Net zero or real zero? Which climate pollution target is best? An open mic episode!

Net zero or real zero? This 'open mic' episode features short audio clips from a range of people, giving their views.

Then podcast hosts Dr Franziska Curran and Murray Griffin weigh in with their views. Is one concept a misguided fantasy, and the other our best hope? Or are both concepts useful? Tune in to find out! 

If you like this episode, don't forget to rate it on your favourite pod platform and share it with friends/colleagues! 

Episode Transcript

(00:00):
One reason why I'm excited aboutthis episode is just how topical

(00:05):
it is. So just last night, oneof my my best friends said,
Franziska, what do you thinkabout carbon credits? What do
you think about offsets? And Iwas like, I looked at him, Oh,
my God. I took a big sigh, andI'm like, I'm like, do you want
the - how long have you got? Andhe said, well, like, three
minutes. And I was like, Oh, I'msorry, I can do 30 seconds or
half an hour.

(00:26):
Which did he choose? Which didhe choose? Oh, there was,
there was several people, andsomeone was like, yeah, 30
seconds,
yeah. Okay, so we're cuttingedge.
Ah, we're at the, well, it kindof feels like, on one hand,
we're cutting edge like this isstill an important discussion,
but it's one that's been goingfor ages and evolving, and the

(00:46):
paradigm has been changing andthe definitions have been
refined, so it's sort of good tohave a little checkpoint of what
is it now?
Yeah, important now, yeah, allright, well, let's see where the
episode takes us!
Hello. Franziska Curran! HelloMurray Griffin, how are you

(01:06):
going? Good, good. And welcomelisteners to Track Changes! A
very special open mic episodetoday on ... Yes,
a bit of a different format,which is exciting. I really
enjoyed listening to all thedifferent perspectives. So I
hope everyone does too.
Yeah, yeah, it was, it was, it'sbeen kind of fun to put
together. So the topic today isreal zero, net zero. And

(01:32):
Franziska. I don't think we canreally get into this until we've
got a bit of a grip on whatthese terms, two terms mean. So
do you want to give us someinsight into that?
Yeah, well, Murray, do you have30 seconds or 45 minutes?
I'm going to go to the 30seconds option, but I'll let you

(01:53):
push, I'll let you push out totwo minutes if necessary!
When we were talking about this,you were like, maybe, maybe two
sentences, and then I wrote toand then I'm like, oh, but hang
on. I think part of this is thatit is nuanced and it is complex,
and because of the definitions,there's all these asterisks and
fine print and and that gets abit overwhelming, but I'll do my

(02:13):
best to give the headlinedefinition on these two topics.
Yep. Okay, fire away. Basically,net zero is defined as reducing
emissions as fast and far aspossible, and then neutralizing
any of the remaining emissions,which we call residual
emissions, through the use ofresidual of removals or carbon

(02:34):
credits that draw down carbonfrom the atmosphere. Now this
typically, and based on thedefinitions that we have,
requires consideration of notjust your operational emissions,
but also emissions in yoursupply chain. So if you're a
corporate, your scope threeemissions, which is an
important, important part. Andof course, there's a lot of
global groundswell around thisterm. And you know, net zero

(02:56):
commitments from companies andcountries is really widespread.
Yeah. And did I miss anything inthat one?
Murray, I stopped myself fromsaying a couple
of other things! But anyway,real zero basically mean, and
this is a term that we've onlyseen pop up, you know, fairly
recently, the last couple ofyears. It basically means zero

(03:19):
emissions from fossil fuelactivity. And I've seen this
term used and applied tooperational emissions within a
company, and it seems to comefrom a skepticism of offsets and
an acknowledgement that we justneed to stop using fossil fuels.
So real zero is no emissionsfrom fossil fuel activity.
Okay, I thought that was a greatand nicely timed definition, a

(03:43):
succinct definition there!
And obviously it makes it soundvery simple, but like I've said,
that there's a lot of caveats.You know, people tend to to
fudge a little when they'reusing these, these terms. For
example, I think it was the netzero stocktake. So an annual
report that gets published wherethey talk about how the

(04:05):
integrity of net zero targetsremains quite low, where maybe
companies don't disclose exactlywhat emissions are included, or
how they define residual or abunch of other criteria. So
while these are the technicaldefinitions, it might be more
loosely applied in differentcontexts. And I think that's
because the term net in zero,people just think they know what

(04:26):
that means. They just go, oh,net - it means after you've
taken out offsets. But that'snot the point. It's about
reducing emissions first andforemost.
I mean, I think actually boththose words are not particularly
in some ways helpful, yeah, andit's hard to be precise about
each of them. You know, likereal, that word real and the

(04:48):
word net, they're a little bitfuzzy both of them.
Yeah, absolutely. And I thinkalso, you know, I'm a big fan of
the Safeguard Mechanism and allof the Safeguard Mechanism
emissions items are talkedabout, or the goal is talked
about, in terms of of netreductions, after you've
considered offsets. Like, that'sthe point of the scheme. So
we've got that term in there aswell, which might add a bit of

(05:10):
confusion.
All right. Well, one thing I didwant to ask you, with these
audio clips, a couple of people,you know, when we were talking
to them about real zero, netzero, or they were giving us
their views, a couple of themtalked about carbon pricing.
And, yeah, can you just give mea bit of a, share, I guess, a
bit of an insight into howcarbon pricing relates to this

(05:33):
debate or discussion about netzero, real zero?
Yeah, because your first thoughtmight be net zero, even if we're
talking about net zero,obviously real zero doesn't
encourage the use of offsets,but net zero, no, we should be
prioritizing reductions first,right? And so why are we
thinking about offsets on thejourney? Well, yep, well, I

(05:54):
guess a net zero world doesacknowledge that we will need
carbon credits in the future. Wewill need removals. That's sort
of an inevitable way of nettingout any residual emissions. But
increasingly, frameworks areencouraging voluntary action
that means investing in carboncredits or beyond your value

(06:14):
chain, beyond your supply chainreduction. So these are
considered above and beyondactivities supporting emission
reductions, and that's wherecarbon credits come in. This
used to be called Beyond ValueChain Mitigation by the Science
Based Targets initiative.
Most confusing. Honestly, Idon't know who thought that up,

(06:37):
but anyway, yep, go on.
There's some we'll talk about itlater, but there's some exciting
sort of changes in the latestupdate to the Science Based
Target net zero standard. Sobasically, there's, we
acknowledge, we don't useoffsets to count progress on the
journey, but we do try to dovoluntary, extra voluntary

(06:57):
action, investing in or buyingcarbon carbon credits along the
journey, and then also oncewe're there, in 2050, or 2040,
or whenever your net zero targetis. So this creates both
voluntary but there's alsomandatory demand for carbon
credits, and that's why weobviously have a carbon market.

