A major Australian energy company has acknowledged that carbon shifts do not prevent carbon volume or damage caused by greenhouse gas emissions, and apologized to its customers, allegedly misleading marketing.

More than 400,000 Australians have signed Australia’s “GO-neutral” carbon shift plan since 2016, which has promised to offset the issuance’s emissions due to its electricity and gasoline consumption.

Advocate group climate parents launched legal action in federal court in 2023, accusing the company of misleading and deceptive behaviors, including the offset of buying international carbon carbonate by claiming to reduce emissions on behalf of its customers.

The case is the first time that a large Australian energy company has faced legal action on suspicion of greening, which will begin last week, but the two sides agreed to a settlement.

In a statement on Monday, Australia Energy said carbon offsets were “not the most effective way to help customers reduce emissions” and apologized to “any customer who believes it is not clear to sell its GO neutral products.”

"Greenhouse gases are harmful to the environment and contribute to climate change. Deviation can help people invest in valuable projects that may reduce greenhouse gas emissions elsewhere, but offsets do not prevent or remove the amount of combustion burned due to the use of burned energy, even in the range of combustion, or even in the amount burned. It helps climate change."

The parents of climate CEO Nic Seton said it was a "historic recognition" that took a "huge step" to the company's 1.6 million customers and conveyed a "strong message that the era of green washing without the organization has ended."

"Energy Australia's statement clearly shows that offsets should not be used as a license for pollution," Seton said. "Presidentializing a product as 'carbon neutral' is no longer feasible and leads customers to believe that it is good for the planet by registering them."

Seton said the case is not only Australia's energy plan, which ends in July 2024. “It’s about a comprehensive plan to get companies to higher standards.” “Greening is not harmless. It costs families money, delays climate action and erodes trust.”

Both parents of Australia's climate and energy said the question of reaching a settlement involves whether the federal government's plan for climate activity demonstrates carbon offsets and whether the plan is delivering its commitments.

Kate Gibson, chief client officer of Australia Energy, said the company participated in the "sincere" climate-active certification carbon nuclear power offset program but is now accepting "legitimate public attention on the effectiveness of these programs".

“Carbon compensation should not be used to delay or reduce the important work required for active decarbonization,” she said. “Energy Australia is now focusing on more effective methods to help its customers directly reduce emissions related to energy use.”