What is net zero?

As global awareness of climate change intensifies, businesses are increasingly recognizing the importance of sustainability in their operations. A central concept in this discussion is “net zero,” a term that is critical in the context of corporate and national climate commitments. But what is net zero? This blog post aims to demystify the concept, differentiate it from similar terms, and provide guidance on how businesses can set and achieve effective net zero targets.

What exactly does net zero mean?

The term net zero refers to the balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere. These gases increase global temperatures as they trap extra energy in the Earth’s atmosphere.

Achieving net zero means that any emissions released are offset by an equivalent amount of carbon removal, either through natural processes like afforestation or technological solutions such as carbon capture and storage (CCS). The ultimate goal of net zero is to minimize the impact of human activities on the climate by ensuring that the total amount of global emissions does not increase, which will therefore limit warming.

For businesses, this involves not only reducing direct emissions from their operations (known as Scope 1 emissions) but also addressing indirect emissions. These include those from the energy they consume (Scope 2 emissions) and emissions associated with their supply chain and product lifecycle (Scope 3 emissions). Achieving net zero is a complex challenge that requires comprehensive planning and implementation across all aspects of a company’s operations.

What are residual emissions? 

Residual emissions refer to the remaining greenhouse gases that persist even after all feasible reduction measures have been implemented in a company or country’s operations. These anthropogenic emissions often arise from unavoidable activities, such as specific industrial processes or certain agricultural practices. To address these residual emissions, organizations frequently use carbon offsetting strategies, funding projects that remove emissions from the atmosphere, like reforestation or carbon capture and storage. 

However, some climate scientists worry that this approach might allow wealthier nations to avoid making significant reductions in fossil fuel use. By relying on carbon offsets, these nations could potentially shift the burden of reducing emissions onto poorer countries, which might already be transitioning to cleaner fuels independently. This situation could undermine global efforts to effectively reduce fossil fuel dependency and achieve comprehensive climate goals.

What is the difference between net zero and carbon neutrality?

While the terms net zero and carbon neutrality are often used interchangeably, they are not synonymous. Carbon neutrality typically refers to balancing carbon dioxide (CO2) emissions with an equivalent amount of CO2 removal or offsets – i.e. by actively removing greenhouse gases from the atmosphere. This could be achieved, for instance, by purchasing carbon credits that fund projects like reforestation or renewable energy. However, carbon neutrality often focuses solely on CO2 and does not necessarily encompass other greenhouse gases, such as methane or nitrous oxide.

Net zero, on the other hand, is a broader and more stringent target. It requires balancing all net greenhouse gas emissions, not just CO2, and mandates reductions across all three scopes (Scope 1, 2, and 3) as a means to tackling climate change. Furthermore, net zero emphasizes actual emission reductions over offsets, advocating for minimal reliance on offsetting mechanisms and prioritizing direct actions to cut carbon emissions. This broader approach ensures a more comprehensive mitigation of climate impacts and helps businesses tackle their environmental impact more effectively.

What is the difference between real zero and net zero?

The concept of real zero goes beyond net zero by eliminating greenhouse gas emissions altogether, rather than balancing them with removals or offsets. Real zero implies a complete cessation of emissions, meaning that a company or country would not only avoid emitting greenhouse gases but also eliminate existing emissions entirely from their operations and supply chains. This often involves transitioning away from burning fossil fuels to renewable energy sources.

While achieving real zero is technically more challenging and often not immediately feasible, it represents the ultimate goal in climate action. For most businesses and nations, reaching real zero may involve substantial changes in technology, energy sources, and industy. In practice, while net zero allows for some level of emissions to continue if they are counterbalanced by removals, real zero sets the more ambitious aim of zero emissions without relying on offsets.

What does ‘net zero by 2050’ mean?

As of now, over 130 countries have committed to achieving net zero by 2050. This global commitment is driven by the urgent need to limit global warming to 1.5°C above pre-industrial levels, as outlined in the Paris Agreement. These commitments vary in their legal and policy frameworks, with some countries enshrining their targets into law, while others have set more voluntary or aspirational goals.

For example, the UK government passed the Climate Change Act in 2008, which commits it to reducing the UK’s greenhouse gas emissions by 80% by 2050. In June 2019, it became the first major economy to commit to net zero emissions by the same date. The UK government stated that if other countries were to follow its lead, there would be a 50% chance of of staying below the recommended 1.5C temperature rise by 2100.

Other major economies like the United States, European Union, China, and India have also enshrined their commitments in law, given their significant contributions to global greenhouse gas emissions. 

