The Carbon Border Adjustment Mechanism (CBAM)
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In this article we’ll explore what the CBAM is, why it’s been created, and what importers need to know ahead of its introduction.
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What is the Difference between Carbon Neutral and Net Zero?
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In 2019, Amazon announced they’d be net zero carbon by 2040. In 2020, Microsoft claimed they’d be carbon negative by 2030. Later that year, Apple declared that it would be carbon neutral for supply chain and products by 2030.
But what is the difference between net zero and carbon neutral?
When everyone uses different words to describe their climate goals, it’s hard to understand who is doing what.
Even though terms like net zero and carbon neutral might have similar meanings, the small differences between them, when considered at scale (especially on the level of world leaders like Apple and Amazon), can mean a very different impact on global warming – and a very different environmental benefit.
👉 In this article, we'll explain the difference between carbon neutral vs net zero, the role of carbon offsets and carbon offsetting, and which of these emissions reduction strategies is most effective.
First: Let’s break it down
There are enough sustainability terms out there to make your head spin, so let’s run through a few quick definitions before we begin.
What is carbon neutral?
The term carbon neutral refers to an activity or a company which offsets the same amount of carbon or greenhouse gases that they emit. Carbon neutral means that emissions produced and offset are equivalent. On its own, it won’t keep the world under the 1.5°C target, set by the 2015 Paris Agreement.
💡 It is important to note that working towards carbon neutrality usually only focuses on reducing carbon emission as opposed to all other greenhouse gas emissions.
What is net zero carbon?
Net zero (with reference to net zero commitment) means implementing net zero strategies to reudce all greenhouse gas emissions as much as humanly possible, and offsetting only the essential emissions that remain. Net zero GHG emissions are designed to keep us on track for a global temperature rise of less than 1.5°C – which is in line with pre-industrial levels.
“ Net zero carbon or carbon net zero or zero carbon means reducing carbon credits emissions as much as humanly possible, and offsetting only the essential emissions that remain. ”
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But there’s more than carbon neutral and net zero to deal with. Here are a few other terms that can be helpful to understand.
Carbon negative and climate positive means that a company or an activity achieves carbon neutrality and more — basically, they remove more carbon from the atmosphere than they emit in the first place. In other words: removing additional carbon dioxide. Essentially, this is one step up from neutral, or "zero".
💡 In order to achieve these intense net zero targets, companies usually must purchase carbon credits, invest in renewable energy projects, and implement carbon capture and storage systems.
“ Carbon capture and storage systems work to remove and sequester carbon emitted into the atmosphere and can help to reduce the current levels of air pollution. However, this should prohibit companies from implementing strategies to reduce their emissions directly. ”
Climate neutral means reducing all greenhouse gases emissions as much as possible and offsetting the essentials (i.e., net zero), while also making sure an organization or activity is not contributing to any other negative impacts on the environment – such as the use of fossil fuels or causing harm to carbon sinks.
It’s a holistic approach to going green that also considers environmental factors like water, waste, and so on. It’s also the most ambitious approach to reducing greenhouse gases emitted and to achieve net zero carbon emissions emissions – but don’t let that stop you from trying!
What does it mean to become carbon neutral?
To achieve carbon neutrality, all a company technically has to do is not increase their carbon emissions, and then purchase carbon offsets to balance the emissions they produce. Although carbon neutral certification (PAS 2060) does specify that your company must make reduction targets, it doesn’t specify by how much (making this standard fairly ineffective).
In practice, most companies will work towards this goal by first cutting down on unnecessary emissions to reduce their carbon footprint, and then offsetting what’s left. But carbon neutral as a concept only requires that you offset an equal amount of carbon to that which you produce. Therefore, a company could technically not even try to reduce their green house gas emissions, pay for the equivalent amount in offsets, and call themselves neutral.
That’s better than doing nothing at all, but that kind of approach is not what will help keep us on track to limit global warming by 1.5° C — which is why COP26 focused so strongly on achieving net zero on a global scale.
What does it mean to reach net zero emissions?
Net zero is frequently used to describe a state of human existence whereby we are emitting no new greenhouse gasses into the atmosphere.