(07:17):
So it's not, yeah, you're going
so. And the price, like the ideaof a carbon price, then, yeah.
How does that tie in? Yeah.
So that helps to create a sortof pressure on your
decarbonization activities. Ifyou've committed to buying
carbon credits equivalent to acertain amount of your actual
emissions, that helps youcreate, like an internal price

(07:39):
on carbon, because you've gotthat liability, so it can be
used as a smoothing and on thejourney to help you reduce
faster your actual emissions,because you're paying for, yeah,
okay, these carbon credits,
Alright. Well, thanks very muchfor that. Now, just before we
get into it, Franziska and Iboth want to point out that

(07:59):
everything about this episodereflects our own personal
efforts and views, from conceptto final episode. However, like
many who provide commentary onthis issue, no matter what side
they come from, our views aren'tjust theoretical. They come
partly from our own closeobservations of how businesses

(08:22):
are attempting to fight climatechange, or all too frequently,
our own close observations ofhow businesses are attempting to
put off fighting climate change,and they also come from our own
close observations of thevarious policies that
governments have at varioustimes, introduced or sadly,
withdrawn. And in my case, aswell as having a back story as a

(08:45):
journalist, doing the best job Icould to report fairly on
various sides of lots ofdifferent climate change
debates, including the debateover real zero, net zero. I've
also done work as acommunications consultant for a
wide range of organizations,including the Carbon Market
Institute. But like I said, ourviews are our own, and none of

(09:08):
our clients have had anyinfluence on this episode in any
way whatsoever. So with thatproviso, let's get into some
clips and readings, and we'regoing to start with Australia's
strongest critic of net zero andadvocate of real zero. Andrew
Forrest, who is the founder andchair of Fortescue, and I'm

(09:30):
going to read out what he saidin Bloomberg's 'Switched On'
podcast late last year, andwe'll drop the link into that
podcast episode, into the shownotes. Okay, this is what he
said. 'Real zero is simplystopping burning fossil fuels.
Don't worry about carbonsequestration, set offs,
offsets, carbon credits, allthat rubbish. It's all a smoke

(09:54):
screen. You've got temperaturesgoing through the roof. Net zero
by 2050 has two many excuses init, but if you just stop burning
fossil fuels, you go real zero,then it's economic for your
shareholders.' And then he wenton to say, 'I say to the entire
world, real zero, stoppingburning fossil fuels by 2040, is

(10:18):
economic. It's great for yourcitizens now. It's great for
your kids tomorrow, and it willhead off global warming.' That
was his words in that podcastepisode. Any initial thoughts?
Franziska? Yeah,
I guess my first thought,Murray, is that because of the
complexity of the climatecrisis, having simple,

(10:40):
effective, clear messaging onwhat we need to do is so
powerful. So I'm kind ofinspired. I find it admirable
and clear. You know, I think itis important we act fast and far
on climate change. But maybeI've drunken the net zero kool
aid because I I feel like theway it's explained devalues net

(11:01):
zero and all the efforts thatthe community you know have done
to make the most robust goldstandard of climate action. So
listening to the comments, Iagree with the message, but I
also I think net zero holds somuch potential and promise and
can be so effective that this ismade in oversimplification in
some ways, but yeah, very kindof, I like it, and I think it's

(11:23):
really important message.
Yeah, yes, well, I kind of agreewith you. It's sort of a baby
and bath water warning thatyou're sounding there, which I
kind of agree with. And youknow, there is no business
person in Australia that Iadmire more than Andrew Forrest.
But I guess, you know, a coupleof things come to mind. Firstly,

(11:47):
yes, fossil fuels are the mainculprit, and we need to phase
down their combustion as soon aspossible. But they are only
slightly more than two thirds ofour total emissions, so we're
left with about 30% that arefrom other sources, and we have
to deal with those somehow. Wecan't just pretend they don't
exist. And secondly, despite itsambitions, Fortescue currently

(12:09):
relies substantially on carboncredits to comply with its own
obligations under the federalemissions reduction scheme that
you mentioned earlier, known asthe Safeguard scheme. Now some
people are going to say, oh, butthat's because Fortescue has to
use use credits to meet itsSafeguard obligations. But
that's actually not true. It'sperfectly entitled, like every

(12:32):
company, to meet its currentsafeguard obligations by
reducing its own emissions andnot relying on carbon credits.
It's just that it's currentlynot economically or technically
feasible for Fortescue to dothat. And I think that's that's
a very telling point that kindof runs, you know, strongly

(12:53):
counter to the message thatAndrew Forrest makes there.
Okay, well,
let's .. Murray if I can alsoadd that the thing that this
doesn't talk about is scopethree. And net zero is very
clear, or net zero frameworksare very clear on the need to
consider your supply chain andyour scope three emissions.
Yeah. Whereas I think that'sstill a question like, what

(13:15):
about influencing your supplychain and your downstream
emissions? Yes. You know aparticular particularly, for
example, the emissionsdownstream from the use of iron
ore that you sell overseas,exactly, and does acknowledge
that as well. That's it does.They clearly acknowledge that.
So that doesn't devalue realzero, but it says it's sort of
not enough. It doesn't covereverything realistic perspective

(13:38):
of real zero.
Yeah, that's a good point,because it does actually not
rule out using carbon credits inscope three, while it's also
investing in strategies andapproaches to directly reduce
its scope three emissions, whichis the term that we use to
describe supply chain or valuechain emissions. Okay, our next
audio clip is from ElijahButler, who is a senior