• United States: The U.S. has committed to achieving a net zero target by 2050. This commitment was re-affirmed under the Biden administration, which has made significant policy moves to promote clean energy and reduce emissions across various sectors.
• European Union: The EU aims to become climate-neutral by 2050, meaning net zero greenhouse gas emissions. The European Green Deal outlines this ambition, and the EU has enshrined the 2050 target in law with the European Climate Law.
• China: China, the world’s largest emitter of greenhouse gases, has set a target to become carbon neutral by 2060. This means they plan to peak carbon dioxide emissions before 2030 and then work towards net zero through steep emissions reductions.
• India: India has announced a target to reach net zero emissions by 2070. This was declared by Prime Minister Narendra Modi at the COP26 summit in 2021. India’s commitment to reducing emissions is notable given its status as a developing country with significant energy needs.

But the commitment to net zero is not just limited to national governments; many regional and local governments, as well as businesses, have also pledged to achieve a net zero emissions economy, reflecting a broad-based recognition of the need for comprehensive climate action to tackle climate change.

However, most governments pay close attention to the cost of reaching net zero. For example, in its Sixth Carbon Budget, the UK’s Climate Change Committee estimated that the yearly cost of achieving net zero would be 0.6% of GDP.

It’s also important to note that for emissions other than carbon (e.g. methane), the net zero date is generally later – as it is recognized that these emissions are more difficult to phase out. Countries with high agricultural emissions generally find it more challenging to reach overall net zero. 

What does a good net zero target look like?

A good net zero emissions target is specific, time-bound, and aligned with the latest climate science. Here are key elements that define a robust net zero target:

1. Ambitious yet realistic goals: Targets should aim for a significant reduction in emissions by a specific year, typically by 2050 or sooner, depending on the sector and starting point.
2. Comprehensive scope: A good target includes all relevant emissions scopes (Scope 1, 2, and 3) to ensure comprehensive coverage of a company’s entire value chain and the net greenhouse gas emissions produced.
3. Interim milestones: Setting interim targets for 2025, 2030, and 2040 can help maintain momentum and provide measurable progress checkpoints for cutting carbon emissions.
4. Reduction first approach: Prioritize direct emissions reductions over offsets, ensuring that carbon removal and offsetting are used only as a last resort.
5. Transparency and accountability: Publicly disclose targets, progress, and methodologies to maintain transparency and build stakeholder trust. Regularly update stakeholders on progress through sustainability reports.
6. Alignment with science-based targets: Ensure that targets are consistent with the levels required to meet the goals of the Paris Agreement, typically through frameworks like the Science-Based Targets initiative (SBTi).

A well-structured net zero emissions target not only demonstrates a company’s commitment to sustainability but also enhances its competitiveness and resilience in a rapidly changing market landscape, particularly as global efforts to tackle climate change intensify.

How can carbon accounting platforms support businesses with net zero targets?

Carbon accounting platforms are essential tools for businesses aiming to achieve net zero. These platforms provide the necessary infrastructure to accurately measure, track, and report on the carbon emissions produced. Here’s how they can support businesses:

1. Accurate emission tracking: Carbon accounting platforms help businesses calculate their emissions across all three scopes. This includes direct emissions from owned or controlled sources, indirect emissions from the consumption of purchased electricity, heat, and steam, and all other indirect emissions that occur in a company’s value chain.
2. Data management: These platforms manage vast amounts of data, ensuring accurate and up-to-date information on emissions. This data is crucial for identifying key areas for reducing carbon emissions and for tracking progress over time.
3. Benchmarking and analysis: They allow businesses to benchmark their performance against industry standards or regulatory requirements, providing insights into how they can improve their sustainability practices.
4. Scenario analysis: Carbon accounting tools can model different scenarios based on various reduction strategies, helping businesses understand the potential impact of different actions on their overall carbon footprint – e.g. the switch from diesel cars to electric vehicles.
5. Regulatory compliance: As regulations around carbon reporting and reductions tighten, carbon accounting platforms ensure that businesses remain compliant with regional, national, and international regulations.
6. Integration with sustainability reporting: These platforms can integrate with broader sustainability reporting frameworks, such as the Global Reporting Initiative (GRI) or the Carbon Disclosure Project (CDP), providing a comprehensive view of a company’s environmental impact.

By leveraging carbon accounting platforms, businesses can not only ensure accurate reporting and compliance but also identify cost-saving opportunities and drive innovation in sustainability. As more companies commit to reaching net zero targets, the role of these platforms becomes increasingly vital in managing and reducing their environmental impact.

How can we reach net zero?

Understanding and implementing net zero emissions strategies is essential for businesses in the current era of climate awareness and regulatory change. By setting clear, science-based targets and utilizing tools like carbon accounting platforms, companies can not only reach net zero, but also enhance their competitiveness and reputation. With global momentum building towards a more sustainable future, now is the time for businesses to act and lead the way in achieving net zero emissions, thereby helping to reduce global warming.