There’s no businessperson in Australia that I admire more than Fortescue’s Andrew Forrest. Except when he talks about carbon credits.

It’s obvious why so many people, me included, consider Forrest to be an inspiration.

His company will build more than 1GW of solar before the end of the decade, and in FY24 it took three hydrogen projects to Final Investment Decision. Wow.

Just in the last few weeks, it announced a US$2.8 billion partnership with Liebherr that will encompass the purchase of 475 zero emissions mining machines, including about 360 autonomous electric trucks. Again, wow.

He also wants reform of that giant mining industry rort and deadweight on decarbonisation known as the diesel fuel rebate.

Then there is Forrest’s work on the marine environment, where he has highlighted the urgent need to slash the production of plastics.

But when Forrest talks about carbon credits, and proudly claims that Fortescue is interested in real zero, he loses me a little.

Yes, real zero is better than net zero. Yes, all companies should set a deadline to exit fossil fuels. But that doesn’t make ‘net zero’ a con.

And Fortescue’s own position is actually more complex than the vocal ‘rejection’ of carbon credits might lead one to assume.

Firstly, one of Fortescue’s goals is actually a net zero goal. Secondly, Fortescue is still a major buyer of Australian Carbon Credit Units. And thirdly, as a necessary result of Fortescue’s abandonment of the use of voluntary carbon credits, its emissions are actually rising at the moment.

On the first point. It’s true that Fortescue has a “real zero” goal for its operational (scope 1 and 2) emissions from iron ore operations in Australia.

But its scope 3 is a “net zero” goal – of net zero by 2040 – and it’s scope 3 emissions are about 100 times greater than its combined scope 1 and 2 emissions.

On the second point. Fortescue’s latest transition plan says that it expects to be buying about 120,000 Australian Carbon Credit Units in FY24 to meet its Safeguard obligations. And although it doesn’t say anything about ACCU purchases beyond FY24, it’s not out of the question that the company might still buy more in future (although it does intend making use of a Safeguard flexibility mechanism called multi-year monitoring).

The company’s comeback would no doubt be to point out that its pledge is only to purchase no voluntary carbon offsets, and that it will instead only buy them “to the extent required by legislation”.

But there is nothing in the Safeguard legislation that requires Fortescue to use ACCUs. Presumably it is buying them because it isn’t feasible, for commercial and/or technical reasons, to meet its Safeguard obligations without using carbon credits.

The thing is, that’s literally the whole point of carbon credits. Companies use them (or at least should use them) – to help meet goals (mandatory or voluntary) that in the short-term they can’t meet by just relying on their own decarbonisation efforts.

Which brings me to my third point.

Previously, when Fortescue included carbon credits as a component of its decarbonisation strategy, it was able to commit to reducing net emissions by at least 3% annually from FY20 levels of 2.07 million tonnes.

Given anticipated business-as-usual growth in emissions, particularly from its transformative Iron Bridge development, the company said in its FY21 climate change report that this meant “we will effectively reduce our net emissions to 50% below our projected business-as-usual unmitigated emissions by FY25 from our FY20 baseline”.

Instead, in the wake of its decision on credits, its operational emissions had grown to 2.7 million tonnes in FY24, and the company says they will be higher again in FY25, before starting to fall in around FY26.

That doesn’t mean its revised approach to credits was necessarily a bad thing. It’s goals are incredibly ambitious, and it’s crucial to note that Fortescue definitely has a decarbonisation pathway aligned with the climate science. But it remains a fact that, in the short term, its net emissions are going up, because it stopped using carbon credits.

It’s also worth noting that Fortescue’s latest climate transition plan says it has identified solutions to eliminate approximately 90% of its operational Australian ore operations, and is “actively working to identify solutions for the final approximately 10%”.

The thing is, that is exactly the same phrase that the company used in the previous year’s climate report.

So, at least publicly, it isn’t reporting progress in developing strategies to deal with 10% of its operational emissions.

Interestingly, the latest climate transition plan also mentions the possibility of Fortescue undertaking “ecosystem restoration and nature-based solutions” on its own land. To me, that leaves wiggle-room for developing its own carbon credit projects to deal with the pesky 10% of its emissions for which solutions haven’t yet been identified.

In short, I agree with Forrest that “net zero 2050” is a con. But the problem I have with that phrase isn’t the “net zero” bit, it’s the date. As suggested by modelling for the Climate Change Authority, we need net zero by 2040, not 2050, in order to limit global temperature rise to 1.5 degrees with no or limited overshoot.

All this is not to make the case for allowing the unfettered use of carbon credits. I’m intrigued by a suggestion in the Climate Change Authority’s recent sector pathways report that different types and/or quantities of removals (presumably in the form of credits) could be allocated to different sectors, as part of the government’s net zero plan.

“For example, biological removals could be prioritised for use within the agriculture and land sector," the Authority suggested.

There also needs to be some serious discussion about limits on ACCU percentages and vintages used in the reformed Safeguard, when the policy mechanism comes up for review.

On the other hand, encouraging the use of high-integrity carbon credits could facilitate what would be a transformative measure in the fight against climate change – introducing a new legal duty that companies must reach net zero as quickly as they reasonably can.

Incidentally, the introduction of such a legal duty was initially proposed by UK-based Dr Ben Caldecott, who wrote the introduction to Fortescue’s latest transition plan.

I regard Forrest as a real hero. He has made an outsized contribution to Australia’s economic wellbeing through his iron ore activities, and he is poised to make an even more outsized contribution to the development of a global green hydrogen industry. But when Forrest talks about carbon credits, I think there’s an element of hypocrisy and hyperbole. And that’s a real shame.

Murray Griffin is a climate change and sustainability communications advisor at Earthed. He is also the host of a new podcast on climate, sustainability, and sustainable development, called Track Changes. The above views are personal.

https://podcasts.apple.com/au/podcast/track-changes/id1773158403