Breaking Down Decarbonization Buzzwords: Part 1
March 28, 2022
Has your company pledged to become carbon neutral, net zero, or climate positive? If so, you’re not alone. There’s an increase in sustainable business commitments from major corporations like CVS Health, Ford Motor Company, and American Airlines, to name a few. As more companies rise to the challenge and set decarbonization goals of their own, those who delay adoption will likely face mounting pressure from regulators, investors, and consumers.
As organizations define their decarbonization roadmaps, there are many terms being used across the industry for this transition. For those that are new to the space, not only are these terms unfamiliar, but often used interchangeably—despite key underlying differences. We’ll break down a few of the most common terms—carbon neutral, net zero, carbon negative, and climate positive—while providing clarity to actionable solutions that can address your organization’s sustainability goals.
Carbon Neutral vs. Net Zero
Organizations’ emission reduction goals are often rooted in one of two terms: carbon neutral or net zero. While many view these terms as synonyms, that’s not the case—and especially not for investors and sustainably driven stakeholders. We’ll break down what each means, how you can achieve one (or both), and what considerations to keep in mind.
If your organization is carbon neutral (also referred to as net zero carbon), that means your total carbon emissions released into the atmosphere from business activities (people, production, supplier, and vendor activity, etc.) must be offset or remove an equal amount of carbon (CO2) from the atmosphere.
But how is this accomplished? In many cases, this is achieved by simply purchasing carbon offsets or participating in carbon absorption projects such as sustainable reforestation. However, organizations often look to reduce their carbon footprint as much as possible prior to purchasing offsets—leveraging renewable energy, alternative fuel, and energy-saving practices. Once all reduction options are exhausted, then organizations may purchase the quantity of offsets needed to zero out (or balance) their carbon footprint.
Net Zero Emissions & Climate Neutral
Having net zero emissions (or being climate neutral) varies from carbon neutrality in one principal way: the type of emissions targeted. Organizations with a net zero emissions or climate neutral goal must remove an equal amount of total greenhouse gas emissions (not just carbon emissions) from the atmosphere to balance the total quantity they produce and emit.
You may be questioning, how will an organization handle this? In theory, no different than if you had carbon neutral goals. The primary change will lie in how many emissions you must reduce since we’re accounting for more than just carbon. As a result, you’ll often find organizations leaning more heavily on renewable energy and alternative fuels as well as using carbon offsets to counterbalance their remaining emissions footprint.
Where Should Your Organization Begin?
You may be like many other organizations—acknowledging change must happen, but uncertain of where to focus your efforts. In that case, calculating your company’s carbon footprint will enable you to better understand your impact and benchmark where you are today. What areas require improvement? What are the worst carbon indicators at your business today? Where have you already solved for emissions?
Being proactive in integrating sustainable practices throughout your organization will position you ahead: whether that’s going paperless, finding sustainably conscious vendors, educating employees on your recycling system, replacing outdated vehicles with alternative fuel models that support renewable natural gas, electric, or hydrogen technology, or purchasing carbon offsets and RECs (more on this below).
Carbon Negative vs. Climate Positive
Next, let’s dive into carbon negative and climate positive, but what’s the difference? Technically, there’s not one, and here’s why. Both terms share a common goal—to counteract the carbon footprint of a product, business, or means of production. Every activity an organization carries out has an associated emissions factor: a value that serves to quantify pollutants released into the atmosphere. From here, each emissions factor is compiled to generate an organization’s total emissions and carbon footprint.
As we noted above, a company becomes carbon neutral when they offset 100% of the carbon emitted from doing business. Conversely, to become carbon negative (or climate positive) an organization must remove more carbon from the atmosphere than they are responsible for producing. How is this accomplished? In many cases, through carbon offsets.
A carbon offset represents one metric tonne of carbon dioxide emissions that have been avoided or removed from the atmosphere—enabling organizations to solve for Scope emissions where direct carbon mitigation technologies do not yet exist. Often, carbon offsets themselves are tied back to reforestation projects for their ability to sequester high volumes of carbon from the atmosphere. These offsets are then purchased by organizations to satisfy their emission reduction, carbon neutral, or carbon negative goals.
For example, oil blenders, refiners, and end-users purchase carbon offsets to counterbalance cargo shipments or tailpipe emissions. Beyond the oil industry, organizations spanning sectors are using offsets to achieve carbon neutral products and services or to compensate for operational emissions—either in conjunction with alternative fuel and renewable energy use or as a standalone option.
SBTi’s: Understand Your GHG Emissions
Finally, there’s Science Based Target initiatives (SBTi’s). SBTi’s stand to motivate organizations in the private sector to fight climate change by adopting science-based emission reduction and net zero targets. SBTi’s encourage action in line with the 2015 Paris Agreement which calls to limit global warming to 2 (if not 1.5) degrees Celsius above preindustrial levels.
Stakeholders realize industry collaboration and climate commitments are essential to develop more funding for alternative fuel infrastructure, fuel supply, and renewable energy developments. By aligning consumer demand with the ability to produce volumes of fueling alternatives, the market can collectively move closer to net-zero. For companies looking for guidance and implementation strategies, SBTi’s Net-Zero Standard provides year-by-year guidelines on how to become net-zero by 2050.
Futureproof Your Business
Taking a proactive approach to your stainability goals is advantageous from a competitive standpoint. While the future of carbon taxation is still uncertain in terms of policy drivers and a timeline for adoption (depending on where you live), it’s inevitable. Key decision-makers should be thinking about what their competitors are doing to reduce emissions—acknowledging it’s imperative to be proactive in futureproofing your business.
In part 2 of this blog series, we’ll dive into best practices and solutions companies can leverage to stay ahead in this ever-evolving landscape. We’ll dive deeper into why many corporations are moving towards offsite power purchase agreements (PPAs) and virtual power purchase agreements (VPPAs) as well as how RECs can help meet sustainability goals.
Understanding what each of these concepts means for you, your business, and our planet is a strong step in the right direction. While many of these terms have been around for years, stakeholders are just starting to grasp the magnitude of what these actions (or lack thereof) really mean for society at large. For help transitioning your decarbonization roadmap from an initial plan to reality, reach out. Our team can help evaluate the landscape, identify solutions, and implement scalable alternatives.