In order to limit global warming to 1.5 degrees Celsius above pre-industrial levels – a threshold the Intergovernmental Panel for Climate Change (IPCC) suggests is safe – achieving carbon neutrality by mid-21st century is essential. This target was also laid down in the COP21 Paris agreement signed by 195 countries.

There is not a unique definition of Carbon Neutral and Net Zero, as these are often defined in different contexts, such as buildings, organisations, or even nations. Best practice is to consider scope 1, 2 and 3 emissions in both definitions, however some typologies of emissions are often excluded based on a materiality assessment. For example, both carbon neutrality and net zero are often referred to specific aspects of an asset or organisation: “Carbon Neutral product” or “Net Zero in operation”.

In decarbonisation, we often use kg of carbon dioxide equivalent as the unit for all GHG emissions. Therefore, when we use carbon neutral and net zero carbon, we commonly include all relevant emissions.

Defining ‘neutral’

To be carbon neutral means achieving a "neutral” balance between the amount of GHG emissions produced in the context of a given project, asset or organisation, and the “carbon" offsets purchased to abate any remaining emissions.

Carbon offset units are generated from activities that prevent, reduce or remove greenhouse gas emissions from being released into the atmosphere outside the boundary of the boundaries.

One way to reduce emissions and to pursue carbon neutrality is to offset emissions made in one sector by reducing them somewhere else. This can be done through investment in renewable energy, energy efficiency or other clean, low-carbon technologies

Carbon neutrality is generally associated with a significant use of carbon offsets to compensate for the emissions.

An example of carbon neutral certification is the Australian Climate Active standard

What does net zero mean?

Net zero, on the other hand, refers to a given project, asset or organisation which first reduces its emissions following science-based reduction pathways, then offset any remaining GHG emissions by like-for-like removals (e.g. permanent removals for fossil carbon emissions).

Achieving net zero means reducing emissions as much as possible and then offsetting any remaining emissions through the removal of greenhouse gases from the atmosphere, such as through reforestation or the use of carbon capture and storage (CCS) technologies.

Net Zero is associated with a focus on emissions reduction within a 1.5 degrees Celsius trajectory and a minimal reliance on offsets.

An example of net zero certification is the SBTi net zero standard

To summarise, carbon neutrality refers specifically to achieving a balance between GHG emissions and offsets, net zero refers to reducing emissions and then achieving a balance between GHG emissions and removals. Action to reach net zero must happen on a global scale and it requires the collaboration of world governments, as well as private individuals and third sector groups.