The Difference Between Carbon Neutral and Net Zero

The terms “carbon-neutral” and “net-zero” are much in the news these days, with numerous organisations and businesses claiming to have achieved one or even both of these objectives. These terms are frequently used indiscriminately and inconsistently in the corporate world, making it challenging to understand what they mean and how to use them effectively. It is crucial to comprehend how “carbon-neutral” and “net zero” are different from one another because they have very different definitions. What precisely is the difference?

Act fast, Act now!

The only way for a business to become carbon neutral is to reduce its own greenhouse gas (GHG) emissions. The main distinction is that global neutrality refers to the fact that global emissions and absorptions are in balance.

Definitions of net zero and carbon neutrality

Without requiring that any emissions be reduced, “carbon-neutrality” refers to the purchase of carbon reduction credits that are equal to the amount of carbon dioxide emitted.

Net-zero refers to reducing emissions in accordance with the most recent findings in climate science and balancing any residual emissions with carbon offsets.

The role of the private sector in decarbonizing and reducing emissions is becoming more crucial as the fight against climate change gains importance. The urgency of the climate emergency is now acknowledged, and the level of commitment shown by governmental climate action committees has resulted in more serious initiatives like the UNFCCC’s Race to Zero Campaign or France’s Carbone 4’s Net Zero Initiative, both of which aim to achieve net zero emissions.

The Paris Agreement’s Effect

The 2015 Paris Agreement created a global framework for limiting global warming to well below 2 degrees Celsius to avoid the severe effects of climate change. We must achieve collective carbon neutrality by 2050, which is the aim of the agreements previously outlined, to be in alignment with this goal. But how can each organisation contribute significantly to this effort?

Economic actors are making increasing efforts to accomplish a range of climate-related goals, the majority of which are due by 2030 or 2050. To describe their initiatives, they use a variety of net zero terms, including carbon neutrality, net zero, and carbon negative. These are the three key ideas that both organisations and nations use. Even though they are similar, there are a few subtle differences that need to be considered.

Understanding net zero emissions

Also important to stress is the distinction between net zero emissions at the corporate level and global net zero emissions. A company is actively advancing global neutrality while purporting to be impartial. The only way for a business to become carbon neutral is to reduce its own greenhouse gas (GHG) emissions. The main distinction is that global neutrality refers to the fact that global emissions and absorptions are in balance.

The EU and the UK are leading the world in the effort to achieve net-zero emissions, and the Glasgow COP26 in 2021 undoubtedly strengthened the zero carbon targets through emission reduction efforts.

What emission scope are we referring to here?

First, it is crucial to understand that emissions are divided into three categories, each of which has its own set of net zero terms, according to the Greenhouse Gas Protocol, the most widely used and internationally recognised greenhouse gas accounting standard.

  • Scope 1: Direct emissions from fleet vehicles or on-site fuel combustion
  • Scope 2: Indirect emissions resulting from the production of emissions from energy purchased, such as heat and electricity.
  • Scope 3: Additional indirect emissions from upstream and downstream commercial activities.

Although Scope 3 emissions are typically much higher than those of the other two types of pollutants, measuring these emissions is more difficult. A company must specify the range of emissions it is evaluating before declaring neutrality or having reached net zero emissions to be completely transparent. All three types of emissions and their sources must be covered when discussing a net-zero strategy.

A schedule for a net zero approach

In addition, organisations and governments should decide whether their strategy will take place over a short or long period of time. Many businesses state that they are neutral or have reached net zero, but they don’t say for how long—has the business been neutral for a year, for instance, or has it been so ever since it was founded?

Many commitments made by companies and organisations are based on language found in the IPCC report. Most other publications, including those created by the Science Based Targets initiative (SBTi) and the Carbon Disclosure Project (CDP), use both the terms established by the IPCC and their own definitions.

Carbon-neutral or CO2 emissions-free

When anthropogenic CO2 emissions are globally balanced by anthropogenic CO2 removal over a specific period, a condition known as carbon neutrality, net zero CO2 emissions are achieved. According to the IPCC assessment, organisations and governments should achieve net zero CO2 emissions by 2050 to keep global warming to 1.5 degrees Celsius.
To achieve net zero CO2 emissions, it is crucial to have a consistent climate plan. Companies should be aware that, contrary to popular belief, net zero initiatives do not only involve carbon offsets. It calls for crucial pre-processing steps like assessing their environmental effects and comprehending the sources of their emissions as part of a thorough analysis.

The three processes listed below can be used by a company to create a comprehensive sustainability strategy once it has recognised and understood its various emission sources, especially the “hotspots”:

The SBTi refers to reduction; abatement refers to the removal of sources of CO2 emissions along the entire value chain (scopes 1, 2, and 3). In practise, this term refers to reducing or eliminating sources of CO2 emissions associated with a company’s operations and value chain until a constant level of residual emissions is attained.

Emissions that cannot be reduced for a variety of reasons, such as technological and economic ones. Some industries will always need to take residual emissions into account, like agriculture with its crops and livestock breeding.

Can CO2 be neutralised?

Neutralising CO2 is the removal and long-term storage of atmospheric carbon to lessen the impact of releasing CO2 into the atmosphere through Carbon Dioxide Removal (CDR) activities like re-establishing natural carbon sinks or technological advancement.