(14:02):
sustainability advisor and whohas an environmental and
chemical engineering degree. AndI'm just going to say that
Elijah has provided the bestintroduction of our audio clips,
and also you'll hear him referto himself as having had
experience in the Big Four, andby that he means experience in

(14:24):
one of Australia's four largestconsulting firms. Okay, off we
go.
I'm Elijah Butler, human beingon planet Earth. I work in
sustainability, very passionateabout the transition, experience
in the Big Four and other globalconsulting Cs. Real zero and net
zero. What's the importance ofeach and it's a really, really

(14:48):
interesting question, and Ithink emphasizes the importance
of responsible discourseparticularly. As a
sustainability professional netzero, we do the best that we
can, technologically andeconomically to reduce emissions
as much as possible whilstmeeting remaining residual

(15:09):
emissions with carbon credits.Real zero is, to my
understanding, just no need ofcarbon credits you operate with
zero emissions impact to theclimate. This is a bit of a
double edged sword, wherethere's a cost of action,
there's a cost of inaction,there is a huge role of a carbon

(15:30):
price that's really that'sfundamental to balancing the
scales between for incumbenttechnology and new technology
that will actually help andachieve a somewhat real zero
future. However, without thatcarbon price and without those
regulatory frameworks thatsupport a carbon price, then

(15:52):
that future, whether it be netzero or real zero, doesn't
really matter. And the reasonwhy I say that is because a
carbon price also incentivizesthings like planting projects
which are really, reallybeneficial for the climate the
environment. It can be donetoday with the benefits realized

(16:14):
by future generations withoutthe constraints of renewable
energy uptake and technologicaltransformation in the industrial
So I really appreciate howquickly Elijah gets to the point
sector.
and the framing around it beinga carbon credit problem, which
is, I think the core part of thedebate, one core part of the

(16:36):
debate. The other core part isobviously fossil fuel
consumption and how one thinksit needs to stop immediately,
and the other sort of might notbe have such a stance on it and
but I also really appreciate howElijah emphasizes that carbon
price role and how it can helpto drive those cost reductions
for actual reductions, but inthe interim, can incentivize

(16:58):
these planting projects whichactually have diverse and
widespread benefits forcommunities and land when, when
done, well.
Yep, and you mean plantingprojects that you know they they
pull carbon dioxide the plantedtrees pull carbon dioxide out of
the atmosphere and earn carboncredits By doing so. So when you

(17:21):
say 'carbon credits problem',tell me what you're getting at
there.
Yeah, teasing out that one termaccepts carbon credits in some
form, and the other term rejectsthem, basically. And I think
that sort of is the broaderdebate that's happening here, in
which we also have terms likecarbon neutral. And I think that

(17:42):
the evolution of the paradigm,you know, accepted carbon
neutral in the past, now we'vemoved to carbon to net zero, and
then questioning is real zero,that the next paradigm is it?
The next thing along that nowrejects the use of offsets at
all. So he kind of hones in onthis spectrum, but acknowledges
the benefits that carbon creditscan have on the way in driving

(18:04):
price reductions.
And maybe our next open micepisode should be on carbon
credits and issues around carboncredits integrity and so on.
Murray, I don't know! This onewas hard enough as it is! Like
that could be
our New Year's resolution,Franziska! Okay. So on, we got
it.
So our next clip is fromenvironmental engineer and

(18:27):
senior consultant with Anthesis,Grace Tully. Let's hear what she
has to say.
Hi, Franzi, I wonder if rightnow, the argument of net zero
versus real zero should maybe beanswered based on palatability
rather than climate science. I'mthinking of this specifically in
relation to our heaviestemitting industrial clients with

(18:50):
facilities currently capturedunder the Safeguard Mechanism.
Net zero is clearly the moreachievable of the true outcomes,
yet it's still viewed by most ofour big industrial clients as an
end state that's going to be,yeah, incredibly hard to
achieve. I'd say that it'scommonly accepted that what, in
less than 15 years, there'sgoing to have to be significant

(19:12):
shifts in both the availabilityand the costs for key abatement
technologies and alternativeenergy sources. And honestly,
I'm not convinced that there's agreat amount of faith in our
ability to get there. So whileI'd like to think that I'm a big
advocate for additionalaspiration, I wonder if changing
the goal post to real zero rightnow risks actually

(19:34):
disenfranchising industry whofeel as though they're up
against a monstrous challengefor no or maybe minimal, actual
near term benefit, as thosetechnologies that will make the
ultimate difference between netzero and real zero may not
actually exist yet. Very keenfor your thoughts.

(19:54):
Okay, I really liked the commentthat Grace made about
palatability. Because, you know,I think it's a really important
issue that we need to take intoaccount. And I think what she
was saying is that net zeroapproached in the right way
doesn't conflict with climatescience, and importantly, it
makes the task of shifting to aclean economy palatable for

(20:17):
businesses and individuals.
Yeah, I really appreciated whatshe said too, when, you know,
actually my knee jerk responsewhen she said palatability, was
like, Whoa, hang on. No, thescience says we need to do x, y,
z, that we need to move faster.It shouldn't just be about being
acceptable to people. So Ithought initially, it's a hot

(20:39):
take, but then the way sheunpacks it is so like logical
and reasonable. I mean, if wecan't get the majority on board
for net zero, if that seems likean insurmountable task, but
we're still struggling to aimfor, can that real zero focus
disenfranchise industry, I thinkis such a valid point. So it
does make me think aboutslightly differentiated
responsibility and timing in theway we approach reductions, and

(21:03):
I suppose I appreciate how theSafeguard Mechanism does drive
net reductions, as long as itgets absolute reductions as
well.
Yep, you're a fiend for theSafeguard Mechanism! I know
we're going to do lots ofepisodes on it next year when
the review starts. But yeah, Iagree. And to your point, with,

(21:26):
I agree with everything you saidabout Grace's comments. And to
your point, of course, Grace isnot saying and that, oh no,
don't worry so much about thescience. It's what people can
do. No, she's saying, yeah, thescience is critical, but you
cannot forget the issue of, asshe puts it, palatability. Okay,

