Carbon Neutrality: What it is & Why it Matters

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Individuals and Companies throughout the U.S realize that we have a climate crisis on our hands and that it requires urgent solutions. As a result, these organizations and are stepping up to reduce emissions in ways never seen before. Everyone is asking, how can I or how can my business become carbon neutral.

What does carbon neutral mean? How does a carbon neutral economy become a reality? What does decarbonize really mean?

We’ll answer the question what is carbon neutral and how to set a goal of carbon neutrality.

How to Achieve Carbon Neutrality

No person or company can be completely carbon free. For any company thinking about Carbon Neutrality it is important to first “decarbonize” as much as possible. This means permanently reducing as many emissions as possible by cutting energy use, substituting fossil fuel driven energy with renewables, traveling less and reducing waste of all kinds. This will start your journey toward being one of the carbon neutral companies. It is also important to look at emissions associated with the organization and outside the organization control including employee commuting, supply chain emissions, and purchased goods and services. This will create your baseline carbon footprint.

Large companies classify their emissions in three buckets, Scope 1, Scope 2 and Scope 3 emissions.

  • Scope 1: These are emissions that arise directly from sources that are owned or controlled by the organization: for example, from fuels used in boilers or the vehicles that departments and facilities management own. These emissions can be avoided or reduced through improvements in efficiency and conservation.
  • Scope 2: These are the emissions generated by purchased electricity consumed by the organization. Scope 2 emissions are usually fairly easy to manage as they can be eliminated by switching to renewable (zero carbon) sources of energy.
  • Scope 3: These emissions are a consequence of the activities of an organization but occur from sources not owned or controlled by the organization. They include emissions associated with waste, water, business travel (including air travel, commuting, purchased goods and services and fuel) and energy-related activities not included in Scope 1 or 2.

Next, it will be important to set short term and long-term goals for emission reductions.  Different companies have different goals. Some companies just want to do their part to reduce global emissions.  Others are responsible for highly technical sustainability reporting and must not only set goals but reach those targets so they can report to customers and stakeholders.

There will be limits to how much it is possible to decarbonize the business completely and these residual emissions will have to be mitigated in some way with offsets that avoid, reduce, sequester or remove emissions from the atmosphere.

Definitions of Carbon Neutral, Climate Neutral, Net Zero

The words Carbon Neutral or achieving Carbon Neutrality is a hot topic in the voluntary carbon market and there are a number of associated terms that are being defined along with it by scientists associated with the IPCC.  Technically these are the definitions:

Climate Neutral

A state in which human activities result in no net effect on the climate system (all GHGs + radiative forcing).

Net Zero

Net zero carbon emissions (including emissions beyond carbon dioxide) are balanced by anthropogenic removals over a specified period of time (all GHGs).

Carbon Neutral or Net Zero CO2

When anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removal over a specified period of time.

Carbon Negative

A business removes more carbon from the atmosphere than it generates (Forbes).

The terms carbon neutral and carbon neutrality have been the terminology used for describing sustainability practices using offsets for the past 20 years, but from the definitions above, it is clear that times are changing and so are claims that can be made. There are even some carbon neutral countries which adds to the confusion.

Scientists are becoming more specific about the requirements associated with those terms, but unfortunately there is no clarity on this subject just yet.

Types of Carbon Offsets

Any offset you purchase should be additional. The strict definition for additionality is:  In the context of crediting mechanisms, emission reductions or removals from a mitigation activity are additional if the mitigation activity would not have taken place in the absence of the added incentive created by the carbon credits.

Projects that are additional must also meet a set of requirements:

  • It is not legally required to fulfill official policies, regulations or industry standards
  • It is not profitable without revenue from carbon offsets
  • Ithere are other barriers that might otherwise prevent its implementation
  • It does not employ technologies or practices that are already in common use.
  • It is also important to understand that carbon offset projects must be additional to what might be carried out in a business as usual scenario.  The sale of that carbon credit must be key to the project’s existence.

There a wide variety of carbon offset projects, some with more social benefits than others.  Some that benefit large industrial organizations and others that benefit small community-driven organizations.

Some types of high-quality carbon offset projects are: forest sequestration of all kinds, cookstoves, methane capture and use, grassland protection, soil carbon sequestration and composting.  There are also industries that sell carbon credits to be able to use more expensive processed that reduce industrial gases with high global warming potential (GWP).

Some wind projects are listed on carbon registries.  Wind was one of the first types of carbon credits to be issued and required the sale of carbon to be able to survive.  Now that wind is grid-connected, in great demand, able to sell its electricity at higher profits and often receives government subsidies, it could be argued that those types of projects are no longer additional. This is also true of hydro projects.

Prices of carbon offsets vary according to geography, type, the age of the credit, the quantity of credits issued each year and the amount of infrastructure required to execute the project.  It is important to have some transparency in pricing so that both buyer and seller know what the price per credit is and hopefully can ensure that the bulk of the investment in a carbon offset goes to the project and not the middleman.

At the end Cool Effect likes projects with Environmental Integrity.  This is the concept that if you were to be able to make an emission reduction yourself, you would do it in the most reliable, permanent way possible.  By choosing an offset, you have confidence that the project and carbon credit you’ve selected are at parity with what you would do if you were able to.

For more information on becoming Carbon Neutral by supporting projects with Environmental Integrity, contact us at business@cooleffect.org.

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