Net zero, or carbon neutral? Why does it matter?

Carbon offsetting is one way for a business to neutralise their greenhouse gas emissions.

Offsetting is a system designed to cancel out or reduce the effect of something. In the context of climate change, the idea is to counterbalance or compensate the volume of greenhouse gases a business produces by paying for initiatives that help remove carbon from the atmosphere.

These environmental protection projects can include:

• Reforestation: this includes planting trees native to the local area, which is a cheap and relatively easy way to capture greenhouse emissions from the atmosphere. The growing trees pull carbon from the atmosphere – creating a carbon sink – and store the captured CO₂ in the form of timber.
• Peatland protection: this type of wetland is one of the largest natural carbon stores made up of dead vegetation built up over millennia. Damaging peatland to produce everyday products such as compost releases a high volume of greenhouse gases, meaning the protection and restoration of these ancient sites will significantly reduce global emissions.
• Seagrass: coastal wetlands, seagrass meadows and mangroves in our oceans may capture and store carbon faster than tropical rainforests. Seagrass restoration projects help support overall carbon sequestration while also absorbing a significant portion of the ocean’s carbon each year.
• Wild grasslands: these are also important carbon sinks that store most of their carbon in the soil and underground, which helps prevent carbon release from events such as forest fires.

How can a company such as an oil or gas supplier be carbon neutral when their business model is based on selling fossil-fuels?

Carbon neutrality means a company can continue business-as-usual activities – such as burning or supplying the same volume of fossil-fuels – and then balancing the greenhouse gas (GHG) emissions produced by these activities through ‘offsetting’ the equivalent amount of carbon. Often this is done by purchasing ‘carbon credits’ and/or supporting global GHG reduction by investing in avoidance or reduction projects such as renewables or reforestation.

For example, if a Carbon Neutral company supplies gas to customers which then produces 18,000 tonnes of CO2 emissions when burnt here in Guernsey, that company might commit to removing 18,000 tonnes of carbon annually on their customer’s behalf by purchasing 18,000 carbon credits.

These credits are then used to fund carbon avoidance or reduction projects.

Avoidance credits are from certified emission-reduction projects that reduce emissions compared with their usual activities – e.g. renewable energy and carbon-capture projects.

Removal credits offset projects that absorb additional CO₂ back from the atmosphere, for example reforestation projects.

Here is where the challenge lies: carbon neutrality doesn’t require a commitment to avoid, reduce, or replace the overall GHG emissions of that business. Nor is there a commitment to only select removal offsets, which shall be a requirement of net zero businesses. 

This is a permit owned by a company that allows them to emit a certain amount of carbon dioxide or GHG emissions. One credit is usually equal to one tonne of carbon dioxide.  

Companies that pollute are awarded credits that allow them to continue producing pollution up to a certain limit. If their GHG emissions reduce, they may sell any unneeded credits to other polluting companies that need them.

There is a danger that cheap carbon offsetting might be used to avoid the hard work and dedication needed to cut carbon emissions if it is perceived as a way to wipe the slate clean.

Over time the intention is to reduce the number of credits issued to incentivise companies to find new ways to reduce their greenhouse gas emissions.

Both words are often used in business advertising and it can be hard to get through a week without hearing or seeing them somewhere.

The bottom line is the two terms mean entirely different things and should not be used interchangeably. If you are buying from a business and wish to support their environmental commitments, it’s important to be clear on what they’re trying to accomplish.