What is the Difference between Carbon Neutral and Net Zero?

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.

There are enough sustainability terms out there to make your head spin, so let’s run through a few quick definitions before we begin.

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.

Net zero (with reference to net zero commitment) means reducing 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.

But there’s more than carbon neutral and net zero to deal with. Here’s 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.

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!

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. So technically, a company could 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.

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.

It’s hard for a company to become completely net zero right now for a few reasons:

1. It’s not always easy to justify why your company’s residual emissions are truly “impossible” to reduce, and
2. 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.

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.

But even if every company went carbon neutral, it wouldn’t be enough to keep global temperatures below a 1.5° C increase.

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 where we all need to get to.

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).

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.

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 the activity 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.

So 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.

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 simple terms, the less likely we are to take action on them.

If reading this article about carbon neutral and net zero has made you interested in reducing your emissions further, it's time to talk to the Greenly team!

At Greenly, we don’t believe it’s the words you use that really matter. If you want to reduce carbon emissions, limit warming and leave a positive legacy for the planet, then your actions will speak louder than words.

Want help with your net zero carbon emissions? Talk to the team at Greenly. We’ve helped companies of all shapes and sizes to measure and reduce carbon footprint, and offset their emissions on their way to carbon neutral, net zero and beyond.