Carbon neutrality and net zero are two popular climate pledges that organizations around the world are making. However, they are not the same thing. A new wave of climate commitments from different companies across various sectors is surfacing, prompting the need to differentiate and clarify what it means to be carbon neutral or net zero. These terms are often used interchangeably, using one to really mean the other. So knowing and understanding the major differences between carbon neutral and net zero is crucial in making correct climate pledges. This article will guide you on how to achieve carbon neutrality for your business or non-profit, what steps to make, or measures to use to get there.
Net zero and carbon neutrality are a form of climate commitment made by business companies and government organizations. Each is a noble pledge with the same goal: to balance out the release of harmful gases into the atmosphere. What makes them different is the type of gas they target and the scope they cover. Carbon neutrality specifically focuses on neutralizing an entity’s carbon dioxide (CO2) emissions. Being carbon neutral means your business operations’ emissions are compensated through CO2 reduction or removal initiatives. On the other hand, net zero solutions tackle all greenhouse gas (GHG) emissions, not just CO2. Other potent GHG include methane, nitrous oxide, fluorinated gas emissions, among others. But they’re all expressed in tonnes of carbon dioxide equivalent or CO2e as the common measurement unit in carbon accounting.
Achieving carbon neutrality is much easier than reaching net zero. That’s because you can opt to compensate or offset for your carbon footprint without actually reducing CO2 emissions but funding CO2 reduction or removal projects. The amount of CO2 the project avoids or removes must be equivalent to the same amount your business operations pollutes. In other words, if your company emits about 80 tonnes of CO2 annually, you have to pay for the same amount of carbon offsets.
While you can do that to achieve carbon neutrality, it’s not the case with meeting net zero emissions. The scope of net zero is much broader and it’s harder to achieve. You need to account for all of the GHGs your company emits. The Science Based Targets initiative’s (SBTi) corporate Net Zero Standard formally set the definition of net zero and provided guidelines for companies on how to achieve it. Under this standard, carbon offsetting to compensate for GHG emissions should be the last resort. Polluters must first reduce their emissions meaningfully through various means. These can include improving energy efficiency of operations or processes, using renewables, electrification, and more. In short, net zero goes beyond carbon neutrality; it’s a race calling for more drastic solutions to reduce GHG emissions.
Net zero is a movement in addressing global warming while carbon neutrality is a narrower climate solution. Yet, that doesn’t mean being carbon neutral is less important. In fact, it’s a good starting point for businesses to manage their carbon footprint and help in the fight against climate change. Being carbon neutral doesn’t necessarily mean your operations will result in zero emissions. But it does mean that you choose to join the race to net zero, run your company with a lighter CO2 footprint, and be sustainable.
The first step to being carbon neutral is getting how much CO2 your company emits. That would serve as a baseline. This process is also known as carbon accounting or GHG emissions accounting. Public traded companies, especially the big ones, are required to disclose their carbon emissions and report them properly. The gold standard in accounting for corporate carbon emissions is the Greenhouse Gas Protocol or GHG Protocol. It’s an international framework that puts numbers on a company’s business activity.
This means you should identify activities that your firm does that release CO2. The more complex the structure of your company, the more difficult it is to identify the sources of emissions. But most often, doing it involves quantifying emissions based on three scopes – Scope 1, Scope 2, and Scope 3. The following diagram shows the common emissions sources under each scope.
The most common method used to calculate carbon emissions is to apply emission factors to activity data from your company. It means getting the quantity of resource use through receipts, invoices, or bills associated with the activities. For instance, calculate the amount of electricity, fuels, goods, and services you paid for. The table below shows common polluting activities and sources of information to turn the data into carbon emissions. To know more about carbon accounting, here’s a detailed guide for that. While for quantifying CO2-polluting activities, here’s a comprehensive guide to refer to.
Once you have established your CO2 footprint baseline, you can now move on to the next step – laying out a plan on how to neutralize emissions. There are many means to that. As mentioned earlier, you can opt to shift to renewable energy sources to reduce CO2 emissions. Or you may improve the efficiency of your business processes. And if you want to provide potential income to others, you can help fund environmental projects through carbon offset credits.
Examples of leading companies that have an SBTi-approved carbon neutral pledge are: Apple by 2030, Delta Airlines by 2030, and BP by 2050. These companies have set ambitious targets to achieve carbon neutrality, and they’re doing it through various means. Apple, for example, is investing in renewable energy projects, improving the energy efficiency of its products, and using recycled materials in its manufacturing processes. Delta Airlines is investing in carbon removal technologies, fuel efficiency measures, and sustainable aviation fuels. BP is shifting to low-carbon energy, investing in carbon capture and storage, and reducing methane emissions.
In conclusion, carbon neutrality and net zero are both important climate pledges that companies should strive to achieve. Understanding the differences between the two is crucial in making the right climate commitments. Achieving carbon neutrality is a good starting point for businesses to manage their carbon footprint and help in the fight against climate change. It involves calculating your carbon emissions, laying out a plan to neutralize them, and monitoring your progress.