Carbon neutrality vs. net zero – are they one and the same? No, they’re not, but both are popular climate pledges made by organizations around the world. 

A new wave of climate commitments from different companies across various sectors is surfacing. This prompts the need to differentiate and clarify what it means to be carbon neutral or net zero. 

These terms are often used interchangeably – using one to really mean the other. So knowing and understanding the major differences between carbon neutral and net zero is crucial in making correct climate pledges. 

If you’re wanting to know how to achieve carbon neutrality for your business or non-profit, what steps to make or measures to use to get there, this article will guide you out. 

Carbon Neutrality vs. Net Zero: The Key Differences

Before we spell out their differences, let’s first cite their similarities. Net zero and carbon neutrality are a form of climate commitment made by business companies and government organizations.

Each is a noble pledge with the same goal: to balance out the release of harmful gasses into the atmosphere.

What makes them different is the type of gas they target and the scope they cover. 

Carbon neutrality specifically focuses on neutralizing an entity’s carbon dioxide (CO2) emissions. Being carbon neutral means your business operations’ emissions are compensated through CO2 reduction or removal initiatives. 

On the other hand, net zero solutions tackle all greenhouse gas (GHG) emissions, not just CO2. 

Other potent GHG include methane, nitrous oxide, fluorinated gas emissions, among others. But they’re all expressed in tonnes of carbon dioxide equivalent or CO2e as the common measurement unit in carbon accounting.    

More importantly, achieving carbon neutrality is much easier than reaching net zero. That’s because you can opt to compensate or offset for your carbon footprint without actually reducing CO2 emissions but funding CO2 reduction or removal projects. 

The amount of CO2 the project avoids or removes must be equivalent to the same amount your business operations pollutes. In other words, if your company emits about 80 tonnes of CO2 annually, you have to pay for the same amount of carbon offsets.   

While you can do that to achieve carbon neutrality, it’s not the case with meeting net zero emissions. 

The scope of net zero is much broader and it’s harder to achieve. You need to account for all of the GHGs your company emits. 

The Science Based Targets initiative’s (SBTi) corporate Net Zero Standard formally set the definition of net zero and provided guidelines for companies how to achieve it. Under this standard, carbon offsetting to compensate for GHG emissions should be the last resort. 

Polluters must first reduce their emissions meaningfully through various means. These can include improving energy efficiency of operations or processes, using renewables, electrification, and more. 

In short, net zero goes beyond carbon neutrality; it’s a race calling for more drastic solutions to reduce GHG emissions. To know more about net zero, this full article explains what net zero is all about. 

Net zero is a movement in addressing global warming while carbon neutrality is a narrower climate solution.

Yet, that doesn’t mean being carbon neutral is less important. In fact, it’s a good starting point for businesses to manage their carbon footprint and help in the fight against climate change. 

So, what does achieving carbon neutrality mean for your company? 

Being carbon neutral doesn’t necessarily mean your operations will result in zero emissions. But it does mean that you choose to join the race to net zero, run your company with a lighter CO2 footprint, and be sustainable. 

Let’s get down to the details.

The First Steps in Achieving Carbon Neutrality 

Carbon neutrality vs. net zero is not always a case of comparison. Because reaching net zero may also involve the use of carbon offsets, as is the case in achieving carbon neutrality. 

But before we dwell on this element of neutralizing your emissions, you must first know the basic steps involved. 

Calculating Your Carbon Emissions 

The first step to being carbon neutral is getting how much CO2 your company emits. That would serve as a baseline. This process is also known as carbon accounting or GHG emissions accounting. 

Public traded companies, especially the big ones, are required to disclose their carbon emissions and report them properly. 

The gold standard in accounting for corporate carbon emissions is the Greenhouse Gas Protocol or GHG Protocol. It’s an international framework that puts numbers on a company’s business activity. 

This means you should identify activities that your firm does that release CO2. The more complex the structure of your company, the more difficult it is to identify the sources of emissions. But most often, doing it involves quantifying emissions based on three scopes – Scope 1, Scope 2, and Scope 3.  

The following diagram shows the common emissions sources under each scope. 

The most common method used to calculate carbon emissions is to apply emission factors to activity data from your company. It means getting the quantity of resource use through receipts, invoices, or bills associated with the activities. 

For instance, calculate the amount of electricity, fuels, goods, and services you paid for. The table below shows common polluting activities and sources of information to turn the data into carbon emissions.

To know more about carbon accounting, here’s a detailed guide for that. While for quantifying CO2-polluting activities, here’s a comprehensive guide to refer to.