(21:47):
let's hear now from Bret Harper,who is head of research at
RepuTex Energy and anelectricity modeling consultant.
As you'll hear, he says, realzero fossil fuel emissions is
not going to be practical by agiven date in all settings. So
the concept of net zero isuseful for that reason. But he

(22:09):
points out, and I think this isreally important, and it was one
of my favorite comments, Iguess, in all the clips that we
got, he points out that a realzero approach is increasingly
viable for many businessactivities. So here we go.
Here's Bret Harper.
Well, in terms of stoppingdangerous climate change,
achieving real zero fossilgreenhouse gas emissions is

(22:33):
usually your goal from aclimatic perspective, but it's
not always going to be practicalin all instances, certainly by a
given date. So that's where youknow the idea of net zero can
come into play, where you can goas far as you can go at the
current time, and then keeptrack of your remaining
emissions and try to offset someof those emissions by having

(22:57):
someone else generate credits,kind of on your behalf, to put
effort into areas other thanwhere you can reduce emissions
at the current time. Well, Iguess the thing that I would
keep in mind is that real zerois what you're aiming to do for
yourself or your business oryour facility. You're trying to

(23:18):
get your emissions down to zero,fossil greenhouse gas emissions
that you know is increasinglylooking like a possibility in
many instances where it probablywasn't as few as five years ago.
We're now seeing all kinds ofnew pathways, new
decarbonization technologiesthat allow you to continue to do

(23:41):
or make whatever it is you'redoing in a clean, green way that
doesn't require fossil fuelemissions. Now that's not always
the case, and it can be quitecomplex, it can be quite
expensive, and so I think that'swhere the idea of net zero can
come in handy when you'retalking about broad swaths of
different industries or parts ofthe economy or national targets,

(24:06):
acknowledging that they are notall going to be able to get to
real zero emissions, but if youcan still achieve it on a net
accounting basis, then you canaim for that as your your goal.
So what
did you think Franziska?
I'm still thinking, because I hehas two parts to it. I
appreciate Bret'sacknowledgement of the

(24:27):
complexity of a journey to realzero and how net zero can come
in and assist with that journey.He's using net zero and thinking
about tracking net emissionreductions along the way, not
necessarily thinking about anend point of net zero being
where you you offset yourresidual emissions. He's sort of

(24:49):
talking about the journey on theway there, which is an important
part as well. What did you think
Murray? what did I think? Well,I just did like, I liked the way
he recognized the usefulness ofboth. And I like, I love the way
he talked about the increasing,you know, realism, that we can

(25:11):
have real zero in a lot of withrespect to a lot of activities
and so on. But I also reallyappreciated his, just his blunt,
straight out assessment, youcannot do it everywhere, and you
certainly cannot do iteverywhere straight away. And so
net zero has to be useful, isvery useful in those

(25:32):
circumstances. So yeah, andwithout it, I think, is
basically implying, without it,we be in a very difficult
situation. So yeah, I thought itwas a nice balance of ambition
and realism there.
Yeah, very balanced. I alsoliked how we talked about the
emergence of more options as wego along, and it does give me

(25:54):
this feeling, like I said, it'slike an emerging paradigm and
maybe real zero is the eventualgoal, but we're sort of getting
everyone on board along the way.
Yes, I thought he sort of, youknow, was sort of quietly
cheering us on, you know,saying, Well, we're on a winning
streak. You know, there's allthese things coming into play

(26:14):
that are going to help us. Andso, yeah, which is good. All
right. Did you want to read outa couple of the comments, the
LinkedIn comments?
So we had Christian Lohberger.He's a climate and energy expert
based in Papua New Guinea who'sdone an awful lot of work in
this space, and in particular onsolar and renewables. He said

(26:39):
that real zero should be thegoal, but not easy to implement
without difficult socio economicchoices, net zero as a
compromise for certain hard toabate sectors, but should
absolutely not underpin theentire transition. Yep, and
Travis Williams, so he's asustainability and climate
strategy leader who's working onvarious aspects of the

(26:59):
transition transition planninghas said that net zero has
become a buzzword, partlybecause of how widely it's used,
but the underlying concept isnot obsolete. It remains
scientifically it remains thescientifically grounded
benchmark for stabilizing globaltemperatures. And he says,
according to the IPCC AR6synthesis report, global net

(27:20):
zero CO2 is a necessarycondition for halting warming,
regardless of the emissionspathway chosen. He says the
physics hasn't changed. Thecarbon budget constraints
haven't changed, but what haschanged is the public
understanding of how difficultthis pathway actually is. Where
the perception of an outdatedparadigm emerges is not from the
science, but from the gapbetween one, what the net what

(27:42):
net zero technically requires,and two, what our current
technologies, deployment ratesand policy structures can
reasonably deliver. He goes onto say even the IEA, which is
broadly optimistic on clean techlearning curves, is explicit
that net zero by 2050, scenariorequires unprecedented,
unprecedented deployment oftechnologies that are not yet

(28:05):
available at commercial scale,including large scale carbon
capture, utilization andstorage, CCUS, direct air
capture, sustainable aviationfuels and hydrogen for heavy
industry. Many of these are atTRL technology rating level five
to seven still. Most sectorsstill lack commercially viable
zero emission solutions atscale.

(28:27):
Yes, and just a couple of bitpoints of clarity, IEA is
International Energy Agency. andI don't have a clue what that
technological readiness scaleis, but no doubt you do!
Basically
a scale of how, how ready thattechnology is for deployment and

(28:49):
viability. So if it's a just anearly concept and an early idea,
it might be TRL one or two.Okay, yep. Thanks so much to
Travis and Christian for thosecontributions. I think, both
really clear and succinct andkind of captures kind of the
practicality of a lot of whatneeds to happen. You know, when

(29:10):
Travis talks about currenttechnologies, deployment rates
and policy structures, you know,being limitations to what we can
actually deliver. But let's nowhear from Michaela Morris, who
is the chief executive officerof Tasman Environmental Markets.
Michaela has worked as a seniorconsultant with many
organizations. She waspreviously head of program
delivery at Climateworks. Shealso has a master's degree in

(29:34):
climate change from MelbourneUniversity, and just an all
around really impressive set ofexperiences. Yes. SThese
comments are an extract from aTrack Changes podcast episode
done earlier in the year, sofeel free to go and give that a
listen as well. Here we go. Thefirst fundamental is
that you set and follow ascience based emission reduction
target that's appropriate foryour sector and your region, and

(29:54):
you have a credible transitionplan. So that's the foundation
you need. There's no point ofusing carbon credits if you
don't have that fundamentalelement in place. And then
carbon credits are then reservedfor one of four things, in my
opinion. One's obviouslyresidual emissions in the net
zero target here. So afteryou've reduced your absolute

(30:16):
emissions in line with scienceand your carbon budget, that bit
at the end that cannot beabated. That's where you likely
use carbon credits. The otherarea is, you know, you go
voluntarily above and beyond inyour operational emission
declines in any given year. Sodo more, to make that voluntary.

