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The Differences Between Carbon Neutral and Net Zero

While businesses have become familiar with climate-related terminology in recent years, there is still some confusion surrounding key carbon neutral and net zero. This confusion is understandable — many people still use the terms interchangeably, but they actually refer to two different things. Understanding the difference between carbon-neutral and net zero claims, and how they relate to climate goals, is vital for businesses embarking on a climate action strategy. 

What is Carbon Neutral?

Carbon neutrality essentially means balancing the levels of carbon dioxide or greenhouse gases (GHGs) emitted into the atmosphere, with the levels of carbon absorbed by the atmosphere in carbon ‘sinks’.

In business, carbon neutrality is achieved when a company’s carbon emissions are counterbalanced by an equivalent amount being removed. What cannot be removed can be ‘offset’ by purchasing carbon offsets to achieve carbon neutrality. Carbon offsets, or offset units (or carbon credits) are created by projects that avoid, reduce, remove or capture greenhouse gas (GHG) emissions from the atmosphere such as planting trees or increasing carbon in soil.

Carbon sinks do most of the heavy lifting when it comes to removing carbon from the atmosphere. They are systems that absorb more carbon than they emit; think soil, oceans, and forests. Carbon sinks generally remove between 9.5 and 11 Gt of carbon each year.

In our industrialised, modern world, no natural carbon sink is able to remove enough carbon to combat the amount of carbon rapidly being emitted into the atmosphere. The consequence is the effects of climate change. 

The carbon stored in natural sinks, such as forests, can also be released back into the atmosphere due to unsustainable practices such as deforestation and wildfires.  

Offsetting Carbon Emissions

Offsetting refers to activities and practices that prevent, reduce, or remove carbon and other greenhouse gases from the environment. 

Offsetting strategies provide businesses with opportunities to reach their carbon neutral targets. One carbon offset equals one tonne of greenhouse emissions reduced. 

Businesses must ensure that the carbon offsets they purchase are credible. They must adhere to strict selection criteria in order to ‘count’ as a certified offset. 

For an offset to be considered credible, the removal of carbon must be permanent and licensed. 

Offsets are classified as either avoided emissions, which is preventing emissions from being released into the atmosphere — or sequestration, which is the act of physically removing or capturing existing emissions.

Examples of carbon offsets include tree planting, wind farm projects, energy efficiency projects, and investing in initiatives that reduce the methane output of cows. 

Projects that enhance biodiversity, improve soil quality, and maximise rainwater usage are also credible offsets.  

What is Net Zero?

Net zero refers to a company’s target goal to counterbalance all its greenhouse gas emissions with greenhouse gas removals by a certain time, for example, net zero by 2040. 

In order to reach their net zero goal, a business can implement a Science Based Target (SBT). A science-based target defines a pathway for companies to reduce their greenhouse gas emissions in line with climate science and the Paris agreement. 

The process of removing carbon from the atmosphere and storing it is called carbon sequestration. In order to achieve net zero emissions, all worldwide greenhouse gas emissions need to be counterbalanced by some form of carbon capture or carbon sequestration. 

To avoid the most extreme consequences of climate change and preserve a liveable planet, the Paris Agreement tells us we need to cut global emissions by 45% by 2030 and reach net zero by 2050.

Governments who are signatories to the Paris Agreement have set net zero targets in-line with the goals of the Agreement. 

What is Absolute Zero Emissions?

Absolute zero refers to the total absence of greenhouse gas emissions. 

What’s the Difference Between Carbon Neutral and Net Zero?

As we can see, carbon neutral and net zero are closely related terms, but they are not entirely interchangeable. 

Carbon Neutral vs Net Zero

The concepts of carbon neutral and net zero have some notable differences. 

As we know, ‘net zero emissions’ refers to achieving an overall balance between GHG emissions produced and GHG emissions taken out of the atmosphere. For corporations, this requires regular measurement of GHG emissions in line with a robust standard (for example, the Greenhouse Gas Protocol suite of standards), a reduction of emissions, and in most cases, the removal of or compensation for residual emissions. 

Net zero implies a connection to the Paris Agreement, which outlines the goal to “achieve a balance between anthropogenic emissions by sources and removals by sinks of GHG in the second half of the century”. We’ll take a closer look at the Paris Agreement below.  

Therefore, the general expectation is that a corporation’s net zero target supports the goals of the Paris Agreement and is governed by its underlying principles. 

Carbon neutrality, on the other hand, can be achieved today through carbon offsets. Operational emissions reduction is part of the process, but most standards or protocols for carbon neutrality don’t specify a minimum requirement on how much of a corporate carbon footprint must be reduced versus how much must be offset — the only requirement is that the final balance is zero. 

Examples for such protocols are the Climate Active Carbon Neutral framework in Australia, the British PAS 2060, and the ISO/WD 14068 Carbon Neutrality standard, which is still under development. 

The Paris Agreement

The Paris Agreement is the first legally binding, worldwide climate change agreement. It was first adopted by participating parties at the United Nations Climate Change Conference of Parties (COP21) in December 2015. 

