Carbon Neutrality vs Net Zero

Friday 19th June 2020

As businesses continue to focus on reducing their greenhouse gas emissions, it’s vital to understand the terminology used around this topic. There can be ambiguity regarding some of the related technical language, and this can hamper efforts to improve environmental credentials. A common confusion is around ‘carbon neutral’ and ‘net zero’. These are often used interchangeably, but we wanted to explain our interpretation of the two concepts below.

For a business to be carbon neutral, in addition to lowering emissions as much as possible, it must be able to ensure – and prove – that the level of greenhouse gas emissions for which it is responsible is offset elsewhere. In other words, this means investing in offsetting projects which prevent an equivalent volume of greenhouse gas emissions entering the atmosphere as the business is directly responsible for. For example, a delivery business might ensure that the emissions made by its motorcycle couriers are effectively negated by investing in the purchase of energy saving devices elsewhere. Care must be taken that any investment is not resulting in additional energy use – renewable energy generation in an off-grid village must replace or reduce run time of a diesel generator, rather than add to it. If enough emissions are offset in this way, the business becomes carbon neutral – it has prevented as many greenhouse gas emissions as it has emitted.

Net zero, on the other hand, goes much further than this. To be net zero, a business must directly balance the greenhouse gases emitted into the atmosphere with those removed, or emit no carbon emissions at all. For most companies, net zero is best considered an aspirational target, as it is not currently realistic for all types of business, although this is an area of research which is advancing rapidly. Although just a decade ago a net zero business goal was unheard of, more and more companies are working towards achieving this. Most pledge to achieve net zero by 2030 (such as Sky), 2040 (such as Sainsbury’s) or 2050 (such as Nestlé). It is important to note that many of these companies have already been carbon neutral for several years. They are not moving towards the net zero target directly without the ‘stepping stone’ of carbon neutrality.

You might be wondering how it can be possible for a business to emit no greenhouse gas emissions at all. This has become possible in recent decades through significant advancements in carbon capture and storage technologies. In a nutshell, these techniques work to capture and prevent greenhouse gas emissions from entering the atmosphere, and therefore from contributing to climate change. Hence, any greenhouse gas emissions a net zero business produces is transported and safely stored underground. Carbon capture and storage technologies, when paired with extensive emissions reduction projects, can eventually allow even the largest businesses to become net zero. In fact, some ambitious companies aim to go even further – such as Microsoft’s recent pledge to be ‘carbon negative’ by 2030 – that is, removing more greenhouse gases from the atmosphere than it emits.

While becoming net zero or even carbon negative is possible – and is a great aspirational target – going ‘carbon neutral’ is a more realistic target for businesses in the short to medium term. The road to net zero is a challenging one, and your business must achieve carbon neutrality before it can look further. At E2 Services, we work alongside your business, designing a bespoke pathway to neutrality together. If you’d like to understand more about what becoming carbon neutral entails, get in touch with E2 today – our Compliance department will be delighted to help.