(30:37):
Don't deduct that from your fromyour pathway, but do more. The
third one would be invest incarbon dioxide removal, because
we need to, like, scale updemand so we can catalyze all
these technologies, bring downcost curves, so we actually
have, we can suck downgreenhouse gas emissions from
the air the time when we needthem. And then, fourthly, as a

(30:58):
former greenhouse gas accountantand consultant, a company can do
everything right and, you know,reduce emissions in line with
science, but in any given year,there's ups and downs, you know,
the lumpy bits that just happenin the real economy, like you,
you know, sell more product oryou acquire emissions intensive
competitor. And carbon creditscan help you just to instead of

(31:19):
just letting your target lapseand not achieving it that year,
it can help you tie over andmake good on that overshoot, and
then just buy your time to makeup for it in a subsequent
year. So any
any thoughts? So that was soclear, and I love the very clear
picture of what carbon creditsare reserved for, both four
things, residual emissions,voluntary, above and beyond,

(31:41):
investing in removals. And thenthe fourth was the smoothing to
not not so the smoothing whenyou can't achieve a target one
year because of fluctuations inyour business, which is, by the
way, how the Safeguard Mechanism
should work. Yep, I thought itwas good. And also that point
about it, you know, you needfirst to have a target, a
science based emissionsdirection target as well. Okay,

(32:06):
let's hear now from ChrisHalliwell, who is co founder and
chief executive of Core Markets,which has been active in global
environment and energy marketsfor more than 20 years. So
that's impressive enough. Butone of my favorite things about
Chris, which not many peopleknow, is that he is so

(32:26):
passionate about climate actionthat he commissioned a climate
action mural to be painted onthe outside, on the outside of
his home, and he made a verypowerful clip a while back that
features that mural, and I'lldrop the link into the show
notes for that. In this newaudio clip, Chris issues a very

(32:48):
valid warning on the costs ofsolely focusing on achieving
real zero down the track at theexpense of feasible broad
actions now that can includecarbon credits. And spoiler
alert, he's got this great linein there which, which is, what's
the point of a few succeeding ifcollectively, we've missed the

(33:09):
opportunity? Which, I think is areally powerful point. Let's
hear what Chris has to say.
I just googled the mural. It isso good. All right, I'm pressing
play.
So Murray real zero suggests weinvest hard now in the
development of new technologicalmeasures, right? Read, hydrogen
fuels. Now it's, it may resultin a fractional gain in the

(33:31):
timeline of that technology, buta huge multiple of the costs,
you know, and these costs won'tbe borne by government. It's
not, it's not politicallynavigable, you know, in a cost
of living crisis. As you know,Murray, most companies won't
even be able to participate inthat type of a technology yet,
let alone the timeline toimplement it. So we're
restricting uptake in such a waythat we're not actually aligned

(33:51):
with any acceptable emissionsreduction pathway, and in
addition, in doing so, we'veoverlooked the broader
mitigation efforts that we couldbe incrementally implementing as
soon as possible. So what'swhat's the point of some
industries, or some companies,of a few succeeding if
collectively, we've missed theopportunity, and with
collectively, we've all failedin the context of climate

(34:13):
ambition Murray? I can't get myhead around how that is
defensible. I've tried. Icannot. So what you're doing in
that instance is you're delayingmitigation to wait for the right
technology, and that is far moreexpensive than taking
progressive action now, and thatcomes from the IPCC themselves,
right? We're at risk of losing afew percent of global GDP per

(34:33):
year if the transition ispostponed, whereas, conversely,
net zero, yes, with a stringentuse of irrefutably high impact
carbon credits. It's achievable,it's economically rational
pathway, and it unlocks all thebroader ecosystem shifts that we
need. You're scaling global anddomestic energy transition
towards low emission electricitysources. You're scaling carbon

(34:56):
nature, renewable energymarkets, and it's pragmatic,
again. This is a collectivechance for hope, Murray! And
that's, you know we need someintention and leadership in
protecting the future of ourplanet. Carbon credits. They
play an important role. It'sdriving system wide
decarbonisation. It's supportinginvestment in in emerging
solutions, and it's managing therisk of being too late to

(35:18):
correlate with a meaningfulemissions reduction trajectory.
Okay, Franziska, what did youthink? Do you see what I mean
about it, framing the differencebetween these two terms in the
context of carbon credits, Ithink that's such a kind of at
heart perspective here. But Ireally, I really loved this, the
collective chance for hope, andthe way Chris talks about the

(35:41):
ecosystem shifts that we need,and, you know, the practicality
of net zero. But he alsomentions the stringent use of
high impact carbon credits,which limits and sort of builds
the integrity of net zero. Itdoesn't limit so it builds the
integrity of net zero. Yes, Ireally like his emphasis in the
collective here, yeah,

(36:06):
well, earlier we had this, Chrisbrought up the second P word. So
earlier we had Grace, talkingabout the word palatable,
palatability, and Chris, in thisclip, was talking about being
pragmatic. And I think neitherof those things can be
underestimated. Of course,Science trumps everything, but

(36:27):
palatability and pragmatism arealso very important. Yep. Okay,
so on we go.
Next up, we're going to hearfrom Liz Boylan, a Senior
Principal Consultant with OakleyGreenwood. And here's just a
heads up that in addition to mywork at university, I'm also a
part time consultant with OakleyGreenwood, so working alongside

(36:51):
Liz. So in this clip, Liz talksabout the benefits of carbon
credit sport farmers. And for abit of context, when she talks
in this clip about fewerdiversification options. She's
referring to economicdiversification, so giving
farmers a wider range of incomestreams. So let's give it a

(37:11):
listen.
Liz Boylan Oakley Greenwoodhere. Absolute zero means
eliminating every ton ofemissions from our economy with
no offsets. And while thatsounds ambitious. It does remove
a major opportunity for ouragricultural sector to be a
climate solutions providerthrough soil carbon,
biodiversity plantings and otherhigh integrity offset projects.

