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What is Net Zero?

Dale Edwards, Strategic Consultant – Green Energy discusses what is Net Zero and his thoughts for business impact.

The term net zero is being used with increasing regularity, whether by politicians, journalists, businesses or just in conversation. The increasing use of the term in different settings and connotations can lead to confusion on what the term means.

Businesses often state that they will be net zero or carbon neutral by a certain date as part of their overall strategy or corporate sustainability charter. This can be difficult to visualise for those not connected with the business, particularly when coming from sectors historically known for using fossil fuels as part of their day to day operations. Also, politicians local or national when announcing certain policies will state they will help achieve the ambition of net zero, but without further or limited explanation.

To help demystify what net zero is, I discovered the term originated in 1936 and was defined as resulting in neither a surplus or deficit or something specified when gains and losses are added together. Fast forward to today the “something” refers to in its simplest form “the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere”.

An alternative and well used definition is the balancing of emitted greenhouse gases with the equivalent emissions that are either offset or sequestered. Being open to interpretation on what can be counterbalanced, there is an argument for a firm set of guidelines or rules which clearly state which approaches for greenhouse removal would be allowed to achieve net zero.

From a UK business perspective, the British Standards Institute through the development of the PAS 2060 standard for carbon neutrality is arguably the best set of guidelines to help support businesses moving towards achieving net zero. The specification defines a consistent test of measures and requirements to demonstrate carbon neutrality for their entire business or product.

Initially the business must develop a carbon management plan containing public commitment which includes time frames, targets and how carbon neutrality will be achieved incorporating both removal and offsetting working in partnership with their supply chain. All activities in the plan must be incremental and not an extension of business as usual. Verification by an independent third party on an ongoing basis is key to demonstrating the plan is permanent and can prove the emission reductions or offsetting are genuine and can be substantiated.

The difference between PAS 2060 and net zero surrounds the expectation that next zero requires a 1.5% science-based reduction target as outlined in the Paris Climate Agreement at the 21st Climate Change Conference of the Parties (COP21). This was signed by approaching 200 Governments in 2015 committing to curbing rising global temperatures to below 2% and limit its increase to no more than 1.5%. Since then many countries have ratified the agreement. In my view when businesses state they are going to become net zero they should not just be looking to achieve carbon neutrality but also look at activity that goes above and beyond by creating enhanced environmental impact by removing incremental carbon dioxide from the atmosphere.

I am encouraged that many businesses are looking how to improve their business from an environmental or society perspective, often driven by customer expectations. Many have seen sales and profits grow because of becoming more conscious of their carbon footprint. Along with tighter climate risk reporting from publicly listed companies which is likely to have a flow down effect, the march for businesses to become at least net zero I am convinced will continue.

It will be interesting to see how the net zero momentum will develop from a macro level. Some Governments are looking to achieve net zero sooner with others outlining ambitious plans. For example, President Elect Biden has stated he will bring the US back into the Paris Climate Agreement with many countries focusing efforts on green recovery due to COVID-19, helping to re-set the climate change agenda. With the UK hosting and having the Presidency of COP26 in Glasgow during November 2021 it will be fascinating to see what progress has been made in the next 12 months and the influence the British Government can exert to drive and inspire change in the lead up to the conference.

For over 20 years Clarke Willmott have been supporting clients in their efforts to develop, build and fund the infrastructure to generate clean energy by providing practical legal solutions. With extensive experience in a variety of sectors and disciplines we are here to help and advice.


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