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This is part of a four-piece Climate Series designed to help large emitters chart an achievable path to net zero emissions. Access the full series here.
All companies emit carbon dioxide into the atmosphere, both directly and indirectly. At its core, offsetting is about avoiding or drawing down the carbon your company emits. So what is net zero and why is it the new standard for companies that want to eliminate their environmental footprint? In this article, we’ll define net zero and lay out the first steps your company can take to achieve it.
There is a lot of discussion in the emissions reduction space about terminology. Here is a quick breakdown of the three most common levels of carbon offsetting:
Carbon Neutral - Your company compensates for its emissions through offsetting - paying for activities that avoid the release of CO2 elsewhere in the world. This is generally the cheapest option, but the hardest to measure with confidence.
Net Zero - Your company removes one ton of carbon for every ton emitted. This is generally more costly, but more effective and measurable than offsetting.
Carbon Negative - Your company removes more carbon from the atmosphere than it emits.
For years, carbon neutral was the standard for companies aiming to have a responsible environmental footprint. Recently, the sentiment is that “neutral is not enough” and that companies should pursue at least net zero. There are two main reasons for this: a surplus of carbon in the atmosphere and bad math.
First, we’ve already put too much carbon into the atmosphere, and there is a lag between when carbon hits the atmosphere and when it warms it. So even if we “hold the line” and emit no new carbon from now on, the atmosphere will keep warming for a few decades. We need to hold the line and remove carbon.
Second, many companies who have claimed carbon neutrality have been outed as participating in dubious offset math, which has caused a lot of people to view the term “carbon neutral” with skepticism. In a recent Bloomberg exposé, several high-profile companies were identified as participating in what the article deemed “fake carbon offsets” - essentially paying to protect land that was already protected or not in any danger of being deforested. According to Stanford lecturer and policy director at CarbonPlan Danny Cullenward, “For the credits to be real, the payment needs to induce the environmental benefit.” If you are “enrolling landowners who had no intention of cutting their trees,” you’re “engaged in the business of creating fake carbon offsets.” Sometimes, cheap carbon offset projects that appear “too good to be true” are exactly that - better to invest in projects with a clear and measurable impact.
Most companies have unavoidable emissions as part of running their business. For example, offices need to have lighting and temperature control. Step one is to measure these emissions, step two is to draw them down, and step three is to remove whatever emissions remain by capturing one ton of carbon for every ton emitted.
Before you can choose the best offset portfolio for your company, it’s important to understand all the ways it emits carbon and how you can measure them. Emissions are commonly divided into three Scopes.
Scope 1 includes direct emissions, such as the carbon emitted from a power plant or factory.
Scope 2 includes indirect emissions from energy, such as the electricity that powers your company’s buildings.
Scope 3 includes indirect emissions created in the value chain, such as distribution, purchased goods and services, and employee commuting.
Traditionally, many companies have focused their emissions reduction efforts on their Scopes 1 and 2 emissions. Scope 3 emissions can be more difficult to measure, but it is critical to include them. Many companies, such as Kraft Foods, have discovered that over 90% of their total emissions are in Scope 3!
Some companies measure their own emissions, others choose to hire a firm to measure for them. Following is a list of software your company can use to measure its own emissions, a DIY method, and a list of firms that could do it for you.
Before you shift your focus to removing or offsetting, your company should reduce its unavoidable emissions as much as possible and make operations more efficient and greener. As journalist Jesse Klein says so well in a recent GreenBiz article:
"Going straight to offsets without going through the first two steps is like having a diet soda with your ice cream sundae in order to "offset" some of the calories. Probably not a good diet strategy."
There are a great many ways to drawdown your company’s emissions, following is a starter list of some of the most common methods:
Power purchasing agreements - if your operations are unavoidably supplied by a dirty grid, you can fund clean energy in another location to offset your emissions, one-for-one.
Switching to green energy - this can include using green energy sources like solar and wind.
Efficient energy - for example, motion-activated lighting and automated temperature control systems can dramatically reduce a building’s energy consumption.
Once you know your company’s carbon footprint and have drawn down as much as possible, you need to remove the rest of the carbon your company emits. Most carbon emission offset methods fall into two categories - Avoidance and Removal. Avoidance projects aim to avoid the release of emissions, Removal projects physically remove carbon from the atmosphere.
There are many types of avoidance projects, some of the most common include:
There are two broad types of carbon removal solutions: Natural and Technological.
Natural solutions include:
Technological solutions include:
Both methods are good for the planet, but removal solutions are generally more effective than avoidance solutions and have an impact that is easier to measure. (For more on this, see our article about Avoidance vs Removal).
Net zero is the new standard for carbon emissions reduction efforts - it means you are removing your carbon emissions directly from the atmosphere, ton for ton. Carbon neutral projects tend to offset or avoid new emissions, which won’t slow global warming in a meaningful way. To get to net zero, your company will need to measure its emissions, make its energy use as efficient as possible (through a drawdown plan), and remove all remaining unavoidable emissions. Once you achieve a net zero system, you can feel confident that your company is one of the leaders in the effort to combat climate change.
Jack Fischl is an entrepreneur, writer, and former Climate Strategy Fellow at Recapture. After serving in the Peace Corps in Panama, he founded a sustainable travel company that was recognized by Booking.com as one of the most socially impactful start-ups in the world. He is passionate about the intersection of for-profit business and impact.