Understanding the meaning of net-zero emissions is crucial as they stand at the forefront of our sustainability agenda. The latest climate science reinforces that to limit global warming to under 1.5°C, the world needs to achieve net-zero emissions by 2050.
The net-zero transition will accelerate this year and for the decades to come. Over 130 countries have already set a target of reducing greenhouse gas emissions to net-zero by 2050. However, after numerous international summits like COP, it is unlikely that current pledges will limit climate change under the 1.5°C scenario to avoid its worst impacts. Global GHG emissions must be halved by 45% from 2010 levels by 2030 (with methane needing to be reduced by a third).
Navigating the jargon around net-zero emissions can be daunting: What exactly is the meaning of net-zero emissions, and how to achieve net-zero emissions?
What are net-zero emissions?
By definition, net-zero emissions means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere by oceans and forests, for instance. Net-zero is reached when a business has eliminated all the carbon emissions it could and then compensated the remaining emissions with beyond value chain mitigation.
The net-zero process starts with calculating emissions across scope 1, 2, and 3, setting science-based targets, developing decarbonisation pathways until 2030, and gradually moving towards long-term carbon capture, storage, and sequestration for those emissions which cannot be reduced.
For further scientific clarity, according to the IPCC, net-zero emissions are achieved when anthropogenic removals balance anthropogenic emissions of greenhouse gases to the atmosphere over a specified period. Where multiple greenhouse gases are involved, the quantification of net-zero emissions depends on the climate metric chosen to compare emissions of different gases (such as global warming potential, global temperature change potential, and others) and the time horizon selected.
Achieving net-zero emissions by 2050: The path ahead
To achieve net-zero emissions by 2050, we need immediate and impactful climate action. As we near the critical threshold of 1.5°C increase in global temperature, the focus is now on governments and businesses to lead the charge in realising how to achieve net-zero emissions.
A variety of strategies exist for companies to adopt science-based targets to reduce emissions and progress towards net-zero. However, it's crucial that these pledges be put into action effectively, and not merely serve as greenwashing.
Did you know? Stabilisation of global temperatures will only occur once we've successfully achieved net-zero CO2 emissions. To put this in perspective, limiting global warming to 1.5°C (2.7°F) necessitates reaching global net-zero carbon emissions by the early 2050s. Conversely, if we aim to limit the temperature increase to 2°C (3.6°F), the timeline extends to the early 2070s for reaching global net-zero carbon emissions.
How to achieve net-zero emissions?
The United Nations launched the "race to net-zero" campaign with a worldwide coalition of companies and actors to answer this pressing challenge. Collectively these 3,000 actors cover nearly 25% of global CO2 emissions and over 50% of the worldwide GDP.
On the one hand, a McKinsey report estimated that the annual cost of getting to net-zero - when CO2 emissions are entirely reduced or captured - will be €8.2tn ($9.2tn). On the other hand, the number of companies using science-based targets (SBTs) has significantly increased. More than 1,045 companies representing €20.5 trillion in market capitalisation (more than the GDP of the United States) are committed to science-based targets for emissions reduction. Companies that translate climate commitments into concrete actions will achieve a sustainable leading status.
Il s'agit de faire le premier pas et de commencer à mettre en œuvre des actions, conduisant à un positionnement en tant que leader du marché.
Lubomila Jordanova, CEO & Co-Founder at Plan A
What are net-zero pledges?
The net-zero pledges model presents limitations. It is criticised that most companies setting science-based targets to reach net-zero emissions look good on paper but less in practice. This practice enables a particular "net-zero greenwashing", misleading well-intentioned investors, stakeholders and consumers.
The reason is that many businesses are still making decisions based on outdated data and often do not know which framework to refer to. Also, it is primordial for companies to include all scope of carbon emissions in data disclosure. A recent report analysed the net-zero pledges of 55 of the biggest US companies and found no single large corporation with a net-zero goal covering Scopes 1, 2, and 3 emissions while limiting carbon offsets. The vast majority of major corporations are falling short regarding all three metrics: disclosures, targets, and actual performance.
For example, Walmart, the world's largest retailer, has an official strategy to reach zero emissions by 2040. Yet, according to the company, its reduction plan excludes Scope 3 emissions—although they make up 95% of its emissions. Take Chevron (which received an overall F grade): scope 3 emissions account for 91% of the company's greenhouse gas emissions, so while Chevron has focused on reducing Scope 1 and 2 emissions in line with 1.5 degrees, the report notes, those reductions represent only about 9% of the company's total emissions.
