Is There A Problem With Being Carbon Neutral?

Over the past year, the term carbon neutral has hit several headlines, not necessarily for the right reasons, which may prompt one to wonder what the problem with being carbon neutral is. And is there more to the confusion around this term than meets the eye of the general public? The term gained prominence as numerous products and companies branded themselves as carbon neutral, raising concerns about greenwashing and the authenticity of such claims. This scrutiny even brought Apple's new watch range, which was marketed as carbon-neutral, under scrutiny.

The curious among us may want to know more: How do the experts define carbon neutrality? And what exactly qualifies as being carbon neutral? Understanding these aspects is crucial to demystify the confusion surrounding this topic. While the definition of carbon neutrality might be relatively straightforward, the criteria for qualifying as carbon neutral is where much of the confusion lies, and it's this area that still needs more consensus if achieving one is even feasible in the current landscape.

The landscape of carbon neutrality—specifying what is included—is evolving. Just this week, the Board of the Science Based Targets Initiative—which provides standards used by over 5000 companies to establish net-zero carbon or carbon neutrality targets—released a statement. This statement has implications for what might be included in the scope of carbon neutrality in the future. However, the jury is still out on the matter, as only the revised standards can pass the final verdict.

How Do Experts Define Carbon Neutrality?

Carbon neutrality and net zero CO2 emissions at the global scale are defined in the same manner by the scientific community. According to the IPCC — the UN-backed intergovernmental scientific body, they are achieved when the man-made CO2 emissions released are globally balanced by the amount of CO2 removed over a specified period.

However, at the sub-global level, carbon neutrality and net zero are overlapping concepts, and differences in their definition are circumscribed by how territorial responsibility is determined. For example, entities such as nations and districts generally define the scope of 'net zero' within the reign of their territorial control. Meanwhile, 'Carbon neutral' when applied to firms, products, and events or activities may include emissions and removals beyond an entity's direct control or territorial responsibility, often referred to as 'value chain emission' or 'Scope 3'.

What does it mean in the real world? Unfortunately, at the moment, there is some degree of confusion, for lack of a better word, on what should qualify as carbon neutral, even among key bodies.

Unpacking Confusion In Scope Of Carbon Neutrality

One major source of ambiguity is whether carbon credits — often used interchangeably with carbon offsets —sold in voluntary carbon markets can be included in carbon neutrality claims. Carbon credits are tradeable certificates that represent the mitigation (reduction or removal) of a specified amount of greenhouse gas emissions. There are numerous examples where incorporating carbon credits as part of carbon neutrality has drawn criticism. For instance, the use of carbon credits by Apple to offset the 7-12kg of greenhouse gas emissions produced by each new Apple watch and calling it carbon neutral. It's crucial to emphasize that the primary question here is whether carbon offsets should be factored into neutrality claims. Though important, the quality of these offsets represents a separate concern and is better left out of this conversation to maintain focus.

Regarding including carbon offsets in neutrality claims, most experts generally support that claims of carbon neutrality should be based on the emission reduction impacts within the value chain, not on using carbon credits or offsets of greenhouse gas emissions elsewhere. In line with this understanding, the EU Parliament passed a new regulation to ban greenwashing and improve consumer information. Under this new rule, carbon offsets will not be allowed in carbon neutrality claims from 2026 onwards.

While the EU has made its position clear, the global stance remains ambiguous, raising doubts about whether governments align on using carbon offsets for carbon neutrality. For instance, a government-affiliated certification agency in Australia includes carbon offsets in its neutrality claims. This agency, linked with the Australia's Department of Climate Change, Energy, the Environment, and Water, has faced media scrutiny for certifying companies that utilize offsets.

Impact Of Recent Developments

Last week, the Board of Trustees of the Science Based Targets Initiative released a groundbreaking press statement, which many interpreted as permitting the inclusion of carbon offset credits within the value chain. Undoubtedly, this announcement by the Board was significant as it marked a departure from the stance taken in SBTi's publications and guidance. The statement is backed by the results of the call for evidence, which has yet to be made public.

It's, however, essential to note that the recent statement by the SBTi's Board is only an input to the decision-making process. It's the forthcoming revised standard that will truly define matter. The standard revision process is rigorous and science-based, involving a research team and technical experts who review and approve SBTi standards according to well-established procedures in the public interest.

Therefore, the jury is still out. There are unresolved issues that need to be addressed in order to use the term 'carbon neutral' more effectively. The recent increase in headlines around this topic is a positive development. It suggests that the public, governments, and organizations are taking active responsibility for figuring out the best steps forward. We can be optimistic that this will trigger actions to tie up these loose ends and generate further momentum for climate action.