Once you have established your CO2 footprint baseline, you can now move on to the next step – laying out a plan on how to neutralize emissions. There are many means to that.

As mentioned earlier, you can opt to shift to renewable energy sources to reduce CO2 emissions. Or you may improve the efficiency of your business processes. 

And if you want to provide potential income to others, you can help fund environmental projects through carbon offset credits. 

Examples of leading companies that have an SBTi-approved carbon neutral pledge are: Apple by 2030, Delta Airlines by 2030, and BP by 2050. 

Though the specific levers or measures these companies adopt vary, one common denominator they share is the use of carbon offsets in achieving their climate targets. 

So, how can you achieve your own carbon neutrality targets through carbon offsets?

How To Achieve Carbon Neutrality 

Using carbon offsets or generally known as carbon credits applies to reaching both carbon neutrality and net zero goals. These credits are traded on carbon markets, each credit representing a tonne of carbon reduced or removed. 

Carbon offsets are traded on voluntary carbon markets that serve an important role in supporting corporate emission reductions efforts. Though the SBTi strongly recommends that polluters should limit reliance on offsetting programs as one of their climate actions, not all emissions can be eliminated immediately or through direct reduction measures. 

This is where carbon markets become part of the solution for unabated carbon emissions. These markets are particularly vital for compensating emissions that companies can’t eliminate even after performing substantial reduction initiatives internally. 

The Role of Carbon Offsets in Achieving Carbon Neutrality (and Net Zero)

The goal of carbon offsetting is to neutralize hard-to-abate emissions by removing CO2 from the atmosphere. The idea behind the concept is that a unit of CO2 released by your entity’s activities can be offset by sequestering an equal amount of carbon from somewhere else.  

Ever since offsetting was launched in carbon markets, more and more corporations are supporting offset projects with high hopes that these initiatives help them abate their footprint. And indeed their big investments continue to propel the market to grow immensely in recent years.

As seen in the chart from Katusa Research, offsets issued reached about 300 million in 2021. And as global efforts to shift to sustainable practices to hit net zero intensify, demand for carbon offset credits will also grow.

Based on industry estimates, annual global demand can go up to 2.0 gigatons of CO2 by 2030 and 13 GtCO2 by 2050. That also means the market size can be between $30 billion and $50 billion by the end the decade, depending on various factors.

Carbon offsetting involves different efforts or initiatives pursuing climate actions. Broadly speaking, there are over a hundred projects that can offset emissions. 

Some are into protecting ecosystems like afforestation of new, or reforestation of degraded land. Others include developing or deploying clean energy technologies or renewables. 

Carbon offset projects vary widely when it comes to cost. But the offset credits they generate serve the same purpose: to neutralize an entity’s carbon footprint. 

Both companies and individuals can use carbon offset programs to look for the right offset project to invest in. These programs offer different carbon offset projects that you can select to support. 

So, how do you know which is the best carbon offset program that can compensate for your business’ carbon footprint? That depends on a couple of things such as the type of project you want to support, the quality of the offset, and so on.

But one important criterion to consider is third-party verification which is crucial to validate that the offsetting project is actually reducing the emissions you need to neutralize. And of course, it pays to select projects that follow high social and environmental integrity standards.

Only after retiring the offsets that your company can claim their environmental impacts. Retirement means removing the credits from the market. They shouldn’t be traded anymore as they must count only once towards carbon neutrality or net zero claims.

If you want to learn more about how carbon offsetting works as well as what are the top programs to consider, go over this complete guide.

In summary, here are the key steps you should keep in mind: 

Understand your organization’s carbon footprint
Calculate current carbon footprint to set a baseline 
Define targets and goals for offsetting and reductions
Verify offsets of emissions
Establish a consistent monitoring, verification, and reporting system

Why Having a Carbon Neutrality Goal is Crucial?

Creating a carbon neutral or net zero goal is a great way to fight climate change on a collective level. 

When a popular brand takes a stance against carbon pollution, it inspires other brands or companies to follow suit. 

Not to mention that it also attracts large investors and celebrities like the case of this first carbon neutral food company. 

Neutral Foods was able to attract the likes of Bill Gates and plenty of celebs such as Mark Cuban, LeBron James, John Legend, among others. The company tracks carbon emissions from dairy farms they’re sourcing milk and buys carbon offset credits to neutralize their footprint. They work with farmers to help them cut their own emissions at the source.

