Climate change is one of the most alarming issues of our time and greenhouse gases play a big part in it. One of the most useful strategies to combat this is a reduction in carbon emissions across the globe. This shows environmental responsibility and leadership as well. You can work hard to make a lot of money but if you don’t have a world to spend it in, you won’t be able to use that money for anything. Two of the most commonly used terms in this aspect are “carbon neutral” and “net zero”. In this post, we will chiefly discuss net zero, delineate the differences between “carbon neutral” and “net zero” and talk about the different ways to achieve it. Let’s get started.

Net Zero: All You Need To Know

How is “Net Zero” different from “Carbon Neutral”?

These days, the terms “net zero” and “carbon neutral” are heard in a lot of places. While they both have a similar end goal, how they go about achieving it, is quite different. 

The term “carbon neutral” is used to describe a policy through which carbon emissions are reduced and offsets are used for that purpose.

“Net Zero” is used to describe the process of reducing carbon emission while avoiding offsets wherever possible. 

Offsetting counteracts the emission that is left after the implementation of all the steps taken for reduction.

Carbon offsetting gets rid of excess carbon dioxide from the environment. In order for the offset to count towards a firm’s carbon neutrality or net zero rating, the removal must be permanent (through accredited/licensed methods).

What are the benefits of offset projects?

These projects offer more than just a reduction of carbon dioxide from the environment. They can provide some lasting community and social benefits as well. Some of the prominent examples of offsets are afforestation, reforestation, and conservation. 

Companies can also invest in programs such as developing cattle feed that reduces methane emission in cows, reducing the greenhouse gases in the atmosphere.

As climate change has moved up the agenda of business leaders, so has the concept of carbon neutrality. This means achieving a zero carbon bottom line for a company, site, product, brand or event by first measuring, then reducing its emissions where possible and then offsetting the remaining emissions with an equivalent amount of emissions avoided or offset. This can be achieved by purchasing enough carbon offset credits to make up the difference.

In contrast, net zero is a more ambitious goal that applies to the entire organization and its value chain. This means reducing indirect carbon emissions from suppliers to end-users, a complex feat in a world where companies do not control their entire value chain.

Details on how companies can contribute to the global goal of net zero emissions have been formulated by the Science Based Targets initiative, in conjunction with its Race to Zero campaign. The approach to residual emissions is also different, with active removal of carbon from the atmosphere being essential to achieving net zero emissions in the long term.

How can net zero be achieved?

The widespread adoption of net zero targets around the world is an important factor in climate action. The Paris Agreement seeks to keep global temperature rise well below 2 degrees Celsius and continue efforts to keep it at 1.5 degrees Celsius. Meanwhile, research has shown that to avoid the worst climate impacts, Carbon emissions should be cut in half by 2030 and reach net-zero by mid-century.

At the national level, reaching net zero requires large reductions in business emissions as usual, with the elimination of atmospheric carbon emissions. Some of the world’s largest economies, including Japan, the UK and France, have set a net zero target for 2050, and the EU has put the target at the center of the European Green Deal.

In a corporate context, the working definition of net-zero is generally agreed to as a state in which activities within a company’s value chain do not have a net impact on the climate from carbon emissions. This involves setting and pursuing a science-based target aligned to 1.5 degrees Celsius for emissions across the entire value chain with permanent removal of an equal amount of carbon emissions from the atmosphere to neutralize remaining hard-to-remove emissions.

Even the sport of Formula 1, the pinnacle of motorsport and a playground of horsepower and ultimate car engineering, is aiming to become net-zero by 2030. In order to do so, Formula 1 is putting a lot of effort into developing highly efficient hybrid engines and more sustainable kinds of fuel. Since Formula E already exists, it’s unlikely that Formula 1 will ever go full electric.

For the world to achieve net zero within the timeframe set by the Paris agreement, policies, technology and behaviour must change across the board. For example, renewable energy sources are projected to account for 70-85% of the world’s electricity by 2050. 

It is also critical that we rethink how we power transportation and improve the efficiency of food production. Investing in renewable energy sources such as solar and wind energy is an axis, as is the development of techniques for eliminating and sequestering emissions.

While reducing emissions must of course be our goal, carbon dioxide removal is still necessary today in sectors such as aviation where achieving zero emissions is particularly difficult. 

Removal can be achieved in a number of ways, from natural approaches like restoring forests and increasing carbon sequestration by the soil, to technological solutions like direct air capture and storage.

What are some net zero objectives at the corporate level?

• Regulating direct emissions from own or controlled sources, including on-site fuel combustion, such as gas boilers, fleet vehicles, and air conditioning.
• Regulating indirect emissions, including those from the generation of electricity, heat, refrigeration and steam purchased and used by the organization.
• The other indirect emissions occur in the value chain of a company. They are the most difficult to track and control but generally account for the majority of a company’s emissions inventory. They are associated with suppliers, business trips, acquisitions, scrap, and the end-of-life phase of products and services.

What can companies do to achieve net zero?

Businesses seeking to achieve a zero net goal must take a multi-pronged approach. They need to reduce carbon emissions from operations, manage internal and supply chain reductions, and offset emissions that are difficult to avoid in the short term. 

This starts with accurate data: to reduce emissions, you first need to understand them. Additionally, responsible companies must ensure that they provide accurate, complete, and objective data reporting for transparent and verified communications.

To move beyond carbon neutrality to net zero, companies must also broaden their carbon thinking. The Greenhouse Gas Protocol classifies carbon emissions into three scopes:

• The first covers direct emissions from own or controlled sources, including on-site fuel combustion, such as gas boilers, fleet vehicles, and air conditioning. (Scope 1)
• The second covers indirect emissions, including those from the generation of electricity, heat, refrigeration and steam purchased and used by the organization. (Scope 2)
• The third includes all other indirect emissions that occur in the value chain of a company. These are the most difficult to track and control, but generally account for the majority of a company’s emissions inventory, covering those associated with upstream suppliers, business travel, procurement, waste and water, and the use and end-of-use phases. (Scope 3)

Most companies currently only consider the first two, but there are many advantages to measuring all the scopes of emissions.

What can companies achieve through net zero?

Companies can identify critical emission points in their supply chain and assess suppliers for sustainability, identify opportunities for energy efficiency and cost reduction, and positively engage with suppliers and staff to help reduce emissions. They can also find ways to influence customer behaviour or prepare for the end of life of the product, for example by working with retailers and distributors on take-back programs.

So crucially, to achieve a net zero goal, companies are required to understand and reduce emissions in all three scopes. This represents another important difference from carbon neutrality: to become carbon neutral, a company only needs to worry about scopes 1 and 2; scope 3 is recommended, but not mandatory.

So that was our brief look into the concept of net zero. Hopefully, you have a clearer idea of it and can work towards implementing it in your firm as well.