Net-zero pledges abound in 2020 – but what do they all mean?
What’s happening? Global corporate pledges to slash emissions to net-zero have rapidly increased, with the number of firms making pledges tripling to reach 1,541 last year, reported The Telegraph. The rise in corporate commitments comes as country emissions reduction targets were also upped during the pandemic, such as the UK’s pledge to curb emissions by 68% by 2030, and China announcing its 2060 carbon neutrality goal.
Why does this matter? In order to meet the Paris Agreement’s preferred goal of limiting the rise in global temperatures to 1.5C above pre-industrial levels, global emissions need to reach net zero by around mid-century.
Alongside the far less-positive events, the year 2020 was one in which net-zero emissions pledges abounded. National targets were mirrored by businesses setting their own carbon neutrality goals. This is a welcome trend, but with so many net-zero pledges flying around, how can we judge the effectiveness of these commitments? Is the term “net zero” in danger of becoming a cheap phrase, batted around as a vague commitment aligned to a far-future time horizon?
It’s important investors and interested stakeholders look into the details – not all strategies are created the same and approaches matter. Interim targets, delivery timelines and scope to increase ambition are all important elements of an effective strategy. Do the plans rely on bridge technologies, for example those that make use of natural gas, which are unlikely to fit inwith a long-term net-zero vision? Do they address all greenhouse gases, or just CO2? Do they extend beyond climate to incorporate other environmental metrics? Are there plans to engage suppliers?
There are commitments that stand out. Massachusetts-based Biogen, for example, has gone beyond carbon neutrality and pledged to eliminate fossil fuel use across its business, not just for energy but for its products, by 2040 – the first Fortune 500 company to do so. Microsoft is following up on its pledge to become carbon negative by investing in and collaborating oncarbon capture and storage projects.
This leads us to the offset question. By its nature, net zero means netting out any remaining residual emissions that can’t be mitigated at source via investing in natural or technological solutions to remove CO2 from the atmosphere. While getting to “absolute zero” – where a company is able to eliminate all emissions using renewable power and from measures within its operational boundary – might be the ideal, in all reality, without a dramatic technological breakthrough, it’s so far thermodynamically impossible.
The problem is that negative emissions technologies to take CO2 out of the atmosphere don’t yet exist at scale – they currently capture around a tenth of 1% of annual emissions – and offset schemes have their well-noted issuesaround additionality and double counting. “Insetting” might be a better option for firms that are looking to balance out their carbon footprint, where decarbonisation is funded elsewhere – but specifically within their supply chains.
Net zero is clearly a massive trend. As we move into 2021, it’s time to take a good look behind the term and towards the actual plans companies have made to get there.
Lateral thought from Curation – When it comes to reducing emissions, speed matters. A given tonne of CO2 removed from the atmosphere is worth more today than 10 or 20 years in the future, where it will have caused 10 or 20 years’ worth of additional warming.
In this sense a quick metric to assess the effectiveness of net-zero strategies would be to outline the proportion of emissions tackled at various points towards the end goal. Those that cut more, faster should be favoured by investors. This will also have the added benefit of focusing action on the nearer term and dissuading firms from setting targets they can then kick into the long grass.