(37:32):
Net zero still requires reallydeep cuts through our
agricultural sector in methane,fertilizer emissions and fossil
fuel use, but it does acceptthat there are some residual
emissions that are technicallyor economically unavoidable. If
we pursue absolute zero, farmersand communities in the regions
could lose access to thosecarbon markets, which means they

(37:53):
also face fewer diversificationoptions, and we do see higher
decarbonisation costs then shiftonto regional industries. And we
also can't overlook energysecurity. Rural communities rely
on long supply chains andessential machinery. So a small
managed fossil fuel allowance inlater years, it keeps farms
reliable and resilient.

(38:14):
So again, we hear that deep cutsare common across both goals,
but then the benefits to theregions and to the resilience of
the regions and the economicdiversification of the regions
seems to be better for a netzero world. She talks about a
small, managed fossil fuelreliance at that end point, or

(38:36):
close to the net zero goal. So Iappreciate the perspective of of
the regions and how it's notsomething we we think about as
much in this voluntary carbonworld, this voluntary world, but
it's so important, most of thecarbon credits are generated and
a lot of the benefits and risksof climate change are felt.
Okay.
well, let's hear now our lastclip, which is from Tim Buckley,

(39:00):
who is founder and director ofthe Climate Energy Finance think
tank, and Tim is a passionate,thoughtful and influential
advocate for ambitious climateaction. And as you'll hear in
this clip, he is charmingly atease with either concept, which
is a bit of a relief, but whatwe but he says what we do need
is a price on carbon. Here wego.

(39:22):
Murray, I am fine with net zeroor real zero. At the end of the
day, we need collectively to actwith urgency and scale on the
climate science. We need topivot away from our fossil fuel
intensive emissions, intensiveindustries and practice

(39:43):
practices and lifestyle toembrace zero emissions
alternatives so you don't needoffsets when you're dealing with
firmed renewable energy, whenyou have wind and solar backed
up by pumped hydro storage,demand response Management and
batteries. But I also would liketo see scale and speed of

(40:05):
implementation. And so to me,I'm from finance. I want a price
on carbon. I want a high,regulated and progressively
increasing price on carbon, andthat will drive the financial
markets to solve this problem.Now, in the meantime, some
companies will continue topollute at the end of the day.
We don't want to throw outassets before they reach their

(40:28):
end of useful life. So having aprice on carbon pollution allows
you to make a economic decisionto say, I'll keep my old gas
water heater system for anotherfive years, but I'll pay the
emissions profile of that bybuying offsets, and then as soon
as it reaches an economic end oflife, I will replace it with a

(40:49):
zero emissions alternative. Butin the meantime, I will be
paying my dues. And the sameapplies to industry. We want
them to actually do an orderlytransition. We want them to do
an orderly, acceleratedtransition. They should have
done it 10 or 20 years ago. Weall should have, but the reality
is we didn't. So therefore, Iwould like to see as much

(41:10):
urgency, as much scale, with aslittle economic cost to everyone
involved as possible.
Oh, that's fantastic. I reallyappreciated his clarity, a clear
message about kind of what's thebest way to get stuff done
rapidly, decarbonize. And hedefinitely pragmatism and
palatability. But also the thirdP of this is the price on

(41:31):
carbon.
Yes, absolutely yes, a clearclarion call. He's very good at
delivering those. Okay, allright, let's head into our
reflections. So in this part ofthe episode, we're going to talk
about our views, which is sortof shaped by our own experiences
and by what we've heard today.First up, Franziska, do you mind

(41:54):
indulging me and letting me talkfor a moment about the good old
days? Is that okay with you?
Go for it. Murray, I'm here forit.
Terrific. Okay. Well, thanksvery much. When I say the good
old days, I mean about fiveyears ago. Because back then,
all the utilities that I used myelectricity and gas provider,
Telstra and Australia Post wouldbuy an equivalent number of

(42:19):
carbon credits that match theemission emissions resulting
from my use of their product. Inever for a second thought the
arrangement was as good as themproviding me with those services
without causing any emissions inthe first place. But I did
think, and I still think, thatwe're better off when they did
offer that back then. I feltempowered as a consumer, and now

(42:42):
I don't, or at least not to thesame extent. I feel
disempowered, so I exerciseclimate action through the
ballot box, but not in my roleas a consumer. And in the case
of Australia Post, for example,in each of the three years from
2020 to 2023 Australia Postpurchased more than 100,000

(43:05):
carbon credits, and thosecredits, they weren't being
counted towards meetingAustralia Post's own 2025
targets. Instead they they weresimply being purchased as part
of Australia, Australia Post'sattempts to demonstrate to me
and other customers that theywere providing a service that I
should value. Some people aredismissive of that and say it's

(43:27):
just companies chasing down thehalo effect, but I reckon we
could do a bit more of the haloeffect, because it can't all be
the hairshirt effect.
So what you said makes me thinkof a few different things.
Firstly, what you're describingwas carbon neutrality under the
Climate Active program. So theywould have been certified as

(43:48):
Climate Active, carbon neutral,and they would have had to do
their greenhouse gas account,and then for any of the services
or products that they sold thatwere opt in or that were fully
carbon neutral, they would haveto buy offsets for and I suppose
climate active operational since2010 is also undergoing a

(44:08):
massive transformation andshift. They've been in
consultation since 2023 we'rehoping for a clear direction on
what's next from them, but whatis clear is the changing
expectations on corporatevoluntary climate action, that
offsets are not enough, and deepdecarbonization is necessary,
and offsets should be above andbeyond. But the other thing that