Example of a net-zero company
Among the many companies aiming to be net-zero, Microsoft stands as a paragon. The tech giant pledged to be carbon negative by 2030, meaning it plans to remove more carbon from the atmosphere than it emits. Further, by 2050, Microsoft aims to have removed all the carbon it has emitted since its inception in 1975. Its ambitious commitment is an excellent example of a comprehensive approach to achieving net-zero emissions.
Microsoft’s strategy revolves around the principles of reduction, electrification, and carbon capture. It uses a combination of measures like increasing the energy efficiency of their operations, transitioning to renewable energy, and leveraging carbon capture and storage technologies. Moreover, Microsoft is investing $1 billion in a new Climate Innovation Fund for technology development and carbon removal solutions. This exemplifies the transformative corporate action required to achieve the global net-zero target.
How can companies achieve net-zero aligned carbon compensation?
As part of their net-zero strategies, companies are relying on voluntary carbon offsetting, but it is unlikely to deliver on net-zero promises. According to the Science-based Target Initiative (SBTi), SMEs and PMEs need to reduce their carbon emissions by 80% before compensating anything - carbon compensation would be too easy otherwise. The SBTi requires deep decarbonisation of 90-95% by 2050 for companies to reach science-based net-zero, emphasising that any residual emissions, which should not exceed 5-10% of a company's total emissions, must be neutralised through carbon removal methods. For certain sectors, such as the forestry, land-use, and agricultural sector, up to 20% carbon removal is permitted after an 80% decarbonisation by 2050.
The Oxford principles for net-zero aligned carbon offsetting
While striving for net-zero emissions, it's important to scrutinise the breadth of corporate pledges and to ensure carbon offsetting aligns with net-zero goals. Also, there is a clear need for the development of net-zero aligned carbon compensation principles.
On this regard, the prestigious Oxford University came up with principles, better known as "the Oxford Principles for net-zero aligned carbon offsetting". Our decarbonisation team has recommended reading their report as it is a natural source of truth regarding carbon compensation, in line with net-zero targets.
Principle #1: Cut your emissions first, use high-quality offsets and regularly review your compensation strategy
Numerous effective carbon offsetting methods have been established in recent years. Those who abide by these principles must first take into account these effective practices, which include:
- Making your own emissions reduction a priority - The primary goal should be to limit the necessity for offsets.
- Upholding environmental integrity - Opt for offsets that can be verified, accurately accounted for, and carry minimal risk of non-additionality, reversal, or causing unintentional adverse effects on people and the environment.
- Sustaining transparency - Report current emissions, accounting methodologies, net-zero objectives, and the kinds of offsets being used.
Principle #2: Shift to carbon removal compensation
Most offsets available today are emission reductions necessary but not sufficient to achieve net-zero emissions in the long run. Carbon removals scrub carbon directly from the atmosphere. Users of offsets should increase the portion of their compensation that comes from carbon removals, rather than from emission reductions, ultimately reaching 100% carbon removals by midcentury to ensure compatibility with the Paris Agreement goals. Creating demand for carbon removal offsets today will send the necessary market signal to increase the supply.
Principle #3: Shift to long-live carbon storage
The transition from emissions reduction to carbon removal has been outlined but does not resolve how long the carbon is stored. Long-lived storage refers to storing carbon that has a low risk of reversal over centuries to millennia, such as storing CO2 in geological reservoirs or mineralising carbon into stable forms. On the other hand, short-lived storage involves methods with a higher risk of being reversed over decades.
Principle #4: Support the development of net-zero aligned carbon compensation
Forming sector-specific alliances - work collaboratively with peers to develop a net-zero aligned offsets market. Adopting and publicising these principles and incorporating them into regulation and standard setting for carbon compensation and net-zero emissions approaches. Supporting the restoration and protection of a wide range of natural and semi-natural ecosystems in their own right.
Did you know that Coldplay uses the Oxford principle to compensate for their emissions from world touring?
In conclusion, the path to achieving net-zero emissions demands not only understanding the meaning of net-zero emissions but also concerted action from all sectors of society.
Plan A stands ready to assist you on your journey towards decarbonisation and science-based target setting. Get in touch to find out how to achieve net-zero emissions in your business operations.