Moreover, pledging carbon net neutrality, more so net zero, is a way to practice responsible carbon accounting regularly. This, in turn, enhances climate action awareness and sustainable responsibility at the corporate level or among company leaders. 

Taking steps for being accountable for carbon emissions is a good starting point for companies to strengthen their sustainable policies. 

Most importantly, offsetting CO2 emissions is one option for companies or sectors that can’t fully decarbonize their operations. 

Ideally, your carbon neutrality goals must be flexible enough to consider new technology that can promote climate actions. They must be measurable, attainable, and sustainable within the timeframe set. This can be validated by getting a carbon neutral certification. 

If possible, going beyond carbon net neutral is even more desirable. That means your company is operating not just at a neutral but climate positive footprint. This goes beyond the carbon neutrality vs. net zero debate.

Being a climate positive entity means removing additional CO2 emissions outside of your firm’s value chain. In other words, you’re championing climate actions that eliminate more carbon than your company operations emit. 

Achieve Carbon Neutrality for Sustainability

The takeaway? Carbon neutrality vs. net zero is similar in a sense that they both tackle the climate crisis, prompting actions that reduce harmful emissions. But they’re not the same in a way that they target different emissions and their scope varies.

To be carbon neutral means balancing out carbon dioxide emissions of your company’s or organization’s operations. To hit net zero emissions requires more massive climate efforts that may involve both reducing and offsetting emissions.

Either way, achieving any of these climate goals often calls for getting through large amounts of emissions data, brainstorming reports with stakeholders, and making some changes in your entire operations. 

Achieving carbon neutrality, in particular, is a good way to chart your climate action and sustainability plan. 

The first step to that is calculating your company’s current carbon emissions. From there, you can build out an effective plan of action geared toward reducing your CO2 footprint. Plus, you can also slash your other greenhouse gas emissions in the process.

The post Carbon Neutrality vs. Net Zero (What’s the Difference?) appeared first on Carbon Credits.

The United Nations (UN) has drafted a document that will define a new global carbon market for years to come, which seems to favor nature-based solutions over technological or engineered carbon removals.

The UN panel casts doubt on the promise of using machines to remove CO2 and tackle the climate crisis. This is sending shock waves through the rising carbon dioxide removal (CDR) industry, which scientists said is critical to reduce global warming. 

The high-profile group shots a simple yet baffling question: nature vs. technology – which deserves a carbon credit?

Carbon Removals Don’t Serve Paris’ Article 6.4?

The Biden administration has started pumping billions of dollars into carbon removal solutions to help establish the CDR industry in the U.S. Large companies across sectors have also been betting their money in this emerging industry. The likes of Apple, Microsoft, Stripe, and even JPMorgan have invested hundreds of millions in carbon removal credits. 

But the UN panel appears to prefer the natural ways of capturing CO2. The group is questioning the technical and economic viability of startups seeking to remove carbon that’s already in the atmosphere. In their note, the panel wrote:

“Engineering-based removal activities are technologically and economically unproven, especially at scale, and pose unknown environmental and social risks. These activities do not contribute to sustainable development, are not suitable for implementation in the developing countries and do not contribute to reducing the global mitigation costs.”

In short, they believe that CDR solutions are not serving any of the goals of the Article 6.4 provision. 

A Global Carbon Trading System

The Paris Agreement on climate change contains a specific provision calling for the creation of an international carbon trading program. It’s officially referred to as Article 6.4.

The mechanism sets the international carbon trading system wherein companies can offset their emissions by funding a project that reduces or removes CO2. They can then trade the carbon offsets the project generates in voluntary carbon markets and claim their environmental impact. 

The market for carbon offset credits is currently valued at around $2 billion. By 2050, it can grow to about $160 billion to over $600 billion annually. In another market analysis, operating on carbon removal alone will bring the market to $1 trillion by 2037.

The UN group is tasked with setting up the worldwide carbon trading system. So, the position it takes on which approach in capturing CO2 is best can significantly affect the CDR industry’s fate.

Carbon Credits from the Trees or Giant Fans?

Basically, there are two ways to remove carbon from the air and the oceans. One is through carbon-hungry trees and sea grasses. The other is to use carbon removal technologies such as direct air capture (DAC) that employs giant fans in sucking the CO2.

Both natural and technological climate solutions can be effective ways to mitigate the worst effects of global warming. 

But the UN experts find nature-based carbon market solutions such as reforestation more beneficial despite studies showing some projects failing to deliver their carbon reduction promises. Questions on their durability and quality abound. 