It is a global framework outlining steps that need to be taken to prevent the worst effects of climate change. The Agreement endeavours to help strengthen each country’s ability to deal with the impacts of climate change and assists countries in these efforts. 

Currently, 193 parties have committed to the Paris Agreement.

The Paris Agreement aims to achieve global climate neutrality by 2050. Each signing Party is held accountable to the below elements.  

  • Reducing Emissions – The Agreement outlines that average global temperatures must sit well below 2°C above pre-industrial levels, with 1.5°C as the ideal target limit. Parties must undertake significant and rapid reductions in order to achieve a balance between carbon emissions and removals by 2050. 
  • Transparency – Participating parties agreed to meet every 5 years to assess their progress, provide updates, and enhance their strategies through a clear and transparent reporting system. 
  • Adaptation – Parties agreed to strengthen their community’s ability to deal with the realities of climate change and its impacts. They also commit to providing international support to developing countries.
  • Loss and Damage – Parties recognise the importance of minimising, addressing, and averting the damages and losses that arise due to the impacts of climate change. Parties must enhance their understanding, action, and support in early warning systems, risk insurance, and preparedness to deal with emergencies.
  • Cities, Regions, and Local Authorities – Non-governmental organisations and stakeholders play an important role in addressing climate change. The Agreement encourages cities, private sector businesses, and subnational authorities to enhance efforts to reduce emissions, increase resilience, and promote regional and international cooperation. 
  • Support – Developed countries are required to continue to support all climate action to reduce emissions, and assist developing countries in building resilience against the impacts of climate change. 

The Global Climate Action Agenda

Countries, cities, regions, businesses, and communities taking action to support the Paris Agreement outside of intergovernmental negotiations do so under the Global Climate Action Agenda.

Carbon Neutral Companies

There are now many companies committed to carbon neutrality. 

The Australian Government has been providing businesses with Carbon Neutral certifications under Climate Active (previously NCOS) since 2010. 

These companies have been consistently measuring, reducing, and offsetting their emissions. 

Some Australian carbon neutral companies include:

  • Australia Post
  • Aesop 
  • Belong
  • Bank Australia
  • Coles
  • DHL Express Australia
  • Energy Australia
  • Four Pillars Gin
  • Great Southern Bank
  • ISPT 
  • Intrepid Group
  • Ndevr Environmental
  • Origin 
  • Qantas 
  • Telstra
  • Swisse
  • Virgin Australia

Visit the Australian Government’s complete list of Carbon Neutral-Certified Companies

Interested in Becoming a Carbon Neutral or Net Zero Business?

For a business to become carbon neutral certified, they must measure, reduce and offset their emissions

Expert carbon accountants and climate change strategists are available to assist with this and typically the service will include: 

  1. A GHG inventory and carbon footprint measurement (including identifying your scope 1, 2 and 3 emissions)
  2. Strategic emission reduction initiatives (this could also include an Emissions Reduction Plan)
  3. Carbon offsetting
  4. Assistance with certification – for example to the Climate Active standard

If you opt for an Emissions Reduction Plan, experts will guide you on how to identify and maximise opportunities to reduce emissions related to your business processes and supply chain.

This comprehensive, measured and verifiable approach helps businesses use resources more efficiently, lower their energy bills, reduce waste, and reduce emissions in a tangible way. 

Smaller less complex businesses can also take advantage of tools such as the Greenhouse Gas Protocol’s Calculation Tools as a first step to estimating their emissions.

Your Path to Carbon Neutral or a Net Zero Strategy with Ndevr Environmental 

At Ndevr Environmental, we assist businesses in going carbon neutral and net zero strategies. We provide guidance on setting and measuring reduction targets, setting science-based targets, and implementing net zero trajectories and modelling. We can also assist in achieving carbon neutral Climate Active Certification. 

Discover how we can help you reach your carbon-neutral or net zero goals.

You can learn more about our services here.

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    ATIYAH

    CARBON NEUTRAL PRODUCT

    ​AWESOME STREETFOOD, ZERO CARBON – that’s Atiyah. With its launch in 2020, Atiyah became Australia’s first 100% renewable-run street food zero-carbon kitchen certified under Climate Active. Atiyah sets operational carbon efficiency benchmarks and raises awareness about the global warming impact of food choices. They even disclosed the footprint of every item on their menu to empower their customers’ low-carbon lifestyle. We assist ATIYAH with their carbon neutrality certification.

    ORIGIN

    CARBON NEUTRAL ORGANISATION & PRODUCT

    Responsible business is at the heart of what Intrepid does. Intrepid has been a pioneer in measuring and reporting carbon emissions since 2010. When it joined the Climate Active family in 2018, it became the largest global provider of carbon neutral certified travel adventures and the first company to voluntarily include all global operations in its certification.

