Carbon neutral and net zero are often mistaken for the same thing, but are actually two very different approaches to combatting climate change. Here we’ll explain why – and what you can do too.

A Carbon Neutral business can continue to produce the same volume of greenhouse gas emissions (or more), and then offset these emissions through investment in global carbon avoidance or reduction projects, such as renewables or rainforest restoration.

A company operating at Net-Zero will actively reduce – or even avoid – greenhouse gas production and then offset any remaining emissions through investment in global carbon reduction projects.

Here in Guernsey, we have committed to achieving Net Zero carbon emissions to align with the United Nations Paris Agreement. This is also a commitment made by Guernsey Electricity to help strengthen and support the global response to the climate crisis, and is something each of us can also play our part in.

But first we as consumers need to understand exactly what these commitments mean to make sure we are doing the right thing for our planet and livelihoods.


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.

Carbon Neutral

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 means a company promoted as Carbon Neutral need only offset the volume of GHG emissions it produces – even if those emissions are increasing. There is no requirement to reduce greenhouse gas emissions produced as a result of their business operations.

Carbon credits

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.

Net Zero

A business committed to Net Zero will make all efforts to avoid, reduce, or find alternative ways to replace any greenhouse gas emissions produced by its business activities. Any remaining emissions will then be offset through environmental projects.

The Net Zero approach will help reduce carbon emission in our outdoor space here in Guernsey.

We’ll use business travel as an example.

If 10 business class flights from Guernsey to Geneva via London are made a year, the organisation could become Carbon Neutral through buying enough carbon credits to offset the 8 tonnes of carbon produced by those flights.


To become Net-Zero, the same company would reduce the number of flights per year as much as they can. This could be done by replacing some face-to-face meetings with virtual meetings and taking just 5 business flights a year. This means the business will reduce the greenhouse gas emissions generated by air travel by 4 tonnes, and the remaining 4 tonnes can be offset through investment into environmental projects.

If you applied this theory across all the different ways a business produces GHG emissions – such as heating buildings using oil or gas – the company achieves net-zero by:

  • Reducing the GHG emissions generated from heating their office building to as low as possible using all potential means, which includes switching from fossil-fuel to electric heating.
  • Then removing any remaining GHG emissions produced by the business through supporting environmental projects such as reforestation.

Why do the words matter?

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.

Carbon Neutral – producing the same or more greenhouse gas emissions and then offsetting those emissions through investment in global carbon avoidance or reduction projects such as renewables or forest restoration.

Net-Zero – avoid and reduce GHG production and offset the remaining emissions through investment in global carbon reduction projects

One of the main industries under the spotlight are worldwide electricity producers. The traditional ways of producing electricity by burning fossil-fuels to generate electricity has had a very negative impact on our planet and it’s important these businesses focus on Net-Zero.

Here in Guernsey, our electricity provider has already decarbonised our electricity supply by switching to 100% renewable imported electricity which supplies over 90% of our island’s electricity needs. They are also committed to Net Zero through exploring all opportunities to remove or reduce greenhouse gas emissions from within the business, and plan to offset the remaining emissions produced through environmental projects.

Find out more about their commitment to environmental sustainability.

What can we do?

  • Ask questions – what does a company’s environmental commitment translate to in reality?
  • Reduce our personal carbon emissions – this is how each of us can help achieve Net Zero. Some of the most impactful ways are switching from fossil-fuel to electric home heating, driving an electric vehicle, and reducing our air miles
  • Support environmental projects – we can also help reduce carbon by supporting initiatives that actively remove carbon from our atmosphere