Voluntary offsetting and surrender

Offsetting emissions allows individuals and businesses to demonstrate progress towards net-zero ambitions or commitments, especially where emissions reductions aren't feasible or are difficult to achieve.

The process involves cancelling carbon credits and renewable energy certificates. When a person cancels a unit or certificate, it is permanently removed from the market. 

About market demand

The carbon market is made up of both compliance and voluntary demand.

Compliance demand

Compliance demand is driven by regulatory requirements set by the Australian Government as well as state, territory and local governments. Companies or other entities that emit greenhouses gases may be required to offset a portion of their emissions by purchasing and cancelling carbon credits or contribute to the generation of renewable energy by purchasing and surrendering renewable energy certificates.

• Under the Renewable Energy Target, liable entities must acquire and surrender LGCs and small-scale technology certificates (STCs) to comply with their renewable energy obligations.
• Under the Safeguard Mechanism, safeguard facilities that exceed their emissions baselines must manage the excess, which they can do by surrendering ACCUs or Safeguard Mechanism credit units (SMCs).
• Under municipal, local, state and territory government laws, private organisations and corporations may be required to purchase and cancel carbon credits.

This is part of Australia's effort to reduce national greenhouse gas emissions in line with its international climate commitments.

Voluntary demand

Voluntary demand is when individuals or businesses choose to offset their greenhouse gas emissions. They do this by purchasing and cancelling ACCUs and other eligible offset units, and surrendering LGCs, when they aren't legally required to do so.

People choose to voluntarily cancel units and surrender certificates for a variety of reasons, including: 

• to meet social responsibility and sustainability goals
• to meet organisational emissions or energy targets or renewable energy use claims
• market differentiation
• environmental sustainability
• to offset or compensate for greenhouse gas emissions
• to report under voluntary reporting schemes like the Corporate Emissions Reduction Transparency (CERT) report
• to meet obligations under other programs like ClimateActive, GreenPower, or RE100.

Participants in voluntary markets may include companies, non-profits, individuals, and Australian state, territory and local governments. For example, Australian state governments may purchase and cancel ACCUs to offset emissions from state fleets or meet emissions reduction targets.

Buyers of carbon offsets in the voluntary market may also be interested in the environmental, economic, social and cultural non-carbon benefits associated with the carbon offset projects.

Sources of voluntary demand

Voluntary carbon markets are growing rapidly as ambition to offset emissions and support renewable energy generation gains momentum with Australian businesses, governments and households.

Mandatory and voluntary reporting

Companies may be subject to mandatory reporting obligations, including climate-related financial disclosure reporting. They may also choose to voluntarily disclose climate-related information through programs like Climate Active or the Corporate Emissions Reduction Transparency Report (CERT).

Companies may be required to report:

• greenhouse gas emissions
• progress towards emissions reductions
• renewable energy commitments
• strategies for managing emissions.

This transparency can incentivise companies to voluntarily purchase and cancel carbon credits or renewable energy certificates. By highlighting these investments, companies can demonstrate their commitment to climate change mitigation. This can improve their reputation with investors, customers and the community.

Reducing carbon footprint

Businesses that want to offset their emissions or contribute to renewable energy generation may choose to purchase and cancel ACCUs or surrender LGCs.

Offset scope 1 emissions

Companies who want to offset their direct carbon footprint can voluntarily purchase ACCUs and other eligible offset units to offset their scope 1 emissions.

By purchasing and voluntarily cancelling ACCUs, these companies incentivise ACCU Scheme projects that reduce or remove emissions. This balances out their carbon footprint and contributes to broader environmental goals and sustainability.

Companies can report their voluntary offsetting activities in their sustainability reports or carbon disclosure statements.

Reduce scope 2 emissions footprint

Businesses and individuals can also choose to voluntarily purchase and surrender LGCs to reduce their scope 2 or indirect emissions footprint.

By surrendering LGCs, an entity claims the renewable attribute of the electricity generated. This process is often part of a broader strategy for organisations to meet renewable energy targets or carbon neutrality goals. 

Businesses can report under CERT when they have surrendered LGCs to reduce scope 2 emissions.

Offsetting claims and international climate commitments

When cancelling ACCUs and surrendering LGCs to offset scope 1 and 2 emissions, it's important to understand what claims can be made.

Direct scope 1 offset claims can be made by the voluntary cancellation of ACCUs in Australia. Anyone who makes an offsetting claim against emissions outside Australia should be aware the abatement an ACCU represents may be used by Australia to meet its international climate commitments. This may lead to double counting of the offset.

An LGC can only be used to reduce scope 2 emissions footprint from electricity purchased and consumed within Australia.

Climate Active

Climate Active is an Australian Government program that supports national climate policy by driving voluntary climate action from Australian businesses, facilities and events. It certifies carbon neutrality.

Climate Active also accepts the surrender of LGCs to reduce scope 2 emissions.

The Climate Active trade mark helps the community identify and choose the brands taking steps to address climate change.

Find out more about Climate Active.

Other programs

GreenPower

GreenPower is a government accredited renewable energy product offered by most electricity retailers to households and businesses in Australia.

Companies who make voluntary offers to meet GreenPower obligations must:

• create and register LGCs using the correct renewable energy source
• transfer and accept LGCs before making a voluntary offer
• make offers only once a year which GreenPower may accept at its discretion.

Find out more about GreenPower. 

RE100

RE100 is a global initiative for companies committed to sourcing 100% from renewable energy sources or Climate Active.

Find out more about RE100.