Published: 26 March 2024
Contributors: Amanda McGrath, Alexandra Jonker
Net zero means the state at which enough greenhouse gas emissions are removed from the atmosphere to offset the amount produced by human activities.
Transportation, energy production (especially the burning of fossil fuels) and industrial processes generate carbon dioxide, methane and other gases known as greenhouse gases (GHGs). These gases trap heat within Earth’s atmosphere and contribute to global warming. Reaching net-zero emissions involves countries, communities and corporations taking steps toward decarbonization. Meaning, they must balance out the emissions they produce by removing an equivalent amount through natural or artificial means, such as using renewable energy sources and implementing carbon capture and storage technologies.
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The Earth's temperature has already risen by 1°C above pre-industrial levels, and the impacts of climate change are becoming increasingly severe. Without steps to slow climate change, the planet will face catastrophic consequences, such as extreme weather events, rising sea levels and food shortages.
The Intergovernmental Panel on Climate Change (IPCC) has stated that in order to limit global warming to 1.5°C (2.7°F) above pre-industrial levels, a threshold beyond which the effects of climate change become significantly more severe, we need to reach net zero carbon dioxide (CO2) emissions globally by around 2050. Proponents believe achieving net zero will slow temperature increase and create new economic opportunities, improve public health and contribute to a better environment for future generations.
The concept of net zero has evolved over the past few decades, but gained significant momentum in recent years due to increasing concerns about climate change.
1970s-early 2000s: Early discussions
The idea of balancing emissions to achieve a net-zero effect has its roots in the early discussions on climate change and sustainability. The term started appearing in scientific literature and policy discourse around the 1970s and 1980s, often linked to energy efficiency and renewable energy strategies. In the 2000s, the concept of carbon neutrality gained popularity. Similar to net zero, it was the idea that carbon dioxide emissions could be balanced by absorbing an equivalent amount from the atmosphere. Many businesses and organizations began announcing their own commitments to carbon neutrality.
2015-2018: International action
At the 2015 United Nations Climate Change Conference (COP21), countries around the world and other stakeholders committed to the Paris Agreement, a landmark international treaty that set a global framework to help limit Earth’s warming to less than 2°C (3.6°F) above pre-industrial levels, with a long-term goal of limiting the increase to 1.5°C (2.7°F). To achieve this, the agreement recognized that global emissions need to reach net zero in the second half of this century. In 2018, the IPCC released a special report on the impacts of global warming and suggested global net human-caused emissions of carbon dioxide would need to fall by about 45% from 2010 levels by 2030, reaching net zero around 2050.
2019-present: Net zero commitments
As of 2024, more than 140 countries have set net zero targets that address about 88% of global emissions. More than 9,000 companies, 1,000 cities, 1,000 educational institutions and 600 financial institutions have joined the United Nations’ Race to Zero campaign, pledging to take rigorous, immediate action to cut global emissions in half by 2030.1
Net zero emissions targets are set based on a comprehensive understanding of a country’s or organization’s GHG emissions and the capacity to reduce and offset them. The first step is to conduct a baseline emissions inventory, or carbon accounting, by calculating the current level of GHG emissions, including Scope 1 emissions (direct emissions from owned or controlled sources), Scope 2 emissions (indirect emissions from the generation of purchased energy) and Scope 3 emissions (indirect emissions that occur in the supply chain).
There are a number of international collaborations that aid in setting targets. The Science-Based Targets initiative (SBTi) is a collaboration between the Carbon Disclosure Project (CDP), the United Nations Global Compact (UNGC), World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) that aims to help companies use research and data to set reduction targets in line with what science says is necessary to limit global warming. The SBTi provides a framework and guidelines for companies to develop and validate their targets, ensuring they are consistent with the latest climate science. Targets are also informed by the Paris Agreement’s provision that countries must submit nationally determined contributions (NDCs) outlining their climate action plans. Some countries have also developed mid-century strategies that outline their long-term vision for achieving net-zero emissions, while companies look to stakeholders to help guide their targets.
From there, a plan to reduce those emissions is established. It may involve increasing energy efficiency, switching to renewable energy sources, improving waste management, changing transportation methods or offsetting through carbon removal projects such as reforestation. These decarbonization efforts are central to efforts to reach net zero goals.
Once emissions reduction targets are established, ensuring they are met requires regular monitoring and reporting, which involves tracking emissions over time and making necessary adjustments to the strategy. To ensure credibility and transparency, many organizations choose to have their emissions data and reduction strategies verified by a third party.
