Carbon Neutral vs Net Zero - Understanding the Difference

What is the difference between carbon neutral and net zero?
March 29, 2022

What is the difference between carbon neutral and net zero? 

Carbon neutral and net zero. These two terms are seemingly used interchangeably, and you’d be forgiven for thinking that they mean the same thing. However, there are some significant differences between the two. While both terms refer to the same goal of tackling climate change through the reduction of harmful environmental emissions, the scale and type of these emissions are entirely different, as well as the methods of reduction.

What is carbon neutrality?

“Making or resulting in no net release of carbon dioxide into the atmosphere, especially as a result of carbon offsetting.”

In the simplest terms, this means a business or individual is removing the equivalent amount of carbon dioxide from the environment as their daily actions emit. 

The PAS 2060 is the recognised international standard for carbon neutrality, and a business can seek certification through bodies such as The Carbon Trust and NQA.

To meet these guidelines, a company must offset the equivalent amount of CO2 as their manufacturing, packaging, delivery, storage, and waste produces (known as Scopes 1 and 2). 

This might mean that they are making simple changes in their business practices, such as changing their packaging or moving to electric vehicles, but many carbon neutral companies will offset the majority of their carbon footprint through certified CO2 reduction projects. 

There are two types of offsets that a carbon neutral business can utilise:

1. Carbon Removal Offsets 

These projects actively pull or absorb greenhouse gasses out of the atmosphere through methods like carbon sinks or direct air capture. These projects include:

  • Soil carbon sequestration: Storing captured carbon in the soil
  • Biochar: Creating charcoal and burying it or ploughing it into fields
  • Bioenergy: Capturing and sequestering carbon emissions from biofuels and bioenergy plants
  • Enhanced mineralisation: Crushed rocks are spread over the land to absorb emissions
  • Direct Air Capture (DAC): Specialised machinery sucks carbon out of the atmosphere and stores it in geological formations underground
  • Ocean-based Methods: Adding alkaline substances to seawater to enhance the ocean’s natural CO2 absorption ability or using new technology to pump up the cooler, nutrient-rich waters from the deep to stimulate phytoplankton (a type of algae) activity and draw down carbon dioxide.

Removal offsets are easier to track, calculate and record but more challenging to implement as the technology needed to remove carbon is still very new and expensive, costing between  $100 to $300 to remove a tonne of carbon. However, by supporting carbon removal offsets, it’s possible to permanently remove carbon from the atmosphere and reduce atmospheric carbon dioxide levels.

2. Carbon Avoidance Offsets 

These are projects that reduce emissions by preventing their release into the atmosphere. This could be through green energy projects that reduce our reliance on fossil fuels, such as solar or wind, or projects that prevent deforestation. Other methods could include the following:

  • Methane Capture: Methane can be captured and used as a relatively clean energy source for generating electricity or heat instead of it seeping into the atmosphere
  • Wind Farms: Installing wind turbines to avoid fossil-fuel energy production and creating jobs and opportunities for the wind energy sector
  • Hydropower: Avoids the use of costly and unreliable diesel-fired generators.
  • Biomass Residues: Avoiding health damage from local air pollution by fossil fuel plants in the area, providing access to clean electricity and increasing local farmer incomes.

Carbon avoidance is more difficult to quantify as it involves complicated calculations to determine the true amount of reduced (or avoided) emissions from each project, but there are many benefits to this type of action. These types of offsets promote renewable energy and energy efficiency, cutting carbon emissions at their source.

What is net zero?

“A target of completely negating the amount of greenhouse gasses produced by human activity, to be achieved by reducing emissions and implementing methods of absorbing carbon dioxide from the atmosphere.”

While, in principle, net zero is similar to carbon neutrality, it’s on a much larger scale. Achieving net zero goes beyond offsetting and reducing carbon emissions and refers to eliminating or offsetting all greenhouse gasses that a business produces, including methane, nitrous oxide and other hydrofluorocarbons.

While guidance varies across different industries, most companies must achieve a 90% reduction in scope 1,2 and 3 to be classed as Net Zero.

To achieve a 90% reduction in emissions, a company must take direct action on both direct and indirect emissions. This means reducing their emission output and ensuring that they’re working with the broader business to reduce emissions as a whole. They must act and make significant changes to their own company, from manufacturing, their vehicle fleet, employee travel, and waste disposal down to the lightbulbs in their offices and the utility company they use. 

