The Difference Between Carbon Neutral and Net Zero
The Difference Between Carbon Neutral and Net Zero
Carbon neutral and net zero are both terms that have been thrown around a lot in recent years. But what do they really mean? Let’s get practical here.
Carbon Neutral
- A business measures it’s emissions and works out its total carbon footprint.
- It then usually goes through an online check out with a provider and buys offsets that come from projects that claim to capture or avoid emissions.
- 1 offset is purchased for every tonne of carbon the business emits (as set out in that footprint).
- They pay for the offset.
- The business is now ‘carbon neutral’.
- Emissions do not have to go down each year to reach or stay carbon neutral.
- The Australian government’s Climate Active program is an example of certifying businesses as carbon neutral. For further context, you can search for any carbon neutral brand here. You can then click ‘View Profile’ and select ‘Download Public Disclosure Statement’
- Scroll to the Offsets summary to see what offsets the business has purchased in order to make a Carbon Neutral claim. In the example below an electricity and gas retailer is a carbon neutral organisation because it has calculated its footprint and purchased offsets from a ceramic water purification project in Cambodia, a Landfill gas project and a cookstove project in Peru.
Net zero
Ok, strap in. First, there is no online checkout in exchange for a Net Zero badge.
Less upfront glitz and glamour, more deep considered work to transform…everything.
To stay below 2 degrees per the Paris Agreement (where nearly every nation agreed to do that), industries have to actually reduce emissions.
What does this look like in practice for businesses:
- The business completes a baseline emissions assessment (the starting point)
- It drills down on what activities within the business are generating emissions based your emissions, understand what activities are causing them, and you actually reduce them. e.g. Your emissions came from burning the petrol in your car, you’ve made the switch to EV, now you emit lower emissions as you’re not burning the petrol every time you drive. Yes, the EV it self created emissions and the electricity you purchase might still be from fossil fuels (or from renewable energy if you can!), so you’re not net zero yet. The manufacturer will need to get to net zero with more sustainable materials and practices, and the mine they get the material from does too. And so on.
Net zero isn’t an overnight transaction, it requires a monumental shift in the way we all do business. It's not enough for businesses to just buy offsets to state that they are carbon neutral. The emphasis is shifting towards net zero, because we need to see actual reduction. Most countries and industries have set a net zero goal within the next 30 years. In order to do that, businesses need to engage with their supply chain to understand the source of their emissions and take steps to reduce them.
While it is possible for businesses to buy offsets to become carbon neutral, we always advise them to ask themselves if they have done everything they can to reduce emissions before resorting to offsets. This includes looking at opportunities to invest in emission reduction activities, such as trading in a petrol vehicle for an electric one. Ultimately, the goal should be emission reduction year on year, rather than just buying offsets for a carbon neutral logo.
As the world moves beyond carbon neutrality to focus on true reduction, it is important for businesses to educate themselves on this changing landscape and the business risks associated with ignoring it. At Sumday, we're committed to helping businesses understand the difference between carbon neutrality and net zero, and to take meaningful steps towards a more sustainable future.