On the other hand, the price of carbon credits generated by engineered removals isn’t cheap. For instance, DAC is still expensive and can remove only a few thousand tons of CO2 a year. In particular, carbon removal startup Charm Industrial sells its carbon removal credit at around $600/metric ton. 

If the group considers natural solutions the true way to remove carbon from the air, it can potentially stop a growing sector of the very market it serves.

So, which solution is worthy of a carbon credit certificate?

The carbon removal industry offers a sensible answer, and it’s not one that’s better than the other. 

A Criteria-Based Approach

The UN-backed IPCC believes that CDR is necessary to achieve the Paris climate goals as shown below. CDR includes bioenergy combined with CCUS (BECCS), natural climate solutions (NCS), and direct air carbon capture with storage (DACCS).

Achieving the Paris Goal with Carbon Removal

But the panel broadly defines the concept of carbon removal as “anthropogenic activities removing CO2 from the atmosphere and durably storing it in geological, terrestrial, or ocean reservoirs, or in products.” This definition doesn’t clearly differentiate natural from engineered CO2 removal solutions.

Over 100 supporters of the carbon removal industry call for the UN intergovernmental group to opt for a “method-neutral, criteria-based approach” to the issue. 

Ben Rubin from the Carbon Business Council, a nonprofit representing the carbon removal companies that signed a letter responding to the UN’s draft, asserted that each CDR approach is a combination of nature and engineering. He further said that:

“The lines just start blurring so quickly. Which is why I think having a criteria-based approach has the most clarity rather than artificially saying that one thing is nature and one thing is technological. The [CDR] sector is advancing quickly, and there are a number of approaches ready for eligibility under Article 6.4 now, with more expected to reach that stage of maturity in coming years.”

Rubin cited enhanced rock weathering (ERW) and biochar carbon removals that employ both natural and engineered ways to capture CO2. He also invited the UN to connect with CDR projects worldwide where they contribute to local and regional economic development. 

The UN carbon removal group hasn’t set a deadline for establishing the CO2 emissions trading system but will likely make its final decision at the COP28 climate talks by the end of November in Dubai. While there’s no formal framework in place yet, the note seems to point what direction the final decision may take. 

The post Which Deserves a Carbon Credit – Nature or Technology? appeared first on Carbon Credits.

Global additions of renewable power capacity will increase by a third this year, says the International Energy Agency (IEA).

In the IEA’s 2023 Renewable Energy Market Update report, the agency said new global renewable capacity will jump by 107 gigawatts (GW) to over 440 GW. This is the largest increase ever reported.

Yet, the manufacturing capacity for all solar PV productions will further rise to more than double to 1,000 GW by 2024, with China taking the lead.

Leaders of the New Global Energy Economy

The need to decarbonize the global economy calls for a new energy system that does away with fossil fuels. 

Per IEA Executive Director Fatih Birol, solar and wind power dominate the rapid growth of this new global energy economy. She further noted that:

“This year, the world is set to add a record-breaking amount of renewables to electricity systems – more than the total power capacity of Germany and Spain combined.”

Three major things drive strong demand for solar PV and wind power: growing policy concerns, higher fossil fuel prices and energy security issues.

In 2024, global renewable electricity capacity is estimated to rise to 4,500 GW. That’s about the same as the combined power output of China and the U.S.

Solar PVs will account for 2/3 of the increase in renewable energy (RE) capacity this year and they will keep growing in 2024. The chart shows the IEA’s estimates for 2023 and 2024.

Net RE Capacity Additions by Technology, 2017-2024

This growth is due to continued expansion of large-scale solar PV applications along with smaller distributed systems. The smaller distributed PVs such as rooftop PVs account for half of this year’s total solar PV deployment. Higher electricity costs are pushing the growth of the smaller solar PV applications, the report noted. 

Meanwhile, onshore wind capacity additions are also on track to rise by 70% this year to 107 GW, another record high, after 2 years of decline as seen in the chart above. The major reason for this rebound is the completion of projects previously delayed due to COVID-19 pandemic and supply chain issues.

RE: At the Heart of Europe’s Energy Plan

In Europe, renewables are at the heart of the bloc’s response to the energy crisis caused by the Russia-Ukraine war. Policy actions in many EU nations will bring a 40% uptick in the region’s new renewable capacity forecasts. 

The newly installed renewables in 2021-2023 will bring a whopping energy savings to EU consumers of about 100 billion Euros. 

European Union Capacity Additions in 2023-2024

Also, the bloc has made more policy and regulatory changes to ease RE permitting in the last 18 months than over the whole past decade. 