(44:30):
what you said, that made methink of, is the tension between
individual action and, like yousaid, the empowerment that you
felt at being able to buysomething that was voluntarily
working towards a better climatefuture. So the tension between
individual action versussystemic or corporate or
government action, and where wesit in that, like, what do we
have at our disposalindividuals, and, like you said,

(44:51):
voting, or, you know, if wedon't have these choices at our
disposal, do we need morechoices? Do we need more people
to be informed? And are weactually powerless in a lot of
ways to the transition asindividuals?
Yes, well, I don't think we needto be, but I think there is a
risk that we feel that way, dobecome powerless if, if

(45:14):
organizations don't providethese avenues, like, you know,
above and beyond use of carboncredits to keep to, you know,
get us their customers and keepus engaged as their customers.
But it's interesting, youreferred to Climate Active, and
that has been just under reviewfor so long. In fact, there's
actually been three UN climatesummits since, in the three

(45:37):
years since that program wasunder review. And I think a lot
of the issues around, you know,real zero, net zero, I think the
government has to bear some ofthe blame, quite a lot of the
blame, for not providing clearinsight of its own expectations
on these issues through by thecompletion of its review of

(45:59):
climate Active. The other thingyou alluded to is sort of how
these issues are framed, how wetalk about them. And I did want
to kind of expand on that a bit,and I wanted to expand on it a
bit, but talking about thefreezers in Aldi supermarkets.
Do you mind if I do that

(46:19):
Franziska? Go for it. I knownothing about all these
supermarket freezes.
You do often hear people say,you know, when they're talking
about carbon credits, they say,oh, people don't understand the
terminology, carbon neutral,offsetting, blah, blah, blah,
and the language isn't clearenough and pulls the wool over
people's eyes. I think we doneed to give people as much

(46:40):
clarity as possible aboutterminology. But there's also a
risk that people are going tosort of tie themselves in knots
in qualifiers. And the examplethat relates to Aldi freezers is
actually about renewable energy.It's not about carbon credits,
but it sort of highlights acommon problem. It's to do with
a sticker that was stuck on afreezer door in an Aldi store,

(47:04):
and the sticker said had a cuteimage of a field of grass and a
childlike graphic of a windturbine, and it said the freezer
was powered by 100% renewableelectricity, and it also had a
QR code on it for moreinformation. Somebody complained
saying Aldi doesn't have adedicated renewable system for

(47:25):
the store, and so it's using soit's using grid power, which
means that the freezers are notpowered by 100% renewables. And
according to the complaint, thisquote prevents honest,
meaningful progress towards truezero carbon energy use and
misleads consumers. Now, Aldisaid in its defense that it had

(47:47):
made a voluntary commitment toachieve 100% renewable
electricity in its operations bythe end of 2021 and did so
through in house solar systemsand agreements to buy an amount
of electricity from two windfarms that matched its grid
electricity use. Bear with me,Franziska, I am coming back to
carbon credits! Anyway, thecomplaint to the Ad Standards

(48:10):
Board was made to the AdStandards Board, it agreed with
the complainant that becauseAldi stores are still connected,
still connected to theelectricity grid, meant the
actual electricity in this usedin the Aldi stores would not be
100% renewable. So I'm justgoing to say that is an

(48:33):
absolutely insane decision bythe Ad Standards Board people,
you know, people might notunderstand the ins and outs of
renewable energy power purchaseagreements. I'm certainly one of
them. But what Aldi said on thatsticker was absolutely true, and
the idea that the onlysupermarket that can be running

(48:55):
on 100% renewables, in fact, theonly business that can say it's
running on 100% renewables isone that's off grid is just
crazy beyond belief. So now, asa result, you go into an Aldi
store and there are stickers andthere are no stickers about
renewable energy on the fridges.So the contribution Aldi is

(49:15):
making to a clean transition hasvanished from customer view, and
the contribution renewables aremaking in a way that still
allows customers to buy cheapgroceries that's vanished,
that's vanished from customersview too. And I think there's
the same risk with carboncredits. It's possible to go
overboard to insist that everypiece of consumer facing

(49:36):
messaging on carbon creditsshould convey every element of
the complexity of what they areand how they work and how
they're being used, when thatinformation is not necessarily
all of interest or useful to theconsumer. In fact, it's just
going to bore them to death.What do you think? Am I just
having a big, long, pointlesswhinge, or do you think that

(49:58):
there's a point there? Do.
Uh, you're Oh my gosh. How longhave I been muted for?
Did you go away and have makeyourself a coffee while I was
on that rant!? The whole time?Have I not said anything? You
haven't said anything! Oh, okay,so I must have been muted while
you were talking, accidentally.Yeah. Um, no, Murray, you're not

(50:21):
just having a whinge. Or maybeit's okay to have a whinge
sometimes when things arefrustrating. And I think at the
heart of what you've said is twothings. One is this tension
between good and perfect incorporate climate action, and
the other is, how muchinformation do people need to
know when it is complex? Howmany of these asterisks and
caveats, and, of course, I'mdeep in the technical so I I'm

(50:44):
like, I want everyone to knoweverything, but that's just not
feasible in this world, becausenot everyone can know everything
about every choice they'remaking that impacts the climate.
There's a sort of, there has tobe a good enough point. But in
this case, okay, there's aslight difference between the
renewable energy area and thePPAs and the maybe renewable

(51:06):
energy certificates that aretransferred to be able to make
claims about renewable energyand the carbon credit world. So
at least in renewable energy,it's usually it's like feasible
to imagine that electrons from arenewable energy plant could go
through the grid and could getto that Aldi store right like
it's connected, whereas withoffset, with carbon credits,

(51:28):
it's not even in the supplychain necessarily. It's some
activity completely separate towhat they're doing, if that
makes sense. So, yeah, maybe I'ma postal service and I'm buying
offsets from, you know, a treeplanting project somewhere, so
they're not related, whereas, atleast with renewable energy, it
is related. So it's slightlymore accurate, Yes, yep, but I

(51:51):
think what you're saying is soit's still true, and in this
example, that sort of supportsyour criticism of the the Aldi
inability to have that
claim. Yes, yeah, it'sinteresting that you talk about
being connected because theother connected or not
connected. Because, you know,the other thing that I think is