For the 10% of unavoidable carbon emissions (such as flights for business meetings that can’t be met in a more sustainable way), a net zero company can only offset its emissions through active carbon removal projects.

What are scope 1 emissions?

Scope 1 emissions are direct emissions from a company’s own sources. This includes on-site energy such as natural gas, fuel, refrigerants and emissions from fleet vehicles. Scope 1 also includes emissions that are released during on-site manufacturing from factory fumes and chemicals.

What are scope 2 emissions?

Scope 2 refers to indirect emissions from purchased energy. Research has shown that scope 2 accounts for at least a third of global greenhouse gas emissions. This includes off-site electricity, cooling and heating. For example, if a company purchases electricity from a utility company, this falls under scope 2. 

What are scope 3 emissions?

Scope 3 encompasses all indirect emissions from a business's upstream and downstream supply chain. This could include the use of goods, employee travel, waste disposal and investments. 

One of the most significant differences between carbon neutral and net zero is that no specified reduction levels are required to be carbon neutral. With carbon neutrality, businesses can pay to offset all their carbon emissions. However, with net zero they are limited to only offsetting up to 10% of unavoidable emissions. The rest must be made directly to the business, encompassing Scope 1, 2 and 3. 

Should my company aim for carbon neutrality or net zero?

If your company has decided to take action to be more sustainable, then choosing the right path is the next step. A Net Zero strategy is undoubtedly the best option for becoming a more environmentally conscious company and truly benefiting the planet. But it is significantly harder to achieve in the short term than becoming carbon neutral.

Carbon neutrality is a great first step for any company and a springboard towards net zero. Achieving net zero is challenging and is, therefore, a marathon and not a sprint. 

For any company, reaching for carbon neutrality can be relatively easy and beneficial for the environment. Here are a few steps to help you on your journey. 

Firstly, you can look at the carbon emissions you emit in all areas of your business, which can be done roughly using a carbon calculator. Or more in-depth by performing a complete carbon analysis of your supply chain and operations. 

Secondly, based on this assessment, you can implement changes to your business strategy to reduce your carbon footprint at the source. This may seem daunting, but you can make many small changes that have a massive impact. Here are some questions to ask yourself when looking to implement sustainable changes to your business:

1. How much do you know about your supply chain, and are there more sustainable suppliers you could work with?

2. Can your shipping processes be more eco-friendly?

3. How sustainable is your return policy?

4. How energy efficient is your web hosting?

5. Can you make your packaging more environmentally friendly?

For more information on the changes you can make to your business to help achieve carbon neutrality, take a look at our Sustainable Business E-book to guide you on your journey. 

For the emissions you can’t avoid, you can offset the specific amount of CO2 remaining through certified offsetting projects around the world that generate carbon credits and help reduce emissions through various means.

At Greenspark, we work closely with the UN Global Climate Action, whose projects help offset carbon emissions and improve local communities' lives and well-being. Some examples of these include:

Providing more efficient cookstoves to communities in Malawai. By providing more than 40,000 energy-efficient cookstoves in Malawi, the project has benefited roughly 200,000 people in the Nkhata Bay District. Each of these stoves saves 2.5 tonnes of carbon annually. 

The Chacayes Hydro Project helps avoid over 340,000 tonnes of Greenhouse gas emissions yearly and provides clean energy to over 300,000 Chilean homes. 

The Burgos Wind Project is helping provide the Philippines with a source of clean, renewable energy and stable employment for local communities. With 50 turbines currently powering the National Grid. It generates 370GWh of electricity and offsets 200,000 tonnes of CO2 emissions annually. 

Being carbon neutral is an excellent step in the right direction to being a more sustainable business. It’s your way of saying that you acknowledge your impact on the planet and are fighting to be as environmentally positive as possible. 

Are you ready to be a force for good?

If you’re looking to start your journey towards carbon neutrality or net zero, then Greenspark can help. Through our platform, you can easily take action on climate issues and offset the unavoidable emissions of your supply chain, employees and products. As well as support projects that fight plastic pollution and deforestation.  

By integrating your favourite business tools such as Shopify, WooCommerce, Amazon, and Klayvio, or utilising our open API, you can take meaningful climate action across your business, including for every transaction, subscriber and review.

Regardless of where you are on your sustainability journey, Greenspark can support you and help you along the way. With just a little effort, you make a huge impact.

If you’re interested in finding out more, you can book a demo with one of our team members or request more information at the links below.

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