Carbon Neutral and Net Zero; What's the Difference?

‘Carbon Neutral’ and ‘Net Zero’ are often used interchangeably. Understanding the difference is key to sustainability communications.
Posted by
James Parker
on
March 21, 2022

What's the difference between Carbon Neutral and Net Zero?

‘Carbon Neutral’ and ‘Net Zero’ are often used interchangeably when talking about sustainability credentials. Yet, despite the apparent similarity of the terms, they actually refer to two different concepts. Many large businesses have in fact been criticised for ‘greenwashing’ by using the terms incorrectly. Therefore, it’s essential that organisations understand the distinction. 

Here's a brief explanation of each concept to help form your initial understanding, before we take a deep-dive into the finer details:

Carbon Neutral - balancing carbon emissions released into the atmosphere, by relying on offsetting an equivalent amount of carbon.

Net Zero - involves making active changes to reduce greenhouse gas (GHG) emissions to the lowest possible amount, and then using carbon removal schemes to balance the remaining emissions produced by the organisation. 

Carbon Neutral

Carbon neutrality is a state where the emissions produced by an organisation are balanced by offsetting or removing an equivalent amount of carbon. 

The mechanism used for carbon offsetting is through ‘carbon credits’. Put simply, these credits help cancel out the release of carbon emissions by businesses, via the funding of various carbon-reduction initiatives; just like the portfolio of high-calibre projects Minimum partners with.

In summary, if an organisation wants to reach Carbon Neutrality it will need to ensure that if carbon emissions increase, investment into carbon offsetting schemes increases simultaneously.  It’s important to note that whilst Carbon Neutrality is achieved mainly by offsetting, the internationally recognised specification for Carbon Neutrality - PAS 2060 - does require organisations to present a roadmap for GHG emissions reductions. 

Net Zero

Net Zero, on the other hand, requires an organisation to make active changes to reduce its GHG emissions to the lowest possible level, whilst utilising carbon removal schemes to balance the remaining emissions produced. In fact, an organisation can only claim to be Net Zero once there have been significant reductions in the carbon footprint - roughly 90%. This is in contrast to Carbon Neutrality which relies mostly on offsetting schemes.

Some examples of reduction initiative examples are outlined below:

  1. Improved energy efficiency — reduced demand and consumption of energy
  2. Cleaning up your supply chain — working with sustainable suppliers wherever possible
  3. Influencing consumer choice — resulting in less demand for carbon-intensive activities
  4. Transport & heating electrification — supported by renewable power generation 

Adhering to the Greenhouse Gas Protocol carbon accounting framework, Net Zero must include emissions across Scope’s 1, 2 and 3, whereas a Carbon Neutral certification only needs to cover Scope 1 and 2 (although Scope 3 is encouraged). 

Furthermore, Net Zero requires a consistent and deliberate climate strategy, including a short-term, Science-Based Target. In-depth analysis and monitoring of organisations’ GHG emissions is fundamental to the road to Net Zero. 

Summary

It’s essential that organisations better understand both Carbon Neutrality and Net Zero concepts and get to grips with the specifics of each, before committing to any actions or promoting achievements. As mentioned at the beginning of this piece, large businesses are often criticised for ‘greenwashing’, as they present a more environmentally friendly corporate image than the reality of their actions, misleading investors, consumers and other key stakeholders. Understanding the core elements of Carbon Neutrality and Net Zero emissions, as well as their differences, helps to avoid confusion.

Offsetting shouldn’t be a one-stop-shop for climate action or be used to legitimise an uncapped amount of carbon emissions, however, it is evident that carbon offsetting initiatives remain vital to both Carbon Neutrality and Net Zero strategies.

Comprehensive analysis of carbon and GHG emissions is fundamental for both Net Zero reduction strategies and Carbon Neutral commitments. Minimum is a technology platform that supports you in fully understanding your carbon accounting and management, developing offsetting strategies and driving your organisation towards meeting its climate goals. 

Next Steps for your Organisation

  • Now knowing the distinction between Carbon Neutral and Net Zero, which is most appropriate for your organisation? 
  • Could you combine them both to be Carbon Neutral now and then commit to being Net Zero once you’ve significantly reduced your carbon footprint?
  • If Net Zero is your company’s goal, are there specific emissions reduction initiatives most feasible within your financial budget?
  • Familiarity with your GHG emissions, Scopes 1, 2 and 3 is essential for both Carbon Neutrality and Net Zero.

Minimum offers the best-in-class automated sustainability solutions. Book a call today to kick-start your Net Zero or Carbon Neutral planning.

Appendix: Offsetting Strategies for Carbon Neutral and Net Zero

The difference between what's needed for Carbon Neutrality and Net Zero in terms of offsetting is detailed in the diagram below:


Sources:

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