Reforming Climate Active to prioritise direct emissions reduction

Current Climate Active requirements

Proposed Reforms

Emissions reduction

Certification is currently based on reaching carbon neutrality, including through the use of offsetting emissions that are not reduced in other ways. Participants must also develop and maintain an emissions reduction strategy. A demonstration of minimum gross emissions reduction is not required and program guidelines do not specify consequences for failing to meet the strategy target.

Proposal 1: All participants must produce an emissions reduction strategy that includes a near-term and long-term gross emissions target aligned with Australia’s Nationally Determined Contribution (NDC) applicable to the item being certified.

• Near-term is between 2025 and 2035, long-term is between 2040 and 2050.
• Targets would cover all scope 1, 2, and 3 emissions included in the emissions boundary. 

Proposal 2: To be certified, business and organisations must demonstrate that they are on track to meet their near-term gross emissions reduction. 

• Distinguishes between businesses and organisations which have achieved progress towards directly reducing their emissions, from those who merely commit to making reductions. 
• Businesses and organisations would need to demonstrate that they remain on track over a three-year period.
• Progress of emissions reduction would need to be regularly and independently verified.

The emissions boundary establishes which emission sources have been measured, reduced, and offset.

Currently:

• scope 1 and 2 emissions must be included; and 
• participants assess indirect (scope 3) emissions for relevance using a test adapted from the GHG Protocol. If relevant, these must be included. 

Emissions boundary determinations are subject to independent third-party review. 

Proposal 3: Develop additional guidance to support businesses and organisations to establish robust emissions boundaries, including mandating specific indirect (scope 3) emissions sources. 

• Guidance would mandate specific scope 3 emissions sources. 
• Guidance would vary by type of certification and be created in collaboration with stakeholders.

A range of offset units are accepted by the program. All units must have a vintage year later than 2012.

Proposal 4: All eligible international carbon offsets used under the program are subject to a five-year rolling vintage, where units must have been issued no more than five years prior to their cancellation and use under the program. 

The electricity accounting rules currently set out a dual reporting framework:

• the ‘location based approach’, which shows a business’s electricity emissions in the context of its location, calculating emissions purchased from the grid using the relevant grid emission factor for the State or Territory; or 
• the ‘market-based approach’, which shows a business’s electricity emissions in the context of its electricity purchases, including voluntary purchases of renewable electricity to reduce its emissions. 

There is currently no requirement to set emissions liability using the market-based approach or to source a minimum amount of renewable electricity. 

Proposal 5: Mandate: 

• a minimum percentage of renewable electricity, and 
• use of the market-based method to set emissions liability. 

Voluntarily retiring abatement from Australian carbon credit units (ACCUs) did not count towards Australia’s emissions reduction target. 

Proposal 6: Abatement from all ACCUs used under Climate Active would count toward meeting Australia’s emissions reduction target under the Paris Agreement. 

Climate Active currently provides ‘carbon neutral’ certification. 

Proposal 7: Discontinue the term ‘carbon neutral’ to describe the certified claim.

The current trademark would be discontinued and replaced with a new term that does not risk consumer misunderstanding. 

 Only ‘carbon neutral’ certification is offered with no alternative certification pathways available. 

Proposal 8: Introduce a certification pathway. 

Proposed three stages: 

1. Starting out – supporting businesses and organisations starting their transition journey. 
2. Pending – businesses and organisations enter an agreement with DCCEEW and commit to measure, disclose, report and offset emissions, and publicly report on their progress towards their emissions reduction targets. 
3. Certified – certification only granted to businesses and organisations that achieved progress in reducing their gross emissions.