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This year has seen a surge in the popularity of net zero emissions targets. Companies and governments have been lining up to declare their net zero aspirations.

For example, in June of this year, the UN Global Compact, the We Mean Business Coalition and the Science Based Targets initiative (SBTi) issued a call to action for private companies to align their GHG emission reduction targets with 1.5°C emissions scenarios or set a public goal to reach net zero emissions by no later than 2050. To date, 104 businesses have signed this Business Ambition for 1.5°C pledge.

Then in September, the UN Climate Action Summit in New York saw the launch of the Climate Ambition Alliance, bringing together 59 nations ramping up action by submitting their enhanced Nationally Determined Contributions (NDCs) by 2020, 11 States that have already started an internal process to increase ambition, as well as 65 countries and the EU, ten regions, 102 cities, 93 businesses and 12 investors – all working towards achieving net zero emissions by 2050.

The term net zero has also proliferated in the media, as well as in political, corporate and academic discussions.

One of the reasons for the popularity of net zero targets is that the term itself carries a promise of strong action, openly embracing the need to halt global emissions, and is seen by many as the hallmark of climate leadership. At a time of climate emergency, when the public is increasingly demanding more urgent action on climate change, target dates for achieving net zero emissions have become a new proxy for climate ambition.

But what do we mean by a net zero target in the corporate sector? Is one company’s definition of net zero the same as another’s?

 

A working definition

Unlike other terms, such as carbon neutral, there is no commonly agreed definition of what constitutes net zero emissions. However, this may be about to change. In September, the SBTi published a discussion paper – ‘Towards a science-based approach to climate neutrality in the corporate sector’ - containing a working definition of net zero to inform corporate net zero targets. The SBTi intends to incorporate feedback from stakeholders in the next iteration of the definition, principles and draft guidelines that it expects to publish at COP25 in Madrid next month.

The paper describes net zero for a company as ‘achieving a state in which the activities within the value chain of a company result in no net impact on the climate from greenhouse gas emissions. This is achieved by reducing value chain greenhouse gas emissions, in line with 1.5°C pathways, and by balancing the impact of any remaining greenhouse gas emissions with an appropriate amount of carbon removals’.

 

Key recommendations

While it is positive to see efforts to define this widely used term, it is vital that the final definition, principles and guidelines are as robust as possible if net zero targets are going to deliver on their promise.

In our view, that will require a more prescriptive approach, clearly stating which methods of greenhouse gas removal (GGR) would be permitted in achieving net zero and when these would be legitimate to use. To further elaborate, we believe the following considerations are essential for net zero targets to be meaningful and credible:

  • Key definition distinctions: Among the plethora of related terms, which also include zero carbon and net positive, the most useful distinctions can be made between net zero and carbon neutral, which itself is defined by the PAS 2060 Standard:

- PAS 2060 allows offsets, while net zero only allows certain forms of GGR in certain instances.

- PAS 2060 requires a carbon reduction plan (though no specific level of ambition is prescribed), while net zero requires a reduction target aligned to a 1.5ᵒC science-based target.

  • Ratio of reductions to removals: Emissions should be reduced to the greatest possible extent before any residual emissions can be compensated using GGR – this has always been a key tenet of responsible offsetting. Some sectors, such as aviation, will inevitably find it harder to reduce their emissions and so will require a higher proportion of removals. These truly ‘hard-to-decarbonise’ emissions need to be defined.
  • GGR methods: Any compensation of emissions should be restricted to only certified methods of GGR – in order to be confident that the carbon is permanently sequestered. Some GGRs are seen as more reliable than others. The 2018 Royal Society report on greenhouse gas removal discusses GGR options including large-scale forestation, biochar, BECCS (bioenergy with carbon capture and storage), DACCS (direct air capture and carbon storage) and enhanced weathering. However, the IPCC’s special report on Global Warming of 1.5ᵒC emphasised that geological storage is generally longer lasting than biogenic storage. Such factors should be considered when determining which GGR options are appropriate for compensating emissions.
  • Physical boundaries: While it might make sense for a country to generate removals within its own borders (as Costa Rica has proposed as part of its net zero target), it is impractical to expect the vast majority of companies to effect removals within their own value chains. Instead, we envisage companies being able to purchase GGR certificates in the future, in the same way that they can currently purchase Renewable Energy Certificates and Guarantees of Origin for electricity.
  • Trajectory pathway: An ambitious net zero target needs to consider both the target date for achieving net zero and, as importantly, the pathway to minimise cumulative emissions along the way. Hence, the need for a stretching science-based target trajectory to underpin the net zero target.
  • Business model pathway: It is essential to move towards an appropriate future business model to mitigate transition risks. As an example, finding a way of producing net zero internal combustion engine transport with GGR should not be considered a solution when society is moving towards low-emissions transport via electrification and other means.
  • Accounting boundaries: It might become necessary to treat scope 1 and 2 emissions differently from scope 3 in this context: for example, an international GGR certificate scheme could apply to scope 3 emissions, but it might be more appropriate for scope 1 and 2 residual emissions to be dealt with locally.
  • Standardisation: There is a need to adopt widely accepted accounting standards and an agreed system for verifying and certifying GGRs.

 

Based on these points, we propose the following definition for a net zero company:

A net zero company will set and pursue an ambitious 1.5°C aligned science-based target for its full value-chain emissions. Any remaining hard-to-decarbonise emissions can be compensated using certified greenhouse gas removal.

Net zero is certainly a viable and desirable goal for businesses, provided it demands a reduction target aligned to a 1.5ᵒC science-based target and is limited to specified GGRs.

We have an opportunity to ensure that this is the case and, in doing so, we will be ensuring that the current enthusiasm for net zero targets results in meaningful outcomes for the planet.

 

 

Andie Stephens

Andie Stephens has led on the development of the ICT sector guidance for the GHG Protocol Product Standard and is a recognised global expert in carbon measurement, having contributed to the development of various international standards and European Commission ICT initiatives. 

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