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Governments around the world are moving to ‘net zero’, to limit the impacts of climate change. All Australian state and territory governments have the goal of reaching net-zero carbon emissions by 2050 at the latest, and the Prime Minister says the national target is net zero, preferably by 2050.

Australian governments can and should act now to create momentum towards the net zero goal. Strong policies are required to reach net zero, but some sectors and individuals may be able to do more than others at different times. By offsetting over-achievement in one sector against under-achievement in another, effort can be shared across the economy and the goal achieved at lower cost.

This report, the fourth in a series of five on net zero, recommends policies to ensure Australia has access to high-quality offsetting units, both to act as a ‘safety valve’ if the cost of reducing emissions sector-by-sector is higher than anticipated, and for the ongoing task of offsetting emissions that can’t be avoided.

Offsetting is a difficult part of the net-zero conversation. Some see it as an excuse to delay reductions, others as bringing about unacceptable social change, particularly in rural areas. It has been plagued by integrity problems, and there is understandable cynicism about its potential.

Key recommendations:

  • Implement strong policies to reduce emissions consistent with a net-zero pathway
  • Articulate the role of offsetting in each policy
  • Bolster the integrity of offsetting units
  • Get ready for an expanded international market in offsetting units
  • Support the emergence of negative emissions technologies
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Grattan Institute Report No. 2021-13