You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox

Call 1800 444 141
Call
Call

Hundreds of thousands of households and small businesses that paid extra for AGL’s ‘carbon neutral’ gas and electricity may be entitled to compensation under a class action filed in the Federal Court by Slater and Gordon Lawyers.

The proceeding alleges customers paid a premium believing AGL's 'carbon neutral' products would offset the emissions linked to their energy use, when in fact the carbon credits AGL used to support those claims did not genuinely deliver that outcome.

The class action alleges AGL’s claims were misleading and deceptive within the meaning of the Australian consumer law. This amounts to a type of greenwashing.

AGL has sold the products for about a $1.50 add-on per week since July 2020.

“I paid extra because I wanted to offset the fossil-fuel emissions from my energy use,” said lead applicant, Michael Ihle.

“I believed AGL’s ‘carbon neutral’ product would deliver that benefit. If it didn’t, customers deserve clear answers and fair compensation,” Mr Ihle said.

Cassandra Evans, Legal Counsel in Slater and Gordon’s Climate and Environment practice, says customers paid extra to make a meaningful environmental difference.

“Living costs are already high. Families and small businesses squeezed budgets to pay extra because they believed they were reducing the climate impact of their energy use,” Ms Evans said.

“The case comes down to some simple questions: Does this product do what it says on the tin? Did the people, or the planet, get what was promised?” Ms Evans said.

Ms Evans says consumers should be able to trust environmental claims made about products and services.

“People spend their time and hard-earned money researching and choosing products and services that reflect their values and preferences,” Ms Evans said.

“They rely on labels and claims to make informed decisions. Environmental claims must be clear and accurate. The products should match the promise.”

The case comes amid growing concern about 'carbon neutral' claims, carbon offsets and greenwashing.

In July 2026, the Australian Government announced it would scrap the Climate Active program and move away from the term ‘carbon neutral’, citing concerns about the credibility of claims relying heavily on carbon offsets rather than direct emissions reductions.

In May 2025, EnergyAustralia apologised to customers and resolved legal action brought by Parents for Climate over its ‘Go Neutral’ product. It acknowledged that carbon offsets do not prevent or undo the harm caused by burning fossil fuels.

Nic Seton, CEO of Parents for Climate, says there’s a lot at stake.

“Greenwashing can mislead consumers, misrepresent the fight against climate change, disadvantage companies with legitimate claims and delay the shift to cleaner energy,” Mr Seton said.

“We support the AGL ‘carbon neutral’ class action as an important next step in protecting consumers, and keeping companies honest and our climate goals on track.”

Ms Evans says the EnergyAustralia outcome showed why AGL’s claims required close examination.

“We say AGL should be held to the same standard. If this case succeeds, we expect strong scrutiny of ‘carbon neutral’ claims and for misleading products to be removed from the market.”

This is the first class action brought by Slater and Gordon’s new Climate and Environment practice.

“Our work helps consumers and communities seek compensation for harm, wrongdoing or loss, and pushes companies towards honest, meaningful climate action,” Ms Evans said.

The class action seeks compensation for affected customers and an injunction to stop the unlawful conduct, alleging AGL breached Australian consumer law by:

  • misleading customers;
  • selling products that did not provide the promised climate benefit; and
  • supplying products that were not fit for the purpose for which customers bought them.

AGL residential and small business customers who paid for AGL’s ‘carbon neutral’ electricity or gas add-ons from around July 2020 are encouraged to register for the class action with Slater and Gordon here.