New policy actions will also help drive substantial RE increases in India and the US over the next 2 years. 

The Undisputed Leader in RE Deployment

The IEA further said that China will remain as the undisputed leader in global RE deployment. Its new renewable capacity will grow this year and the next.

In 2022, the 3rd-largest polluter took the share of about 50% of all new renewable power capacity globally. In 2024, China’s share will hit a record 55% of global RE capacity deployment. 

Meanwhile, there’s also a growing supply diversification in other parts of the world, particularly the US, Europe, and India.

Meeting Net Zero Emissions Scenario

Based on the upward trends, the report claims that the world will have enough solar PVs in 2030 to meet the annual demand projected in the IEA’s Net Zero Emissions by 2050 Scenario.

In contrast, wind manufacturing capacity will expand more slowly and may struggle to keep up with demand growth through 2030. 

However, despite those record-breaking increases, renewable energy auctions were under-subscribed also by a record 16% last year. ⅙ of RE auction volume was unallocated due to policy uncertainties and volatile prices as shown below.

Governments have to address this challenge to achieve stronger growth of the sector. More investment in upgrading grids to accommodate higher volumes of RE in power systems is also necessary. In the authors’ words, that means:

“Policies need to adapt to changing market conditions, and we need to upgrade and expand power grids to ensure we can take full advantage of solar and wind’s huge potential.”

More growth in 2024 largely relies on how governments’ policy support will turn out, particularly on permitting and auction design. Several countries will see their annual share of solar PV and wind power reach over 40% by 2024, which calls for effective grid management.

The post Global Renewable Energy to Break Records in 2023, IEA Says appeared first on Carbon Credits.

According to S&P Global, in the first quarter of 2023, US imports of lithium-ion batteries surged by nearly 66% from the previous year, reaching a staggering 235,386 metric tons.

The first quarter of 2023 marked the 11th consecutive quarter of rising battery imports and set a new record, approximately 24% higher than the previous record set in the last quarter of 2022.

The leading shippers in the first quarter were China’s Contemporary Amperex Technology Co. Ltd., the world’s largest lithium-ion battery manufacturer; LG Energy Solution Ltd., with significant factories in South Korea, China, and Poland; and US-based Tesla Inc., which supplements its domestic battery production with imports from China.

In 2023, the United States has seen a remarkable increase in the construction of lithium-ion battery factories, supported by substantial manufacturing tax incentives provided by the Inflation Reduction Act of 2022. This development intends to localize the production of this critical energy transition technology.

However, the US continues to depend heavily on international trade for its lithium-ion batteries, especially from China, to meet the escalating demand for electric vehicles and electrochemical energy storage as part of its effort to reduce emissions. The imports of these batteries have soared to unprecedented levels.

The largest recipients of these shipments were Tesla and Samsung SDS America Inc., a subsidiary of South Korean battery maker Samsung SDI Co. Ltd. Other significant recipients included Fluence Energy Inc., a battery storage system integrator, and a battery construction affiliate of NextEra Energy Inc.

Companies like Fluence, Samsung, Tesla, and LG Energy Solution are among those that have pledged to construct or expand US lithium-ion battery manufacturing following the enactment of the Inflation Reduction Act. Additionally, Contemporary Amperex Technology is collaborating with Ford Motor Co. on its domestic battery production.

In the first quarter of 2023, China was the largest contributor to US battery imports, with an overwhelming share of 87.9%, up from 77.5% a year ago. South Korea contributed 3.2%, down from 4.7% in the same period in 2022. Poland increased its share to 3.1% from 1.4%, and Japan’s contribution dropped dramatically from 11% to just 1.2%.

The increasing demand for lithium-ion batteries in the U.S., which resulted in a record-breaking import in Q1 2023, is a clear indication of the ongoing energy transition and the heightened emphasis on electric vehicles (EVs) and electrochemical energy storage. It also underscores the significant role of international trade, particularly with China, in meeting this demand.

The data underscores the urgency of increasing domestic production capabilities to meet the escalating demand. It also suggests that despite the rapid build-out of domestic lithium-ion battery factories, reliance on imports, particularly from China, is likely to persist in the near term due to the sheer volume of demand.

Consequently, while the U.S. continues to bolster its domestic production, maintaining healthy international trade relationships will be crucial to meeting the nation’s energy transition goals.

 

The post Lithium-Ion Wars: US Battery Imports Soar by 66%, Setting New Record as Domestic Production Ramps Up appeared first on Carbon Credits.