What is carbon neutrality?

The science is clear: the only way to prevent the climate crisis from getting much worse is by drastically reducing greenhouse gas emissions.

Specifically, we need to halve emissions by 2030 and reach net zero by 2050 to keep global heating to no more than 1.5 degrees Celsius.

What is not so clear is the language we use to describe how we plan to reduce those emissions.

From policy documents to business plans, climate pledges are often peppered with terms like ‘carbon neutrality,’ ‘climate neutrality,’ and ‘net zero emissions’ – often used inconsistently and interchangeably.

This makes it difficult to grasp the true scope of policies, keep false claims in check and understand whether pledges cover greenhouse gases other than carbon dioxide.

By mixing up the language, we risk also mixing up different metrics, which makes it even trickier to work across sectors to decarbonize.

So, what exactly does ‘carbon neutral’ mean – and does it really mean the same as ‘net zero’? Let us explain.

What does carbon neutral mean?

If an entity or product is carbon neutral, that means the amount of carbon dioxide we emit into the atmosphere equals the amount of carbon dioxide we remove from it.

Such removal takes place primarily through carbon sinks like forests, soils and the ocean, which absorb and store the carbon in the long term.

What’s the difference between carbon neutrality and net zero? 

At the global scale, ‘carbon neutrality’ and ‘net zero carbon emissions’ mean the same thing according to the Intergovernmental Panel on Climate Change (IPCC), the UN body for climate science.

In this context, the IPCC refers to a world where all of the carbon dioxide that is emitted is then removed. So, if the atmosphere were a bank account, it would be like withdrawing and depositing $10: the balance would remain the same.

At the national, regional or local level, net zero carbon emissions typically refers to emissions under the direct control of the entity reporting them. This could be a country, municipality or sector.

On the other hand, ‘carbon neutral’ can also be used to describe companies, commodities, events and services. It usually includes so-called Scope 3 emissions, which are indirect emissions generated across a company’s value chain, such as investments and purchased goods and services.

This means two things. Firstly, carbon neutrality includes a broader range of emissions and removals, including those upstream and downstream in the supply chain, than net zero goals.

Secondly, entities can use offset mechanisms such as carbon credits to balance emissions that are not under their direct control.

Does net zero mean net zero carbon emissions? 

The IPCC warns that the term ‘net zero’ can be ambiguous, as some users apply it to cover all greenhouse gas (GHG) emissions. In that case, a more accurate term would be ‘net zero GHG emissions’ or ‘climate neutrality.’

Carbon dioxide emissions have been by far the biggest contributor to the climate crisis, making up 80 percent of radiative forcing (the warming effect of greenhouse gases on the climate) since 1990.

But the remaining 20 percent matters, too – with nitrous oxide, methane and fluorinated gases (F-gases) among the most important non-carbon GHGs.

Different gases have different atmospheric lifetimes and warming potentials. For example, each kilogram of nitrous oxide warms the atmosphere about 300 times more than the same amount of carbon.

Meanwhile, hydrofluorocarbons (HFCs), a type of F-gas used in household appliances like fridges, air conditioners and heat pumps, can warm the Earth up to 12,000 times more than carbon dioxide.

That’s why it’s important to convert non-carbon emissions to carbon dioxide equivalent based on their global warming potential to ensure that we’re comparing the same thing.

Unsurprisingly, humanity is expected to achieve net zero carbon emissions several decades before we reach net zero GHG emissions. That means it’s important to be very clear about which gases are covered in a neutrality or net zero goal.

How can we become carbon neutral?

So far, 107 countries, responsible for around 82 percent of global greenhouse gas emissions, have adopted net zero carbon pledges.

Additionally, more than 9,000 companies, 1,000 cities, 1,000 educational institutions and 600 financial institutions have joined Race to Zero, a global coalition of non-state actors committed to taking action to halve global emissions by 2030.

But not all emissions can be avoided. That’s why, says the IPCC, we need to sharply reduce emissions across all sectors and regions and remove carbon dioxide from the atmosphere to balance emissions that may be too difficult or expensive to cut at that time.

One of the best ways to remove that carbon is to store it in the ground. We could be one-third of the way to achieving the Paris Agreement if we protect, restore and sustainably manage forests, grasslands, wetlands, peatlands and agricultural lands between now and 2050.

But to unlock the full potential of these natural climate solutions, we’ll need to invest more than USD 400 billion per year – more than nine times what we’re currently spending.

Soils are the second largest carbon sink on the planet after the oceans, meaning that healthy soils are essential to absorb and store atmospheric carbon. But 90 percent of the Earth’s topsoils could be at risk by 2050.

On top of that, the world’s land is degrading at an alarming rate, losing at least 100 million hectares of healthy land each year. That’s an area the size of Egypt.

On current trends, the world will need to restore a whopping 1.5 billion hectares – an area nearly the size of Russia – of degraded land by 2030 to achieve land degradation neutrality.

How do you know if a company is carbon neutral?

So, now we know what carbon neutrality is – but that doesn’t make it easy to tell who’s genuinely carbon neutral and who’s just greenwashing.

Last year, the EU announced that it will ban companies from labeling their products ‘carbon neutral,’ ‘climate neutral’ or other similar terms unless they can prove that their claims are genuine.

And in 2022, UN Secretary-General António Guterres established a high-level expert group to set stronger standards around net zero and neutrality pledges.

The group aims to “draw a red line around greenwashing” by providing recommendations and establishing clear guidelines on how to set, implement and assess net zero plans.

One of the takeaways from their work is the need for all actors to regularly report on their progress by disclosing verified information that can be compared with peers.

In other words: it’s time to be consistent and transparent in how we use terms like ‘carbon neutral’ and ‘net zero.’