(52:14):
as a relevant topic here is thatis the issue of sharing.
Because, you know, one of thegreat benefits of developing a
clean economy is that it canbring new social and economic
shared benefits to individuals,organizations and companies. And
it also, you know, it's we canalso do things in a way that

(52:35):
also shares the load in terms ofmeeting the costs and of making
the changes that we need to makewe see that with renewable
energy, where large scalefacilities sell their renewable
electricity to large emitters,and where households, millions
of households, make their owncontribution to our shared
efforts. And I reckon the sameis true of carbon credits. They

(52:56):
help us share the load and thebenefits. Yeah, yeah,
definitely what we think aboutan Australian context. So net
zero in Australia means all theemissions within the Australian
geographical boundary are offsetby removal, and so any efforts
to increase the reductions madein a nature or land based manner

(53:17):
within Australia do contributeto Australia's overall net
reductions towards net zero. Sototally agree with that. But I
do want to say something elseabout about renewable energy.
And I think when there's reallylow renewable penetration in the
grid, things like PPAs coupledwith renewable energy
certificates, they say they makea lot of sense in incentivizing

(53:38):
renewable development. But whenwe've got enough renewables in
the grid, one important aspectis time matching. And I'm sorry,
Murray, this does get a littlebit into the details.
Well you are a doctor,Franziska, you're a doctor!
But where the standards areheading starts from the fact

(54:02):
that I can't guarantee I can. Ican pay for renewable energy, I
can have a PPA, and I can have arenewable energy certificate,
but I can't guarantee that theelectrons that actually make it
to my property are green. It'snot like they're colored green
and they walk along the wiresand then I'm like, these are all
green, excellent. And part ofthe issue is when the energy is
generated and when it'sconsumed. And so in the middle

(54:23):
of the day, lots of renewablesin the grid. You know, we're
sometimes flooded with solar,and if wind is good as well,
like so maybe you're veryrenewable in the middle of the
day, but it's possible that youuse energy at night when there's
a higher fossil mix in the grid,for example. So what the
standards are moving towards istime matching of your renewable

(54:47):
energy certificates and yourconsumption. So your claim has
to be backed by knowing thatrenewable energy is generated at
that time. We're seeing thisboth in the Greenhouse Gas
Protocol and also in theAustralian context, with REGOs,
so renewable energy guarantee oforigin certificates. And I think

(55:07):
that's, I mean, in Aldi's case,you know, there'd be a lot of
energy consumption in the middleof the day, which, which makes
sense, you know, maybe it doesline up well. But for other
players, it might not be soconvincing that the energy is
actually generated fromrenewable sources at the time
that it's created. So it's notperfect, because you're not
tracking exactly where theelectrons are going, but it is
trying to better match up anattribute, yeah, can have all

(55:30):
sorts of benefits to the way thegrid works.
And that is a really good point,and I would just like to add
that what that demonstrates isthat it isn't only carbon
credits where we're movingtowards a more rigorous
approach. It's also how we talkabout renewable energy and how
we make claims about renewableenergy. Absolutely. So you know,
we are telling new stories. Partof the transition to a clean

(55:54):
economy is telling new storiesabout ourselves and about what
we do. And that's a complextask. It's a it's a learning
task, and we're doing it bothwith carbon credits and and with
renewable energy. I guess youknow, this has been I've really
enjoyed listening to people'sviews and chatting with you
about this. I guess my veryfinal thought would be this, and

(56:17):
it relates to discussions aboutnew and improved policies to
fight climate change, and I meanthings like the review of your
beloved federal SafeguardMechanism coming up. Yeah. And
the New South Wales EPA hasproposed new emissions
obligations for environmentallicensees. Yes. I guess my

(56:41):
thought is this, it would be amistake to focus on just
minimizing the use of carboncredits in those as those
policies evolve. Sure, it'simportant to make sure that they
aren't overused, and I thinkvery definitely for the
Safeguard Mechanism, that is areal risk at the moment, but I
think it's equally important, atleast in some sectors, it's a

(57:04):
real risk. But I think it'sequally important for people to
think about how carbon creditscan be used to increase ambition
and speed action, because withthe right policy incentives and
guardrails, they can definitelydo just that, because it is
possible to walk both sides ofthe street and to be ambitious
in fighting climate change in away that makes good use of

(57:27):
carbon credits. And I think theperfect example of that is the
UK, where they've just announcedthat they won't issue any more
exploration permits for NorthSea oil and gas, and the UK
Government is simultaneouslyalso a big supporter of carbon
credits. So I think there's alesson there for all of us.

(57:50):
Yeah, absolutely. I suppose if Imay have my final thoughts, yes,
yeah, go tell what. I had nofinal word, but I might. I
really, I do really wish andwant us all to work towards real
zero and as fast as possible.But we also need to remember
supply chain emissions and thecomplexity of all your suppliers

(58:10):
and your customers emissions aswell and and kind of think back
about that collective action andhow we can drive that, bring
everyone along for the journeyas fast as possible. And that
comes to the 3Ps of pragmatism,palatability and a price on
carbon!
Yes, I'm so glad we came up withsuch a sort of catchy
I'm so glad Yeah, ourcontributors, yes,

(58:33):
the 3Ps, all under the umbrellaof aligning with the climate
science, of course!
Yes, absolutely not,
not sacrificing that. Yeah, not.That's a not negotiable!
Franziska, it's been fun. It'sbeen wonderful. Dare I say it's
been real!

(58:53):
It's definitely not been 'net',okay? The net fun Murray, like
there was a bit when it wasn't,but then we had more fun later.
Thanks very much. If you'velistened all this way, I hope
you've enjoyed it. We hopeyou've enjoyed it. Please like
it. Please like the episode onyour favorite platform. It helps

(59:16):
to surface us amongst all theother many 1000s of podcasts
that are out there, and pleasealso share it with your
colleagues. And special thanksto all our contributors today!
Yep, bye for now. Thankseveryone. Bye for now. That was
fun.
That was fun. I thought it wasgoing to be excruciatingly
difficult, but

(59:38):
you know, kind of Yeah, flowed abit better!