A rising number of companies are publicly declaring their commitments to addressing climate change. Terms like “carbon neutral” or “net zero” are becoming increasingly prevalent, emphasizing the importance of understanding their nuanced distinctions.
While both terms share the overarching goal of mitigating the impact of greenhouse gas (GHG) emissions on the atmosphere, commonly known as carbon footprint, the methods and specific types of emissions targeted vary.
In essence, carbon neutrality serves as a commendable starting point for your mitigation journey, particularly when it is crafted to progressively diminish your carbon emissions. However, if you have access to well-defined and cost-effective mitigation technologies capable of efficiently decarbonizing your carbon footprint, committing to net zero targets emerges as the optimal choice. This commitment aligns seamlessly with the Paris Agreement, ensuring the decarbonization of your emissions and the permanent removal of residual emissions from the atmosphere no later than the year 2050.
What does "carbon neutral" mean?
The term refers to achieving a balance between the carbon emitted into the atmosphere and the amount absorbed by carbon reservoirs. Various methodologies exist to certify companies and products as carbon neutral, with PAS 2060 being the most recognized methodology outlining the necessary steps for achieving carbon neutrality:
- Quantify your carbon footprint: Start by assessing the total amount of carbon emissions your activities generate.
- Reduce it: Implement measures to minimize your carbon footprint through energy efficiency, sustainable practices, and other eco-friendly initiatives.
- Offset residual emissions: Compensate for any remaining emissions by investing in carbon avoidance or removal projects.
PAS 2060 offers flexibility by allowing the exclusion of scope 3 emissions (commonly known as value chain emissions). Importantly, it doesn’t specify a fixed reduction target, theoretically enabling companies to claim carbon neutrality without significantly reducing their carbon footprint. This flexibility enables companies to offset up to 100% of their carbon emissions annually by supporting external carbon projects, fostering substantial investments in otherwise challenging renewable energy, energy efficiency, and other low-carbon technologies.
While technically a company can be recognized as carbon neutral without reducing its carbon footprint, companies must prioritize emission reduction. Failing to do so poses considerable reputational risks. Striving for genuine carbon neutrality, achieved through a combination of reduction efforts and the use of good-quality carbon credits, ensures a more sustainable and responsible environmental stance.
What does net zero mean?
The term net zero refers to reducing GHG emissions as close to zero as possible and reabsorbing or sequestering the remaining non-abated emissions from the atmosphere through carbon removals, such as reforestation, afforestation, and carbon capture projects.
These non-abated emissions, also called residual emissions, correspond to a marginal number of emissions (between 5-10% of total emissions) that cannot be abated by direct mitigation mechanisms, such as energy efficiency or the use of renewable energy.
The gold standard net zero framework is the Science Based Targets Initiative, a partnership between CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). Just like carbon neutral, the key steps to achieve a net zero status are to quantify and reduce carbon emissions and offset non-abated emissions. However, the similarities end there.
What are the main differences between carbon neutral and net zero?
- Carbon neutral is not in line with the Paris Agreement. Net zero is as it requires setting short- and long-range targets, aiming to achieve a minimum 50% reduction in emissions by 2030 and complete decarbonization by 2050.
- Carbon neutral allows unlimited use of carbon credits. Net zero only allows carbon credits to neutralize emissions that cannot be abated, which should be around 5-10% of initial emissions.
- Both require different types of carbon credits. Carbon neutral allows carbon avoidance offsets and carbon removals, whereas net zero only accepts carbon removals, which are considerably more expensive.
- Carbon neutral is easier to achieve, and if used well can have significant impacts in the fight against climate change. Net zero presents more difficulties in its implementation, it is designed and structured to decarbonize companies’ own operations and value chain.
What are carbon credits?
Carbon credit is the avoidance or removal of greenhouse gas (GHG) emissions from the atmosphere, that is used to neutralize emissions occurring elsewhere. In essence, it’s a way for individuals, businesses, or organizations to balance out their carbon footprint by investing in projects that reduce or remove an equivalent amount of greenhouse gases from the atmosphere.
To compensate for their emissions, a company invests in projects that either avoid greenhouse gas emissions (e.g., renewable energy projects, energy efficiency initiatives) or remove carbon from the atmosphere (e.g., reforestation, planting new forests, carbon capture projects, etc.).
The emissions avoided or removed through these projects are then counted as “carbon credits.” Companies can claim these credits as a way of indirectly mitigating their carbon footprint. Each carbon credit represents 1 metric ton of carbon dioxide avoided or removed.
Carbon removal credits are both scarce and costly, given that the development of such projects demands significant time and resources. Nevertheless, these initiatives play a crucial role in capturing and sequestering greenhouse gases (GHGs) from the atmosphere. This process is vital for diminishing the concentration of these gases, ultimately helping to avert the most severe consequences of climate change.
i. Carbon removal projects can be either technological or natural. Let’s review some of them:
a) Technological
Direct Air Capture (DAC): This technology involves capturing CO2 directly from the air using specialized devices. The captured carbon can then be stored underground or utilized for other purposes.
Carbon Capture and Storage (CCS): This involves capturing CO2 emissions from industrial processes or power plants before they are released into the atmosphere and then storing the captured carbon underground to prevent it from entering the air.
b) Natural
Afforestation and Reforestation: Planting new forests (afforestation) or restoring existing ones (reforestation) helps absorb CO2 from the atmosphere as trees undergo photosynthesis. It includes mangroves and agricultural projects.
Enhanced Weathering: Accelerating natural weathering processes, such as spreading minerals on land, can help capture and store CO2 over time.
Ocean-based Solutions: Certain approaches involve enhancing the ocean’s capacity to absorb CO2, such as ocean afforestation or using algae to capture carbon.
ii. Carbon avoidance credits, also known as carbon offsets, are typically generated by projects or activities that prevent or reduce the release of GHGs into the atmosphere. Carbon avoidance credits can be generated from various types of projects, such as the development of renewable energy sources (solar, wind, hydro), methane capture from landfills, fuel switching, efficient cookstoves, forestry and land use (i.e. forest management, land use optimization, agroforestry practices, etc.), and improvements in industrial processes to reduce emissions.
Feel free to reach out to us for further details.
At Vim Aeris, our portfolio encompasses both removal and avoidance projects. Our team of dedicated experts ensures the projects meet the highest standards.