Carbon Neutral vs Net-Zero: what is the difference

7 min read
March 26, 2021 at 12:00 AM

As the fight against climate change becomes more urgent, the private sector’s role is crucial to decarbonize and reduce emissions.

Hundreds of economic actors are willing to change their way of thinking, producing, and operating to respond to the climate emergency. They are increasingly committing to initiatives such as the Race to Zero Campaign by the UNFCCC or the Net Zero Initiative. In 2015, the Paris Agreement set out a global framework to avoid the dangerous impacts of climate change by limiting global warming to well below 2°C. To be aligned with this goal, we must reach collective carbon neutrality by 2050, which is the aim of the previously mentioned commitments. But how can organizations play a key role?

The 2018 publication of the Special Report of the IPCC (1) helps us better understand why and how to follow a 1.5°C trajectory. The report analyzes two scenarios (1.5°C and 2°C) and highlights a solution to avoid a catastrophic future: reaching global net-zero by mid-century. 

Economic actors increasingly seek to reach different climate goals, mostly by 2030 or 2050. Their commitments refer to several net zero terms, including carbon neutrality, net zero, or carbon negative. These are the three main notions used by organizations and countries. Although similar, there are subtle differences that are crucial to examine. 

Besides, it is important to highlight the difference between net zero emissions at a corporate level and global net zero emissions. 


1. Carbon neutral or net zero CO2

According to the IPCC definition, “carbon neutrality” and “net-zero” are synonyms.

Carbon neutrality is a generic term, scientifically valid when considered comprehensive, and on a global level: it corresponds to a worldwide equilibrium between anthropogenic emissions and anthropogenic absorption. As such, an organization, product, or service cannot be carbon neutral by itself, but can contribute to global carbon neutrality. 

The objective of carbon neutrality is twofold: to reduce emissions and increase absorption capacity. According to the IPCC report, limiting global warming to 1.5°C means that organizations and countries should reach net zero CO2 by 2050. Reaching net zero emissions is a collective effort (and not an individual one). Therefore, organizations should be aware that net zero strategies do not only consist of carbon offsetting, as many might believe. It requires essential preparatory steps: they must first measure their environmental impacts and understand their emission sources as part of a comprehensive analysis. 


2. Which scope are we talking about?

Before reducing and offsetting, an organization has to measure its greenhouse gas emissions. 

The Greenhouse Gas Protocol, the most widely used and internationally recognized greenhouse gas accounting standard, divides emissions into three scopes.

  • Scope 1: Direct emissions related to on-site fuel combustion or fleet vehicles;
  • Scope 2: Indirect emissions related to emission generation of purchased energy, such as heat and electricity;
  • Scope 3: Other indirect emissions related to both emissions from upstream and downstream business activities. 

Scope 3 emissions are usually far larger than the two others; however, these emissions are more complicated to measure. When contributing to global neutrality or net zero emissions, a corporation needs to specify which scopes it is considering to ensure full transparency. When discussing a net zero strategy, all three scopes of emissions need to be addressed.

Furthermore, companies and countries should determine the timeframe of their strategy: are these short-term or long-term actions? Some companies claim to contribute to global carbon neutrality or net zero but have not indicated the period or the timeline.

Most of the time, commitments from companies and organizations are based on the IPCC report vocabulary. Almost all other reports released by the Carbon Disclosure Project (CDP) and Science Based Targets initiative (SBTi) also refer to the terms defined by the IPCC.


3. A comprehensive decarbonization strategy

Once an organization understands its different emission sources, especially the “hot spots,” it can set up a comprehensive decarbonization strategy by following the below 3 steps: 

  1. Eliminating sources of CO2 emissions within the entire value chain (scopes 1, 2, 3); the SBTi refers to abatement. It means reducing or eliminating sources of CO2 emissions associated with a company’s operations and value chain until it reaches a consistent level of residual emissions. Those emissions are the ones that cannot be reduced due to constraints, such as economic or technological ones. Some industries will always have to consider residual emissions, like agriculture with crops and cattle breeding.
  2. Neutralizing refers to the removal and permanent storage of atmospheric carbon to counterbalance the effect of releasing CO2 into the atmosphere through Carbon Dioxide Removal (CDR) activities such as restoring natural carbon sinks or technology. It consists of innovative systems that could redirect emissions not in the atmosphere by capturing them directly after being released and sequestering them in geological soils. According to the 2019 report of the European Zero Emissions Platform (ZEP), such technologies could add extra costs in the short-run (in the range of 12€ to 30€ per tonne) but will be very competitive in the fight against climate change (4).
  3. Compensating, or contributing, can be used to address value chain residual emissions to support a net zero emissions goal at the global level. It includes direct support of high-quality carbon reduction projects through the purchase of carbon credits on the Voluntary Carbon Market. These projects not only capture or avoid CO2 emissions but also have environmental and social co-benefits for local communities. 


