(Image: Tom Red/Private Media)

Carbon offsets are already big business and about to become a lot bigger. After six years of wrangling over the rules, COP26 laid the groundwork for international trading of carbon offsets.

Under the COP26 rules, 5% of offset credits will be set aside to fund developing countries’ adaptation efforts and 2% will be cancelled to create upward pressure on emissions abatement. Countries will also be allowed to engage in bilateral trade in credits.

To date, the trading of carbon offsets, which companies can claim as effectively nullifying their carbon emissions, has been governed by a slack system of different voluntary rules and organisations. The COP26 agreement means that up to 200 million poor-quality “zombie” credits from the existing system will also be allowed into the new system.

Tony Abbott called international carbon offsets a “rort” and for once he was correct. Compensate, a non-profit offset firm, released a paper in April this year discussing major problems with both the standards for offsets and the monitoring required to make sure they’re real and permanent.

In particular, Compensate found big problems with the additionality of offsets — that is, many offsets were simply activities that would have happened anyway regardless of any purchasing of credits (in the same way the Coalition’s Emissions Reduction Fund mostly pays landowners to do what they would have done anyway).

A ratings agency found about half the projects it assessed didn’t accord with offsets claimed for them. Greenpeace found offsets used by airlines were deeply problematic. A US conservation organisation made millions cutting down trees that were on offset for California.

Don’t tell this to fossil fuel companies, which rely heavily on offsets to green up their images, or carbon offset firms. Last week, representatives of the fossil fuel and carbon offset industries railed at the media for revealing that carbon offsets are commonly scams and rorts.

And don’t tell the Morrison government either. At least 10% of the trajectory to net zero under its fanciful 2050 plan depends on international and domestic offsets, on top of another 15% that relies on “further technological breakthroughs”.

That means at least 25% of the net zero target is composed of things that may never happen, or which have been demonstrated repeatedly to be rorts and scams.

Don’t tell fossil fuel criminal Woodside either. It has just secured funding from US investment giant Global Infrastructure Partners to buy nearly half the expansion of its Pluto LNG plant to take gas from the Scarborough gas field off Western Australia. GIP is one of the dirtiest infrastructure investors in the world, with a heavy involvement in the highly damaging international aviation sector.

Woodside insists “Scarborough gas [contains] virtually no carbon dioxide”. That’s complete garbage: Woodside’s own documents show that the field will produce nearly 880 million tonnes of CO2 over its life; analysis shows the field is consistent with other gas fields in terms of CO2 emissions.

What is Woodside doing about the massive emissions from Scarborough? Surely it is using the wonder technology of carbon capture and storage, so enthusiastically spruiked and funded (with another $500 million last week) by the Morrison government and its fossil fuel donors.

“Carbon capture and storage will play a key role in Australia meeting its emissions targets and has the potential to decarbonise existing and new industry,” Woodside’s CEO said recently. “It would be an important addition to Woodside’s carbon management options as we work towards our own aspiration of net zero by 2050.”

Alas, alack — CCS can’t work on the Scarborough field, Woodside says, because it would require capture on the floating production unit it will use. “This technology is significantly complex and prohibitive on an offshore facility where space is restrictive … It is not considered to be technically feasible for the Scarborough project.”

Woodside has looked at the experience of its big US partner, Chevron, and its abortive attempt to get CCS going at its Gorgon project. Chevron can only get out of the embarrassment of failing to meet its carbon capture and storage targets by… buying carbon offsets.

So instead of the miracle technology of CCS, Woodside will use offsets. As the Institute for Energy Economics and Financial Analysis points out, this would require truly colossal scale purchasing of offsets.

Like the political parties that Woodside controls through its donations and promises of lucrative post-political gigs, Woodside is interested in offsets only as a fig leaf under which is can expand fossil fuel production. Relying on a discredited offset system demonstrates how the “net” in net zero really is full of holes.