    NEXTDC

    CARBON NEUTRAL ORGANISATION & PRODUCT NEXTDC are one of Australia‘s most trusted providers of data centre solutions. Since 2018 we’ve been assisting them with their Greenhouse Gas (GHG) accounting and in March 2021, the company broke ground with the launch of NEXTneutral, an innovative Climate Active-compliant colocation opt-in program for their customers. Learn more.

    GOODMAN

    COMMERCIAL & INDUSTRIAL PROPERTY
    Goodman Group is an ASX20 global property expert in logistics and business space. It owns, develops and manages industrial property in 17 countries. We provide strategic advisory on Goodman’s operational GHG inventory and trajectory, the GHG intensity of its investment portfolio, net zero pathway and carbon neutral certification, as well as the renewable energy delivery strategy.

    ISPT

    PROPERTY FUND MANAGEMENT
    ISPT is one of Australia’s largest unlisted property fund managers, with over $11.9 billion of funds under management. We assist ISPT with its net zero pathway, land-based offset strategy as well as maintaining its carbon neutral certification. When ISPT joined the Climate Active network, it pioneered many concepts. It became the first participant under Climate Active to voluntarily include base building operations on all its owned and operated properties into its organisational certification and, as an industry first, procured 100% Australian Carbon Credit Offset Units (ACCUs).

    BHP

    METALS & MINING
    BHP is an ASX listed, world-leading resources company and are among the world’s top producers of major commodities, including iron ore, metallurgical coal and copper. They also have substantial interests in oil, gas and energy coal. We assist BHP comply with energy and greenhouse gas legislation and advise facilities on matters related to energy use and production emissions.

    Intrepid

    TRAVEL
    Intrepid Travel is the largest small group adventure travel company in the world. Responsible business is at the heart of what Intrepid does. We assist Intrepid with their Human Rights reporting obligations as well as many aspects of its GHG accounting and reporting. This includes its Science-based target (SBT), making them the first tour operator with approved SBT. When Intrepid joined the Climate Active family in 2018, it became the largest global provider of carbon neutral certified travel adventures and the first company to voluntarily include all global operations in its certification.

    LION

    BEVERAGES
    Lion is a global beverage company with a portfolio of brands in beer, cider, wine, spirits, seltzers, and non-alcoholic drinks. Lion has four large and four small Australian breweries, and its brands include XXXX, GOLD, Tooheys New, and Little Creatures. We assisted Lion to become Australia’s first large-scale brewer to be certified as carbon neutral under Climate Active in 2020.

    QANTAS Airline

    AIRLINE
    Founded in the Queensland outback in 1920, Qantas has grown to be Australia’s largest domestic and international airline. We have worked with Qantas since 2016 on a variety of emissions reduction projects.

    ORICA

    METALS & MINING
    Orica is the world’s largest provider of commercial explosives and innovative blasting systems to the mining, quarrying, oil and gas and construction markets, a leading supplier of sodium cyanide for gold extraction, and a specialist provider of ground support services in mining and tunnelling. We assist Orica with their regulatory reporting such as NGERs and also carbon abatement projects.

    Fulton Hogan

    CONSTRUCTION
    Fulton Hogan has more than 80 years experience in the transport, water, energy, mining, civil construction and land development infrastructure in New Zealand, Australia and the South Pacific.
    We assist Fulton Hogan comply with NGER and NPI legislation for their extensive national operations. We work Fulton’s team to streamline reporting procedures to avoid duplicating data handling and transparently demonstrate data flows and aggregations.

    TOYOTA AUSTRALIA

    AUTOMOTIVE
    Toyota Australia was founded in 1963 and is one of Australia’s leading automotive companies. We have worked with Toyota since 2018 on many aspects of its GHG accounting, target setting, reduction initiatives, and reporting. We continue to inform strategic decisions around the contribution of the Australian business to the realisation of Toyota’s global Environmental Challenge 2050.

    H&H Group / Swisse Wellness

    CONSUMER GOODS
    H&H Group is a global health and nutrition company listed on the Hong Kong Stock Exchange. Consumer brands include Biostime, Solid Gold Pet, Dodie, Good Goût, Aurelia Probiotic Skincare, CBII, and Swisse Wellness, a vitamin, supplement, and skincare brand, born in Australia in 1969. We have been working with Swisse and the group on many aspects of its GHG accounting and reporting, including the ongoing management of its Climate Active certification.

    AGL ENERGY

    ENERGY
    AGL is one of Australia’s leading energy companies offering electricity, gas, solar and renewable energy services, plus internet and mobile plans. We have assisted AGL for over five years on a variety of activities including audit and assurance projects.

    VIVA ENERGY

    ENERGY
    Viva Energy is a leading energy company which supplies about a quarter of Australia’s fuel requirements. Viva Energy make, import, blend and deliver fuels, lubricants, solvents and bitumen through extensive national and international supply chains. We assist Viva Energy with a range of energy and greenhouse gas related projects. These include annual NGER reporting, Safeguard baseline setting, advice on Emission Reduction Fund opportunities and emission trajectories.