The order of these actions follows a logic that must be respected by players that want to be engaged in a net zero trajectory. Besides, neutralization and compensation measures should not be a substitute for emissions reduction measures.


4. Carbon neutrality or net zero GHGs 

The concept of carbon neutrality is very similar to net zero GHGs, but the scale is different. Net zero GHGs strategies include every type of greenhouse gas (GHGs). Carbon dioxide is one of the most significant because it remains longer in the atmosphere than others and represents a major part of emissions from human activities (especially fossil fuel burning). However, other GHGs exist: the most dangerous ones in terms of contribution to the greenhouse effect and impact on health are nitrous oxide, methane, and halocarbons from human activities (5). Water vapor is also a major heat-trapping gas, but it is a natural phenomenon rather than directly tied to human activities.

According to the World Resources Institute (WRI) and based on the data provided by the IPCC report, net zero GHG emissions can only be reached from 2063 (6). Organizations and countries’ current measures are inadequate to align with the 1.5°C trajectory. Net zero strategies must be reinforced, and organizations must commit to reducing and offsetting each emission type. 

One of the major challenges to achieving net zero GHG emissions is the quantification of those emissions. CO2 emissions are relatively easy to measure, but other greenhouse gas emissions are more complex. Some climate metrics to compare emissions of different gases have been developed, such as global warming potential, global temperature change potential, time horizon, or CO2 equivalent (3).

The strategy to achieve net zero GHG emissions is the same as explained above, except that it includes all greenhouse gases and not only CO2 emissions.


5. Carbon negative or net negative emissions

Finally, an organization could also offset more than just its residual emissions. It means that a company contributes to removing more carbon dioxide from the atmosphere than it emits. You may have also heard about the term “climate positive,” which means the same thing. These terms are used by some companies or countries, although they are not aligned with the IPCC definition. 


The role of technology based-solutions (Carbon Capture and Storage)

The IPCC presents in one of its reports the role of technology based-solutions as an additional solution since natural sinks are not enough to absorb the huge amounts of GHG in the atmosphere. What are those technologies? For example, one may have heard about bioengineering with Carbon Capture and Storage (BECCS), which is a process that captures biomass emissions, or Direct Air Capture and Storage (DACCS), a chemical process (8).

Net zero does not mean that there won’t be any emissions, but that the world needs to remove as many emissions as emitted. It allows us to contribute to gradually eliminating emissions accumulated in the atmosphere since the first industrial revolution. Nowadays, neither technology nor many trees can offset all emissions in the atmosphere. This is why it has become essential to reduce emissions in line with the 1.5° trajectory and invest in developing new technologies. For example, this is the aim of the worldwide contest recently launched by Elon Musk, CEO of Tesla. For four years, individuals, organizations, or academic teams will be able to present projects of innovative technologies that capture carbon emissions from the atmosphere. Participants will have the opportunity to win from $1 million to $50 million to implement and develop their ideas (9). Finding new ways to capture emissions is key to fighting climate change as quickly as possible.

To conclude, even if the climate emergency needs “deeds rather than words,” it is very important for organizations and countries to be careful of the terminology they use. It reinforces their legitimacy and prevents them from being accused of malpractices.

This article shows that pledges need to be aligned with the 1.5° trajectory and how countries and companies can take measures to contribute to global carbon neutrality.

With this goal in mind, it is crucial to understand the meaning of the different terms and use them appropriately. 

How ClimateSeed can help your company with their climate contribution? 

At ClimateSeed, we offer both removal and avoidance projects in our portfolio. We have dedicated experts that ensure projects are of the highest quality, and have passed our robust three-level verification process. Our unique approach maximizes your positive environmental and social impacts, and offers risk mitigation backed by top-tier financial expertise. We are proud to offer 35 high quality projects. 

Contact us for more information.









Download Guide Methods EN-1