Carbon neutrality is defined by an internationally recognised standard, PAS 2060, and is where the sum of greenhouse gas (GHG) emissions produced are balanced or 'offset' by projects that either result in carbon reductions, efficiencies or sinks . This can be achieved by buying carbon avoidance/reduction credits, which support the funding of projects that reduce the amount of CO2 released into the atmosphere, such as renewable energy generation.
A commitment to carbon neutrality does not require a reduction in overall GHG emissions. However, for a business to be carbon-neutral, it must offset the GHG emissions it produces, even if those emissions are increasing.
In contrast, a commitment to net-zero requires an organisation to reduce its GHG emissions in line with the latest climate science and 1.5ᵒC trajectory, with the remaining residual emissions balanced through carbon removal credits .
Note that a net-zero commitment requires that credits are removal credits, whereas a carbon-neutral commitment permits avoidance/reduction credits. Removal credits support the funding of projects that remove CO2 from the atmosphere – for instance, through CO2 removal technologies or afforestation.
An organisation may go beyond a net-zero commitment to be classed as ‘carbon positive’ if it removes more GHG emissions from the atmosphere than it produces.
Lastly, there are also differences in the applicable scopes of emissions. Carbon neutrality has a minimum requirement of covering Scope 1 & 2 emissions, with Scope 3 encouraged . Net-zero must cover Scopes 1, 2 and 3. The requirement to include Scope 3, which includes supply and value chain emissions, adds an additional layer of complexity with respect to measurement of emissions, which will be explored elsewhere in our Carbonomics 101 series.