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Difference between carbon neutral and Net Zero

Difference between carbon neutral and Net Zero

Nowadays, more and more companies are committed to corporate climate action. For this reason, terms such as “Carbon Neutral” and “Net Zero” have been used over and over, sometimes interchangeably, especially in the last couple of years.

The most important thing for companies to become Carbon Neutral or Net Zero is to understand how these terms work, to have credible actions, to create clear and preferably short-term targets, in order to take on climate action.

Difference between carbon neutral and Net Zero
Credit: Climate Visuals / Andreas Habich

What is Carbon Neutral?

At the 2015 United Nations Climate Change Conference, the Paris Agreement was reached, which sets the goal of: substantially reducing global greenhouse gas emissions to limit the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees. A threshold considered safe by the Intergovernmental Panel on Climate Change (IPCC) – they add that it is critical to achieve climate neutrality by the middle of the 21st century.

Carbon neutrality refers to a state that achieves a balance between GHG emission and GHG absorption from the atmosphere. Basically, removing as much GHG from the atmosphere as we emit. Usually it applies to a specific year and this state can be achieved again after one year’s time. Even though it has the word “Carbon” in it, it applies to all GHG from the Montreal Protocol.

For an organization to be carbon neutral, it must first calculate its GHG emissions for a given year using ISO 14064. Then, with this information it could reduce GHG emissions by analyzing where the organization emits the most, preferably by changing habits and consumption. This however is not always the case and too many companies rely on offsetting to achieve carbon neutrality.

What is Net Zero?

Net Zero refers to a pathway that balances between the amount of greenhouse gasses produced and the amount removed from the atmosphere. In this case, as agreed at the COP21 in 2015, a company would have to reduce its emissions throughout its supply chain to support the goal of limiting the global temperature increase to 1.5 degrees Celsius.

The concept of “Net Zero” is more recent and evolved than Carbon Neutral. At the very least it adds 2 avenues that are more sustainable than Carbon Neutral. First it imposes emission reductions to the highest of possibilities and for unavoidable emissions it relies on carbon removal offsetting in order to ensure “balance between anthropogenic sources of emissions and removals of greenhouse gasses by sinks in the second half of the century”.

Net Zero is more a long term strategy than it is a state and for it to be effective, it must be permanent. This means that the removed greenhouse gasses do not return to the atmosphere over time.

So, what is the difference between carbon neutral and net zero?

Net ZeroCarbon Neutral
DefinitionScience-based target approach to reducing GHG emissions
long term and achieving 1,5ºC goal
When the sum of GHG emissions and offsets equals 0.
There is no reduction requirement
ScopeScope 1,2 and 3 needs to be detailedScope 1 and 2 (3 is encouraged)
OffsetsCarbon removal credits only for unabatable emissionsAny type of offset can be used
Applies to Globally, nationally or company levelCompany, product or service level

Carbon neutral and Net Zero have different but essential scopes in the fight against climate change, as you can see from the table Net Zero has a higher level of sustainability. Net Zero came in after Carbon Neutral and therefore was coined on the basis of lessons learned from the past.

Since there is no specific level of emissions reduction to be achieved, being carbon neutral still means that emissions can be produced. On the one hand, carbon neutrality is a goal that can be achieved in the short term, which is attractive for companies. On the other hand, the net zero label refers to doing everything possible and using all available technologies to reduce emissions as close to zero as possible, before offsetting the rest by 2030 or 2050. It can however remain a wishful claim if a serious strategy is not set in place on how to get there. To keep global temperature rise below 1.5°C, net zero is the goal we all need to achieve. Also many companies are building their net zero strategies whilst achieving carbon neutrality at the same time.

James Cameron, who is a climate campaigner and helped negotiate international climate agreements, such as the 1997 Kyoto protocol, gives his view on these terms, adding: “we’ve had to construct ideas that motivate action,” Also, he says “They are themselves simplifications and have flaws and need to be interpreted, but they are better than not having anything”.

The way in which Carbon Neutral and Net-Zero are spoken and understood, as well as many other terms currently known in the fight against climate change, have an important role to play in motivating and inspiring urgent action.

At ALLCOT Trading, our mission is to promote sustainable impact and help companies in the fight against climate change. If you want to better understand these terms, so that you can apply them to your company, contact us and together we will make it happen.

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