The terms “net zero” and “carbon neutral” are sometimes used interchangeably; however, there are some differences between the two. Both refer to efforts to balance out GHG emissions. But carbon neutrality allows for organizations to simply offset their emissions, without necessarily reducing the amount they generate in the first place. Net zero, on the other hand, is achieved by reducing overall emissions and using offsets in the case of unavoidable residual emissions. The SBTi can be used to validate net zero efforts, but not claims of carbon neutrality.
Countries and companies are employing a variety of strategies to reach net zero emissions targets. Here are some key methods:
Many countries are investing heavily in renewable energy sources such as wind, solar, hydroelectric and geothermal power. They're also phasing out coal-fired power plants and promoting the use of clean energy through subsidies and policy incentives. Many private sector companies and public organizations are transitioning to renewable energy sources to fuel their operations. This can involve installing solar panels, purchasing green energy directly from suppliers or buying renewable energy certificates (RECs).
Countries are implementing standards and regulations to improve energy efficiency in buildings, transportation and industrial processes. This includes everything from fuel economy standards for vehicles to building codes that require energy-efficient design and construction. They are also investing in sustainable development projects like cycling and pedestrian paths and waste management facilities that reduce the amount of greenhouse gas emissions. Companies are investing in technologies such as LED lighting, high-efficiency HVAC systems and energy management software to reduce their energy consumption. They are also incorporating sustainable design principles into their buildings to reduce energy use and minimize environmental impact.
Companies are working with their suppliers to reduce emissions and climate impact throughout their supply chains. This can involve sourcing materials more sustainably, reducing waste or helping suppliers improve their own energy efficiency.
For residual emissions that can't be eliminated, many companies invest in carbon offset projects. These projects, which can range from reforestation efforts to renewable energy installations, help to remove or reduce greenhouse gases elsewhere. However, it is important to note that relying solely on offsets without reducing emissions at the source is not sufficient to achieve net zero.
Many countries are encouraging the use of electric vehicles (EVs) through tax breaks and subsidies. Some have even set deadlines for banning the sale of new gas and diesel cars. Companies with vehicle fleets are increasingly switching to electric, installing charging infrastructure and offering incentives to encourage employees to drive EVs.
Also known as Carbon Capture and Storage (CCS), these are methods used to capture CO2 emissions directly from the source, then store it underground in geological formations to reduce impact on the atmosphere and global temperature. Some companies, particularly in heavy industries, are investing in CCS to reduce their emissions. Countries are also using it to help meet their climate goals, and to allow for energy security (so they may continue using fossil fuels while reducing their environmental impact).
Companies are updating their products and services to be more sustainable—for example, by developing products that are more durable, easier to repair or designed to be recycled at the end of their life.
This economic strategy involves putting a price on carbon emissions, either through a carbon tax or a cap-and-trade system, to encourage businesses to reduce their carbon footprint.
Forests, wetlands and other ecosystems play a crucial role in absorbing CO2 from the atmosphere. Many countries are implementing policies to protect these areas and restore degraded ecosystems.
Some countries have enshrined their net zero goals in law, making it a legal requirement to achieve these targets by a certain date. Many are working together through international agreements like the Paris Agreement to coordinate their efforts and hold each other accountable. For companies, partnerships and collaborative agreements are helping to improve efficiency in supply chains and reduce emissions.
Achieving net zero is not without challenges. One of the biggest is the cost of transitioning to a low-carbon economy. While this can lead to long-term savings and economic opportunities, the upfront costs can be a barrier, particularly for developing countries or smaller companies. Achieving a net-zero transition requires significant changes to supply chains and value chains, which can be difficult to implement, especially at a global scale.
There’s also a need to ensure that emissions reductions are real, verifiable and supported by action. While net zero GHG emissions pledges have been made by a large number of organizations, many of those had only pledged their intention with little to no follow through on how they would achieve their net zero targets. This situation has also brought scrutiny on greenwashing. Greenwashing is when an organization presents an inaccurate or incomplete impression of their climate action to inflate their claims of environmental practices and performance results among stakeholders.
While net zero is not without its issues and challenges, including those noted above, the movement has undoubtedly spurred climate action where it didn’t previously exist. Collective climate action from organizations and jurisdictions around the world has given rise to climate policy, benchmarking and emissions transparency. Some investors are including net zero initiatives in their evaluation of organizational performance. In turn, organizations are making public commitments to deliver on these outcomes.
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Footnotes
¹ United Nations Climate Action (Link resides outside ibm.com), United Nations, accessed March 2024