It is made up of cutting-edge tools that have the potential to capture emissions as soon as they are released and sequester them in geological soil, diverting emissions that are currently not in the atmosphere. According to a study by the European Zero Emissions Platform (ZEP2019), these technologies may cost more initially (between 12 and 30 euros per tonne), but over the long term, they will be very competitive in the fight against climate change.

The voluntary carbon market

Purchasing carbon credits on the Voluntary Carbon Market enables direct investment in emission reduction initiatives. This kind of initiative not only aids in absorbing or avoiding CO2 emissions but also benefits the local populations’ social and environmental conditions. As long as there are residual emissions, organisations will need to support emission reduction efforts in order to maintain a net zero level of emissions.

All parties who want to take part in a net zero strategy must follow the logic that dictates the order in which these actions are carried out. Additionally, measures to reduce greenhouse gas emissions should not be replaced with actions for neutralisation and compensation.

Emissions or GHGs at zero net?

While the idea of net zero emissions and carbon neutrality are similar, they differ in terms of scale. To achieve net zero emissions, all greenhouse gas emissions must be reduced (GHGs). Carbon dioxide is one of the most important greenhouse gas pollutants due to its longer atmospheric residence time than other gases and its role in emissions from human activities (especially from fossil fuel burning).

There are other greenhouse gases (GHGs), but in terms of their influence on human health and contribution to the greenhouse effect, nitrous oxide, methane, and halocarbons from human activities are the deadliest. Water vapour is a significant heat-trapping gas in addition to carbon dioxide, but it occurs naturally rather than because of human activity.
Since anthropogenic emissions of greenhouse gases (GHGs) in the atmosphere are equal to anthropogenic removals of GHGs from the atmosphere over a specific time period, net zero emissions is reached when human activity no longer contributes to global warming.

When is net zero possible?

According to the World Resources Institute (WRI) and based on information from the IPCC’s Fifth Assessment Report, net zero emissions of greenhouse gases will only be reached by 2063. (WRI). The world’s temperature cannot be reduced to 1.5 degrees Celsius with the current measures taken by nations and organisations. Corporations must commit to reducing and offsetting every type of pollution they produce, and net-zero initiatives must be strengthened.

Determining the precise quantity of emissions that have occurred is one of the most challenging aspects of achieving net zero emissions. While monitoring CO2 emissions is relatively simple, it is more difficult to monitor other greenhouse gas emissions. Several climatic measures have been developed to compare emissions of various gases, such as CO2 equivalent, and all show that immediate action is required in all spheres of society. These measures include global warming potential, global temperature change potential, time horizon, and CO2 equivalent.

The strategy is the same, with the exception that it includes all greenhouse gases as part of the objective rather than just CO2 emissions.

Carbon-negative or net-negative emissions

After achieving net zero emissions, a company may decide to go above and beyond by offsetting more than just its remaining emissions. It basically means that a company creates a net positive carbon dioxide balance on a global scale by removing more carbon dioxide from the atmosphere than it emits. The term “climate positive,” which means the same thing as “climate positive,” may have also been used.

While some companies have made the commitment to achieve carbon neutrality, Bhutan stands out as a leader for others to emulate. The Asian nation was the first to achieve carbon neutrality in 2017 despite having massive forests covering more than 70% of its territory. The nation exports renewable energy, which made this possible. The nation is producing more hydroelectricity than it needs, and this surplus is anticipated to produce 17 million carbon offset credits by 2020, according to official statistics. Bhutan emits approximately 1.1 million tCO2 annually, but its trees absorb three times that much CO2.

Are emissions zero if net zero is achieved?

Net zero implies that the world must remove as many emissions as were released, if not more. This does not imply that there will be no emissions. It allows us to gradually remove emissions from the atmosphere that have accumulated since the start of the first industrial revolution, which is a small but significant contribution.

No amount of technology or trees can currently completely compensate for all the pollutants that cause global warming. To achieve this goal, it is now crucial to make investments in the creation of new technologies and procedures.

For instance, Elon Musk, the CEO of Tesla, and a team of volunteers are working to achieve this through a global competition. The chance to submit projects, including cutting-edge technology, that absorb carbon emissions from the atmosphere over a four-year period will be available to individuals, businesses, and academic teams. Participants will have the chance to win cash awards ranging from $1 million to $50 million to implement and further develop their ideas. Innovative techniques for capturing emissions must be developed if we want to combat climate change as quickly as possible.

Risks of Greenwashing

Even though the impending climate catastrophe demands “action rather than words,” it is crucial for organisations and nations to exercise caution in their use of language. Additionally, it increases their credibility and shields them from accusations of malpractice brought on by “greenwashing.”

We’ve shown in this article how pledges must be tied to either the 1.5° or 2° trajectory and how businesses and nations can take action to meet their 2020 climate targets.

So, should one type of vocabulary be prioritised over another? It doesn’t really matter, but it is crucial that you can apply the various terms correctly and understand what they mean.

Reading Time: 7 minutes

What is Accounts Payable Automation

What is Accounts Payable Automation

Accounts payable (AP) automation is the replacement of either all, or a portion of, a given process that was previously based on paper records with automated processing which utilises electronic forms.