer Commission (ACCC) ordered GreenSwitch's parent company, Global Green Plan, to buy 4,000 certificates at a cost of about US$128,000. Then the agency took offsetter Prime Carbon to court over false claims it was affiliated with the National Stock Exchange and approved by the Australian government.

The two cases were the result of a crackdown on "greenwash" marketing in the voluntary carbon offset industry, a consumer protection effort that puts Australia far ahead of other countries.

"It's a new market, so it's in its formative stage, and consumers don't know much about it," says Graeme Samuel, the ACCC chairman. "But they're emotionally tugged towards buying products with sustainable attributes. All this means that the market is potentially open to abuse."

His agency has taken Saab Australia to court over suggesting that the planting of 17 native trees would offset the lifetime emissions of a new car. It has also warned consumers to "hang up" if they get calls from a Japan-based offset promoter.

The federal government recently set minimum requirements for the verification and retirement of voluntary carbon credits. And parliament passed legislation in March allowing restitution for duped consumers and fines of up to $1 million.

Australia's offset industry has grown at a ferocious pace, says Leonardo Ribon-Tobon, a project officer at The Royal Melbourne Institute of Technology. Just 13 carbon-credit retailers were here in early 2007 and 85 by last year.

Mr. Ribon-Tobon estimates that the Australian carbon offset industry does US$40 million of business a year, but says only a third of the companies would disclose information.

So the real figure could be much more, he adds. "I think a lot of the companies are selling larger volumes of offsets than they're disclosing."

Australia's northern neighbor, Papua New Guinea, has the world's third-largest rain forest, which has drawn the attention of Australian offset developers.

In January, the head of a group of landowners, Abilie Wape, told the Special Broadcasting Service (SBS), an Australian TV network, that he was kidnapped after balking at signing over to an Australian businessman the carbon rights to tribal lands.

"We've put a lot of effort into this area," Mr. Samuel says of carbon offset abuses. "Once you see it starting to appear on the edge of your radar screen, you know it won't be long before it moves right to the center."

It's unclear if Australia is doing enough, says Jeff Angel, director of Total Environment Centre, an environmental group. "The industry is certainly open to [cheating]."

Consumers, says John Taberner, an environmental lawyer, should ask what exactly is being traded? "To my mind, the answer is nothing. It's like buying a car, as opposed to a promise of a car," he explains. "The former is the real thing, the latter is something that may or may not happen."

This article was written and reported by Doug Struck of the New England Center for Investigative Reporting, with contributions from reporters Ben Arnoldy in India, Sara Miller Llana in Panama, Ilene R. Prusher in Israel, Kathy Marks in Australia, and Katy Jordan and Tyler Maltbie in Boston.

1. GLOBAL INVESTIGATION: Buying carbon offsets may ease eco-guilt but not global warming

2. How the "Vatican Forest" was felled before it grew

3. An offset gone wrong: Green windmills aggrieve Indian farmers

4. Using the green cloak of "certification" to market a plantation in Panama

5. Is Dave Matthews' carbon offsets provider really carbon neutral?

6. Australia leads the pursuit of carbon offset scams