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WHAT IS NET ZERO... AND HOW TO GET THERE?

Jan. 25 2021

Climate change is the most pressing issue of our time, and governments, city authorities and companies are setting themselves net zero targets every day.

This pledge to reduce carbon emissions demonstrates a commitment to environmental responsibility and leadership. However, it is much easier to announce than to achieve. It is also easy to misconstrue, given the plethora of terminology involved.

CARBON NEUTRALITY VS NET ZERO: WHAT’S THE DIFFERENCE?

As climate change has moved up business leaders’ agenda, so has the concept of carbon neutrality. This means achieving an end result of zero carbon emissions for a company, site, product, brand or event by first measuring, then reducing its emissions to the extent this is possible and then compensating for remaining emissions with an equivalent amount of avoided or offset emissions. This can be achieved by buying enough carbon offset credits to make up the difference.

By contrast, Net Zero is a more ambitious aim which applies to the whole organization and its value chain. This means cutting indirect carbon emissions from upstream suppliers through to end-users, a complex feat in a world in which companies do not control their full value chain.

Details on how companies can contribute their fair share to the global target of net zero emissions have been formulated by the Science Based Targets initiative, with action mobilized by the Race to Zero campaign. The approach to residual emissions also differs, with active removal of carbon from the atmosphere essential to achieve long term net zero emissions. Carbon offsets are acceptable under some methodologies to achieve long term carbon neutrality, but most observers agree they should at best only be used as a short term transitional measure on the route to net zero.  

 

HOW WILL WE ACHIEVE NET ZERO?

Widespread adoption of net zero targets worldwide is an important factor in climate action. The Paris Agreement seeks to keep the global temperature increase to well below 2°C and pursue efforts to keep it to 1.5°C. Meanwhile, research has shown that to avoid the worst climate impacts, carbon emissions need to be halved by 2030 and reach net zero by the middle of the century.

At a national level, reaching net zero requires extensive reductions in emissions from business as usual, with atmospheric carbon emissions removals. Some of the world’s largest economies, including Japan, the UK and France, have set a net zero target for 2050, and the EU has put the objective at the heart of the European Green Deal

In a corporate context, the working definition of net zero is generally agreed to be a state in which the activities within a company’s value chain result in no net impact on the climate from carbon emissions. This involves setting and pursuing a science-based 1.5°C-aligned target for emissions across the entire value chain with permanent removals of an equal amount of carbon emissions from the atmosphere to neutralize any remaining hard-to-eliminate emissions (and only those).

 

CHANGE ON A WORLDWIDE scale                                                                

For the world to achieve net zero within the timeframe outlined by the Paris agreement, policy, technology and behavior need to shift across the board. It is projected, for example, that renewable energies need to account for 70-85% of the world’s electricity by 2050. It is also critical that we rethink how we fuel transportation, and that we improve the efficiency of food production. Investment in renewables such as solar and wind power is a lynchpin, as is the development of emissions removal and sequestration techniques.

While reducing emissions must, of course, be our goal, carbon dioxide removal currently remains necessary in sectors where reaching zero emissions is particularly difficult, such as aviation. Removal can be achieved in several ways, from natural approaches like restoring forests and boosting soil uptake of carbon to technological solutions like direct air capture and storage.

 

WHAT COMPANIES NEED TO DO

Companies looking to reach a net zero target need to take a multi-pronged approach. They have to reduce carbon emissions from operations, manage internal and supply chain reductions, and offset difficult to avoid emissions in the short-term. This begins with accurate data: to reduce emissions, it is first necessary to understand them. In addition, responsible companies need to ensure they provide accurate, thorough and objective reporting of data for transparent and verified communications.  

To go beyond carbon neutrality and hit net zero, companies also need to widen out how they think about carbon. The Greenhouse Gas Protocol categorizes carbon emissions into three scopes.

THREE SCOPES OF CARBON EMISSIONS

  • Scope 1 covers direct emissions from owned or controlled sources, including on-site fuel combustion such as in gas boilers, fleet vehicles and air-conditioning.
  • Scope 2 covers indirect emissions including from the generation of electricity, heat, cooling and steam purchased and used by the organization.
  • Scope 3 includes all other indirect emissions that occur in a company’s value chain. These are the hardest to track and control but usually represent the greatest share of a company’s emissions inventory, covering those associated with upstream suppliers, business travel, procurement, waste and water and the use and end-of-life phases of the products and services they produce.

 

Most companies currently only consider the first two, but there are multiple advantages to measuring scope 3 emissions.

Companies can identify emission hotspots in their supply chain and assess suppliers for sustainability, pinpoint energy efficiency and cost reduction opportunities, and positively engage with suppliers and staff to help reduce emissions. They can also find ways to influence customer behavior, or prepare product end-of-life, for example by working with retailers and distributors on take-back programs.

Crucially, then, to achieve a net zero target, companies are obliged to understand and cut emissions across all three scopes. This represents another important difference vis-à-vis carbon neutrality: to become carbon neutral, a company need only concern itself with scopes 1 and 2; scope 3 is encouraged but not mandatory.

 

HOW BUREAU VERITAS CAN HELP

Bureau Veritas supports responsible companies by providing audits and verification of businesses’ efforts to mitigate their climate change impact. We verify carbon inventories/ footprints and reports on progress towards net zero objectives. We also validate and verify offsetting and removal initiatives, proving the legitimacy of carbon credits. Our experts can also verify claims of carbon-neutral business practices, providing third-party verification and certification to various standards.

Net zero targets start with an announcement and follow with achievement. However, no business should underestimate the importance of the extra step of verification if they want to communicate their efforts transparently and accurately, thereby building stakeholder trust and safeguarding the reputational benefits of their contribution to curtailing climate change.

 

Note: Throughout this article, we use “carbon” to mean the basket of greenhouse gases that the Kyoto Protocol first introduced [The Kyoto basket of greenhouse gases (GHGs) includes carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3)]. These GHGs are usually aggregated and measured in tonnes of carbon dioxide equivalence (tCO2e for short) in terms of their relative ability to cause atmospheric warming.

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