Carbon Neutral Energy: What is it and who offers it?


Aussies are becoming increasingly environmentally conscious, leading many of us to look for simple ways to reduce our carbon footprint. A number of electricity retailers have stepped up to the plate to offer ‘carbon neutral’ or ‘carbon offset’ energy. But what is it, who offers it and what does it cost? This article covers the answers to these questions and more.

What is carbon neutral energy?

Carbon neutral energy involves offsetting the carbon emissions produced from customer’s electricity usage. Carbon neutral electricity is not the same as renewable energy. In fact, since a variety of different generators export to the electricity grid, it is physically impossible for retailers to deliver pure renewable electricity to your home or business through the grid. Instead, the retailers provide ‘carbon neutral electricity’ by purchasing carbon offset units or emission reduction certificates equivalent to the emissions from your home’s energy usage.

The certificates are purchased from certified sustainability groups across the globe and support a range of emissions-reduction projects. This can include anything from renewable power developments to land management and tree planting. Keep in mind that carbon neutral electricity reduces global emissions. If you’re looking to support Australia’s own renewable energy sector, you should sign up to GreenPower.

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Who offers carbon neutral power?

Only a handful of electricity retailers offer carbon neutral products, however the growing interest in carbon offset energy could see other retailers follow suit.

EnergyAustralia Carbon Neutral Electricity

EnergyAustralia logo

EnergyAustralia lets residential electricity customers opt to have their carbon emissions fully offset through the purchase of carbon offset units, approved under the National Carbon Offset Standard (NCOS). The types of projects it supports include renewable energy construction in developing countries, protecting native forests from land clearing, planting trees, improving business energy efficiency and building soil carbon through farming practices.

Powershop Carbon Offset Electricity

Powershop offsets 100% of the carbon associated with its electricity production, meaning all of its customers receive carbon neutral electricity. It does this by purchasing Certified Emission Reduction (CER) certificates from sustainability projects around the world. The projects are developed under the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism. Powershop says that its projects involve the destruction of industrial pollutants and landfill methane. Powershop says it explicitly makes sure not to associate with palm oil production.

Energy Locals

energy locals logo

Energy Locals purchases and surrenders Certified Emission Reductions recognised under NCOS, equal to the amount of energy it expects its customers to use over the next year. If customers use more energy than what was forecasted, Energy Locals says it will purchase additional certificates. To practice what it preaches, Energy Locals also offsets the carbon emissions associated with its own business activities.

AGL Future Forests

AGL may be Australia’s largest carbon emitter, but the energy giant is trying to change its ways. Amongst its other green initiatives, AGL has introduced its very own carbon offset program called Future Forests. This is an opt-in program whereby customers pay $1 per week to have 100% of their home’s carbon emissions offset through tree-planting. The trees are planted in Western Australia’s Wheatbelt region and Yarra Yarra Biodiversity Corridor, meaning the program directly contributes to the Australian environment. To ensure customers can trust the Future Forests program, AGL says it is independently audited and adheres to the World Wildlife Fund Gold Standard.

Origin LPG

Origin Energy does not offset carbon emissions for its electricity and gas customers, however it does for its LPG customers. Origin has its own ‘independently audited’ Carbon Reduction Scheme that invests in tree planting, renewable energy development and energy efficiency programs. Carbon neutral LPG costs an additional $3 per 45kg cylinder.

Does it cost extra to offset my emissions?

While some retailers may charge a small fee to offset your carbon – such as AGL and Origin Energy – most customers with Powershop, EnergyAustralia and Energy Locals are not charged a premium for carbon neutral electricity. That said, the money for carbon certificates has to come from somewhere, so it’s possible these costs are recouped through standard usage and supply charges. Eligible customers signed up with one of these retailers should have their carbon emissions offset automatically, but you should check to confirm this.

The difference between GreenPower and Carbon Neutral Electricity

Carbon neutral electricity is not the only way customers can reduce their carbon footprint. Almost all retailers offer what’s called ‘GreenPower’ – a government-led initiative that allows customers to directly contribute to Australia’s renewable energy sector.

Once again, it is physically impossible for retailers to deliver renewable electricity straight to your home. Instead, customers that sign up to GreenPower will have some or all of their electricity use offset by their retailer with electricity purchases from accredited renewable generators. Unlike carbon neutral electricity, which invests in programs across the globe to offset the emissions caused by customers’ electricity usage, GreenPower directly invests in Australian solar, hydro and wind power.

Customers can opt to have anything from 10 to 100 per cent of their electricity usage covered by GreenPower. Unlike many carbon neutral programs however, customers are charged an additional fee for GreenPower. Generally speaking, customers that have a small portion of their bill covered by GreenPower – around 10 to 20 per cent – pay a small fixed fee of one to two dollars per week. Most other GreenPower customers will instead pay a rate of 5 to 8 cents per kWh on top of standard electricity charges. As you have probably put together, this means that GreenPower can get pretty expensive. For this reason, those looking to reduce their carbon footprint on a budget would likely be better off on a carbon neutral program rather than GreenPower. Of course, there’s nothing stopping you from signing up to both carbon offset electricity and GreenPower if you really wanted, provided your retailer offers both options.

If you’re shopping around for a green energy company, then be sure to check our customer satisfaction ratings to see how some retailers compare on a range of categories, including environmental focus.

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