To do this, net zero requires that we eliminate virtually all emissions produced to the point of almost zero, and then purchase carbon removal credits to offset only the very essential, hard-to-decarbonize emissions reductions that remain.
“ That’s the bigger picture, but individual companies can reach net zero too, although we usually refer to this as carbon net zero or net zero carbon, because most companies will focus solely on their carbon emissions. ”
It’s hard for a company to become completely net zero right now for a few reasons:
- It’s not always easy to justify why your company’s residual emissions are truly “impossible” to reduce, and
- The type of offsets required to go net zero (carbon removals as opposed to carbon reduction offsets) aren’t widely available.
This doesn’t mean that you shouldn’t think about achieving net zero emissions — every company should. However, it's important to note that net-zero is a long-term goal that will take years or even decades. In the meantime, combating climate change by going carbon neutral is a great starting goal, and it’s currently much easier for companies to achieve.
What is the key difference between carbon neutral and net zero?
It’s helpful to think about the differences between carbon neutral and net zero as belonging to three key categories.
Carbon neutral and net zero have different scopes
Because there’s no particular level of emissions reductions you must reach, going carbon neutral still means you can produce significant emissions.
Carbon neutral only covers greenhouse gas emissions Scopes 1 and 2 (your company’s direct emissions), and it can refer to individual products and activities, or to your company as a whole. In short, carbon neutrality is a goal that you can achieve in the short-term, and it’s a great place to start.
💡Remember, the categories for different types of emissions, or "scopes" was developed by the Greenhouse Gas Protocol as an effort to help companies better understand how to reduce emissions, combat climate change, and develop more sustainable practices.
However, it important to note that even if every company went carbon neutral – it wouldn’t be enough to keep global temperatures below a 1.5° C increase.
“ A net zero label means you’ve done everything in your power and have used all available technologies to cut your emissions as close to zero as possible, before needing to offset the rest. Net zero covers emission scopes 1, 2 and 3. ”
Scope 3 includes your company’s entire value chain, from supplies purchased to your products’ end of life treatment, which is a much larger undertaking to calculate. Scope 3 emissions are sometimes referred to as value chain emissions, and can often be the key to helping a company achieve net zero emissions.
This means net zero is more likely to be a long-term goal, and it refers to the activity of your company as a whole. To keep global temperature rises under 1.5°, net zero is what we all need to work towards.
Carbon neutral and net zero have unique standards and certifications
There are different international standards and certifications for achieving carbon neutral and net zero.
PAS 2060
You can be certified carbon neutral if you adhere to the standards outlined by PAS 2060. This certification is the international standard for carbon neutrality. To qualify as carbon neutral, companies need to do three things:
- Measure their total carbon emissions.
- Set targets for reducing emissions (unfortunately, this is entirely up to the company, so this becomes essentially an ineffective standard).
- Purchase carbon reduction credits (like wind or solar farms) equivalent to the total of their emissions.
Currently, you can become PAS 2060 certified through organizations such as Control Union, Carbon Trust, and NQA.
SBTi Net-Zero Standard
Meanwhile, in October of 2021 (just in time for COP26), the SBTi released their Net-Zero Standard, designed to help companies set science-based targets to reach net zero. This standard (Science Based Targets initiative) has four key requirements:
- A focus on fast, extensive emission reductions. Most companies will need to cut 90-95% of emissions to qualify for this requirement.
- Setting short-term and long-term science-based targets. In practice, this means cutting emissions quickly in the short-term, cutting them by 50% by 2030, and producing virtually no emissions (and neutralizing the rest) by 2050.
- Not claiming to be net-zero until long-term targets have been achieved (90-95% carbon reductions and removal offsets on remaining emissions).
- Making additional climate change investments. Outside of their own operations, companies should look to fund climate change projects elsewhere (after first cutting and offsetting their own emissions).
Carbon neutral and net zero require different kinds of offsets
Going carbon neutral requires that you balance your emissions with an equivalent amount of offsets, but these offsets can simply be carbon reduction offsets.
