Net-zero and carbon neutrality. What's the difference?

The terms net-zero and carbon neutral statements are thrown around but what do they actually mean?

Currently, there is no clear standard for net-zero whereas carbon neutrality follows the PAS2060 standard.

Many companies and organizations are only just beginning to understand that net-zero is fundamentally different to carbon neutrality. Companies claim they have achieved one or the other, so what are the two meanings?

Carbon Neutral

This can cover businesses, services and individual products. Carbon neutrality covers scopes 1 and 2.  Organizations who talk about being carbon neutral are taking steps to remove the equivalent amount of CO2 to what’s emitted through activities across their supply chains by investing in ‘carbon sinks’. Companies begin this process by measuring their CO2 emissions and cutting down as much as possible by implementing reduction strategies before investing in offset programmes.

Net-Zero

This covers the whole organization. It has similarities to carbon neutrality but expands considerably in scale covering not only scope 1 and 2 emissions but scope 3 as well. To achieve net zero is to go beyond the removal of just carbon emissions. Net zero refers to all greenhouse gases being emitted into the atmosphere. This requires emissions reductions in line with a 1.5°C pathway. All businesses must do this in order to achieve net-zero global emissions by 2050. Standards for Net-Zero are laid out in the SBTi Net-Zero Standard.

Timeline

Carbon neutrality is a short-term measure, which allows organizations to act now. Net-zero is a medium-long term goal focused on achieving targets by 2030 and 2050.

What are the main differences?

Carbon-neutrality can be achieved through purchasing offsets with Fenix Carbon. It is an important initial step in a company’s strategy and can also make a good springboard towards aiming for net-zero.

Net-zero is harder to achieve than carbon neutrality. One key difference is that net-zero involves eliminating indirect emissions generated by the entire value chain, which includes all suppliers and customers.

Under net-zero, any residual emissions (emissions that prove impossible to eliminate) must be eliminated by purchasing carbon removals that permanently remove an equivalent amount of carbon from the atmosphere. Carbon neutrality, by contrast, allows residual emissions to be dealt with by purchasing offsets that lead to carbon reductions or efficiencies. In terms of our PIU marketplace, which is part of Woodland Carbon Code –this standard cannot be used to offset commercial emissions for UK companies, because the UK government already counts it towards the UK’s Nationally Determined Contribution (NDC) under the Paris Agreement.

Ultimately, carbon neutrality is key for companies in the short-term as globally we look to mitigate the impacts of global warming. Net-zero is complex and takes time to for reduction activities/targets to fully transpire to results. Both carbon neutrality certification and net-zero commitments are key to achieving the 1.5°C limit identified by the Paris Agreement.