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As ESG reporting is becoming increasingly widespread across all industries and countries, terms like ‘net-zero’ and ‘carbon-neutral’ are often cited without clear definitions of what these actually mean. So what is the difference between net-zero and carbon-neutral?
Net-zero and carbon-neutral are used interchangeably to describe the target states organisations have become, or aim to become, in the race to minimise the impacts of climate change. They’re also used alongside terms like ‘net-zero economy’, ‘net-negative emissions’, or ‘climate positive’, making it even more confusing.
The key point when discussing any emission status is, regardless of the term used to describe that single state, that the transparency associated with it is the most important thing. While most organisations are using these terms as part of a journey they’re on, it’s important that we can distinguish between strong and genuine pledges and weak or washy pledges which are nothing more than a marketing ploy (often referred to as greenwashing in this sense).
So what does carbon neutral mean?
Carbon neutrality is defined as the balance between emitting carbon and absorbing carbon from the atmosphere in carbon sinks. Ultimately any emissions output are cancelled out by removing or avoiding emissions elsewhere.
In practice that means that organisations should reduce their emissions as much as possible, and then they can offset carbon emissions through credible carbon offsetting schemes such as Gold Standard offsets.
Therefore, to become carbon neutral a company must first have measured emissions so it knows its total impact, put an action plan in place to reduce this in line with a reduction pathway, and then any unavoidable emissions can be offset.
For a credible claim for carbon neutrality, the reduction plan is vital.
And what does net-zero mean?
Net-zero is similar, in the sense that it aims for a state of completely balanced emissions, but differs in the way it aims to nullify carbon dioxide. In a net-zero state, any unavoidable emissions that are still emitted must be actively removed through carbon removal technologies.
So, what's the difference between carbon neutral and net-zero?
To make it even more confusing, both are states of zero carbon dioxide emissions overall.
The real difference can be explained by saying that carbon neutrality means that you are allowed to compensate for your emissions (typically by using offsets), whereas net-zero means you have to actually reduce the amount of carbon dioxide in the global system.
Broadly speaking, just claiming carbon neutrality is not enough. That’s why when we work on a project with a client we are insistent on setting carbon reduction targets and goals, and tracking these year on year.
With carbon neutrality not being enough for long-term emission targets, and net-zero often relying on a transitions which are out of the direct control of a company, each company should aim for a net-zero consistent state.
To get there, it means measuring a base-year of Scope 1-3 emissions, reducing Scope 1 and 2 emissions to zero, and reducing Scope 3 emissions by a minimum of 50% by a set-end date (ideally 2030). Then, using passive reductions across the value chain to reach a full net-zero state by 2050, in line with domestic and international climate targets (Paris Agreement consistent).
From 2030 onwards, any emissions from a company should be actively removed, rather than simply offset.
What do climate positive and climate negative mean?
Climate positive means that rather than simply offsetting or removing to net-zero or to carbon neutrality, you can go beyond this. For example, if my impact as a company is 100tCO2e, I would over-compensate and offset 150tCO2e to become “climate positive”.
Confusingly this is the same definition used for climate negative. It is more of a marketing term than meaning anything concrete.
Should my company aim to be carbon-neutral or net-zero?
To summarise those steps, most companies moving towards net-zero will go through each state: carbon-neutral, net-zero consistent, and eventually net-zero, because of the very nature of short and long-term climate targets.
- You should start by measuring your impact and understanding where your emission hotspots are to begin immediately reducing your carbon impact. You can offset this impact to become a carbon-neutral company.
- By implementing short-term targets and measuring this year on year, you’ll be net-zero consistent which will be in line with science-based targets.
- By 2030, passive emission reductions will take the company towards net-zero by mid-century. To be a net-zero company from this date, you must remove any emissions to reach a state of net-zero.
Alectro's Virtual Sustainability Officer® provides the tools you need to measure and track your impact in days, not months, giving you total transparency on your impact, ready to use in any reporting required. The platform will help you to create and track your journey as you move from carbon-neutral to net-zero over the coming decade.
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