Carbon reduction offsets include projects like wind farms and solar generation. These types of projects help to cut down on the total amount of carbon dioxide that is released into the atmosphere, now, and in the future.
These projects are great for the environment, but they don’t actually remove the carbon that’s already in the atmosphere, and as such, these offsets alone can’t get us to our less-than-1.5° C target. They’re also generally much cheaper than the carbon removal credits required for net zero.
On the other hand, net zero offsets must be carbon removal offsets, meaning that carbon that is currently in the atmosphere is actually extracted out – mainly thanks to carbon sinks. Because of the newness of carbon removal technology (like direct air capture and enhanced mineralization) and the time it takes for established forestry projects to be ready to be used for carbon removal (10+ years), these kinds of offsets are much more expensive, and not easily available.
They can also be up to ten times more expensive than carbon reduction credits.
Differences between Carbon Neutral and Net Zero
| Aspect | Carbon Neutral | Net Zero |
|---|---|---|
| Definition | Achieving a balance between emitting carbon and absorbing carbon from the atmosphere in carbon sinks. Typically involves offsetting emissions by investing in carbon reduction projects. | Reducing carbon emissions to as close to zero as possible and offsetting any remaining emissions. Focuses on reducing emissions through changes in processes and energy use. |
| Approach | Often relies on purchasing carbon credits to offset emissions that cannot be eliminated. | Prioritizes actual reductions in emissions before considering offsets, aiming for minimal reliance on offsets. |
| Scope | Can be applied to specific activities, products, or the entire organization. | Generally applied to the entire organization or country, encompassing all operations and activities. |
| Long-term Goal | Maintaining a balance of emissions through continuous offsetting. | Achieving a state where no net emissions are produced, focusing on sustainable practices and renewable energy use. |
| Measurement | Often measured on an annual basis, with regular offsetting required to maintain neutrality. | Measured as a reduction trajectory over time, aiming for absolute zero emissions as much as possible. |
| Example Actions | Investing in reforestation projects, purchasing carbon offsets, improving energy efficiency. | Implementing renewable energy solutions, transforming production processes, enhancing energy efficiency, and then offsetting remaining emissions. |
| Certification | Carbon neutral certifications are available from various organizations and often involve demonstrating offset purchases. | Net zero certifications require comprehensive emission reductions and are more stringent in terms of allowable offsets. |
Should you aim for carbon neutral or net zero?
Aiming for carbon neutrality is a great start, and if you approach it with the mindset of first reducing carbon emissions as much as possible before you start offsetting, then it’s essentially the same thing as going net zero emissions.
“ Net zero, though, became increasingly popular terminology after COP26, and it aligns with the global goal of keeping temperature rises under 1.5°C. It refers to a state of human existence that we may one day reach, rather than an effort accomplish on behalf of a single company. ”
It’s also (unlike carbon neutrality) focused on reducing emissions as much as humanly possible (typically 90-95%), and only turning to offsets to mitigate the small amount of carbon that simply can’t be avoided.
Therefore, if you’re making environmental changes where you work, we recommend thinking in terms of net zero rather than carbon neutral. Carbon neutral is the most achievable goal for now, so it can be a great stepping stone on the way to net zero goals. Either way, though, if you’re aiming for one of those, you’ll still be doing a whole lot better than most.
How should we move forward with carbon neutral and net zero?
Climate terminology is confusing, and that’s a major problem – as it can provoke greenwashing and other misunderstandings to customers and investors. It's difficult to understand what carbon neutral means, and the overall difference between carbon neutrality, climate positive, and achieving net-zero.
Therefore, makes it difficult for companies to understand clearly what must be done to reduce their carbon dioxide emissions and overall carbon footprint.
The less we understand relatively basic terms such as carbon neutral and net zero, the less likely we are to act on them – remember, knowledge is power!
What About Greenly?
If reading this article about carbon neutral and net zero has made you interested in reducing your emissions further, Greenly can help you!
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. We offer a free demo for you to better understand our platform and all that it has to offer – including assistance with boosting supplier engagement, personalized assistance, and new ways to involve your employees.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
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