Net Zero vs. Carbon Neutral

Net zero (short for net-zero emissions) means that a company or individual achieves a balance between the greenhouse gases they put into the atmosphere and those they take out.

Imagine you have an empty sink. You can turn the taps on to add water and pull the plug to allow water to flow out. The amount of water in your sink depends on how much water you allow to run through the taps and how much to let out through the plughole. To keep the amount of water in the sink at the same level, you need to ensure that the input and output remain balanced.

Reaching net zero follows the same principle, requiring companies to balance the amount of greenhouse gases they emit with the amount they remove. 
When what we add to the atmosphere is no more than what we take away, we reach net zero. Reaching net zero is also referred to as carbon neutral. Zero emissions and zero carbon are somewhat different, as the latter usually means that no emissions have been produced in the first place.

Five actions that help companies reach net-zero 

1. Scope emissions sources — Accurately and thoroughly scoping details emissions sources is key to providing your organization with the structure to successfully measure, report, analyze, and reduce emissions down the road. Additionally, scoping GHG's will help a company identify a common framework for carbon strategy and accounting and connect this to an organization’s business objectives in the process.

2. Establish emissions baselines — Baseline definitions are a snapshot of a company’s GHG emissions from a specific moment in time. Building emissions baselines make it a lot easier to view and analyze historical emissions. Additionally, they’ll help your organization grasp future trajectories and serve as a reference point to evaluate decarbonization projects and business decisions against. 
Finally, defining your baseline carbon will assist in peer benchmarking and is an integral part of many climate risk disclosure frameworks for reporting. 

3. Assess mitigation and adaptation options — Our second suggested action is to organize and compare emissions reduction opportunities that exist in your corporation and connected supply chain. 

This will help a company compare and contrast marginal abatement costs of mitigation options across multiple business units while helping to identify the most cost-effective opportunities for adaptation. 

It’s possible to generate automatic Marginal Abatement Cost Curves (MAC Curves) and Levelized Cost Curves that are accessible and user-friendly to help a company analyze emissions reductions costs, quickly and easily.

4. Set an internal carbon price — Setting an internal carbon price means putting a monetary amount on the carbon emissions a company produces. The cost can be calculated based on the environmental impact of the company’s GHG emissions and any low-carbon energy solutions that are utilized, among other indicators. 

Putting a price tag on a company’s carbon is a powerful and efficient way of incorporating climate risks into the cost of doing business as well as identifying opportunities and organizing decarbonization budgets.

In several countries, emitting carbon is now much more costly as a result of carbon pricing. Emerging technologies and products help corporations and individuals calculate, monitor, price, and achieve their CO2 reduction goals. Internal carbon pricing is key to not only mitigate risk but successfully budget for net-zero.

5. Commit to a science-based initiative — Lastly, companies may be assisted in reaching net zero faster by committing to ambitious targets set by an external, science-based initiative. 

The STBi’s Ambitious Corporate Climate Action is just one of many respected initiatives companies are getting involved in. Science-based initiatives bring together a growing collective of energy-smart businesses with ambitious targets in transitioning to a low-carbon economy.

Additionally, many initiatives generate shared natural climate solutions across the supply chains in specific business sectors by bringing companies together, focusing on the energy, agricultural, and transport industries. These types of initiatives give businesses greater access to resources and communities that can help them develop new low-carbon pathways.

Consider aligning CO2 reduction targets with the goals of the Paris Agreement by striving for net-zero emissions by 2050 at the latest.

Science-based CO2 reduction targets are considered the gold standard for corporations setting emissions reduction goals, both within their direct operations and across their supply chains. 

Companies can now set targets in line with the decarbonization level required to limit global warming to 1.5°C. These targets are ambitious, but they are achievable and are vital in reaching net-zero emissions by 2050.