Skip to main content

Carbon Neutral vs. Net Zero – Climate action strategies for a Better World

Aiming for net zero emissions and carbon neutrality are among the measures governments and legislators are taking to address climate change. But what does achieving net zero and carbon neutrality mean? What are the similarities between these two terms? What are the differences?

While they are often times used interchangeably, achieving carbon neutrality and net zero seeks to accomplish the same goal – combatting climate change. While they share similarities, their primary differences stem from their respective approaches to removing emissions and the scale and type of emissions removed.


Carbon Neutrality

As the name implies, carbon neutrality refers to the amount of carbon being removed from the atmosphere being equal to the amount of carbon emitted or produced. It's a narrower term for what happens in net zero, explicitly focusing on the removal of carbon.

To become carbon neutral, companies can buy 'carbon credits' permitting them to emit carbon dioxide and other greenhouse gases in exchange for reducing their effects and supporting greenhouse gas reduction initiatives.

However, it is essential to note that a commitment to carbon neutrality does not imply a responsibility to reduce overall GHG emissions since a carbon-neutral business only needs to offset the GHG emissions it generates.

Climate neutrality, a term that goes a step further than carbon neutrality, refers to the emission and mitigation of all GHGs and is not only restricted to carbon dioxide. Just like carbon neutrality, climate neutrality can be achieved by emitting greenhouse gases at a rate equal to the amount they are being removed from the atmosphere.


Net Zero

While the definitions of the term differ among organizations (due to the lack of a uniform one), a commitment to net-zero carbon can most generally be described as the aim to reduce greenhouse gas emissions in order to balance emissions produced and emissions removed from the atmosphere. As another difference from carbon neutrality, but similarly to climate neutrality, net zero refers to the amount of all greenhouse gases, including carbon dioxide, methane, and sulfur dioxide, and not only the carbon emitted.

For companies, achieving net zero can be described as determining how much carbon is emitted through their scope one, two, and three emissions and finding ways to reduce them.

For example, suppose you take a similar approach to how a business emits carbon dioxide. In that case, the company achieves net zero by minimizing GHG emissions across all of its activities and supporting/funding the removal of carbon dioxide produced by its emissions.

Although the terms are often used interchangeably, they refer to different aspects of the fight against climate change, making it essential to clarify what we're trying to achieve and how we're doing it.

For inquiries please contact:

RBI Regulatory Advisory

Raiffeisen Bank International AG | Member of RBI Group | Am Stadtpark 9, 1030 Vienna, Austria  | Tel: +43 1 71707 - 5923