To avoid the catastrophic impacts of climate change, we need to keep the planet from warming more than 1.5°C above pre-industrial levels, according to the Intergovernmental Panel on Climate Change. This means that carbon dioxide emissions need to fall 45 percent from 2010 levels by 2030 and reach net zero by 2050.
One outcome of the recent UN Climate Summit, or COP26, was that 136 countries have pledged to reach net zero, with countries responsible for nearly half of global emissions aiming for 2050, while others have target dates further in the future. What does net zero mean, and are these targets ambitious enough to stave off the worst of climate change?
What does net zero mean?
Net zero means that the greenhouse gas emissions produced by a country, state, city, company, or even a building are counterbalanced by an equal amount of emissions that are reduced. This is not the same as zero emissions, which means that no carbon or other greenhouse gases are released at all, or carbon negative, which means that more carbon is removed than is emitted. Net zero means that greenhouse gases are still being emitted, but the emissions are offset through some action taken.
There are various pathways to net zero. The first is to reduce the amount of fossil fuel use directly, for example by producing power with renewable energy, decarbonizing transportation, or increasing energy efficiency. The idea is to reduce emissions has much as possible and then for those emissions that are harder or impossible to eliminate, use carbon offsets. This involves funding a carbon reduction project somewhere else that is additional— meaning that the carbon removal would not occur without the funding. Carbon offsets can take a variety of forms, such as planting trees to store carbon, funding a methane capture project at a landfill, or paying farmers to reduce synthetic fertilizer use and plant cover crops. Emissions can also be offset by investing in some type of carbon capture technology, such as carbon capture and storage or direct air capture of carbon.
Net zero pledges
Because net zero pledges depend on carbon offsets, many climate scientists believe the pledges actually perpetuate business as usual, enabling countries and companies to continue emitting greenhouse gases rather than doing the hard work of cutting emissions. The reliance on carbon offsets to reach net zero also blunts the urgency about the need to cut emissions as soon as possible.
But it is still an important indication of progress that net zero targets have been set by countries, industries and companies representing 90 percent of global GDP. This includes 136 countries, 115 regions, 235 cities, and 682 companies. To date, Surinam, Bhutan, Benin, Gabon, Guinea-Bissau, Guyana, Cambodia, Liberia, Madagascar, Cambodia, and Mali have achieved net zero or absorb more emissions than they produce.
Some of these countries are relatively undeveloped and some also have significant forest cover. Finland is aiming to become net zero by 2035. Iceland and Austria have targets of 2040 while Germany and Sweden are aiming for 2045. Most other countries, including the U.S., have goals of 2050, while countries such as China, Russia, Saudi Arabia, Brazil, and a few others have a 2060 target; India has pledged to be net zero by 2070.
Of the 2,000 largest public companies in the world, 622 have net zero strategies. In addition, over 450 financial firms pledged $130 trillion in private capital to help reach net zero by 2050.
Bruce Usher, professor and co-director of the Tamer Center for Social Enterprise at Columbia Business School and an expert on carbon offsets, believes it’s important that companies and countries are making net zero pledges because it’s a clear acknowledgement that they need to reduce emissions. “And it’s a clear acknowledgement on when they need to reduce emissions by and by how much,” he said.
How effective and credible are net zero pledges?
If all the net zero pledges are met, we would actually have a chance to keep global warming to 1.8°C by 2100.“The question that matters is, can they actually meet the pledges? Is there a realistic path for doing so?” Usher asked.
The reality is that net zero pledges are imperfect. First, most are voluntary: Only a few of the countries that have made net zero pledges, representing 10 percent of global emissions and including Sweden, Denmark, France, Germany, the U.K., and New Zealand, have legally binding pledges. Usher noted that while companies have the ability to enforce regulations and penalties, countries do not. Consequently, there is no real mechanism to enforce any pledge or penalize countries for falling short.
Another problem is that many pledges do not cover all greenhouse gas emissions or all economic sectors within countries. New Zealand, for example, includes all greenhouse gases except for methane emanating from livestock, agriculture and organic waste; and like many other countries, it also currently does not include international aviation and shipping emissions.
Many of the companies pledging to achieve net zero are not including emissions produced by their value chains.
A case in point: Walmart is pledging net zero by 2040 but is not including emissions from its global value chain, which is responsible for 95 percent of the company’s emissions. Saudi Aramco, the largest oil exporter in the world, also excludes value chain emissions from its 2050 pledge. Royal Dutch Shell includes emissions from its value chain, but not those from products that aren’t combusted for energy, such as chemicals, lubricants and bitumen.
Many of the financial institutions that pledged their funds to achieve net zero are not reducing their own emissions. JP Morgan Chase has pledged to achieve net zero by 2050 for its lending and investment portfolio but this only partially covers its value chain emissions. Santander’s plan does not indicate how it will reduce CO2 emissions.
Despite these deficiencies, Usher believes that companies honestly want to meet their pledges. “They understand the science,” he said. “They’re well-intentioned because they see that the future of their industry and of their business is a low-emissions and ultimately a zero-emissions future.”
A lack of short-term plans
If countries expect to achieve their net zero targets, they should also have ambitious 2030 targets and the policies necessary to achieve them. However, Climate Action Tracker found that there is a gap of 0.9° C between countries’ current policies to cut emissions and their net zero goals. Only Chile, Costa Rica, the E.U. and the U.K. have specific plans to reach their net zero goals.
President Biden’s short-term goal is to reduce U.S. greenhouse gas emissions 50 to 52 percent from 2005 levels by 2030, but with his Build Back Better bill stalled in Congress, the nation currently has no specific means to get there. The recently passed infrastructure bill and Build Back Better would help the U.S. reach its goal of net zero by 2050, but they cannot achieve net zero by themselves. Moreover, if Build Back Better is significantly weakened or rejected, it is unlikely the U.S. will be able to reach net zero.
Reliance on carbon offsets
At COP26, countries adopted rules to establish an international carbon market that would enable countries to buy and sell U.N.-certified carbon credits or carbon offsets from one another. Since net zero strategies rely on carbon offsets, the market could be worth $100 billion by 2050.
“There’s no human endeavor that doesn’t involve some emissions of CO2 or other greenhouse gases in the process. So, at some point you have to start incorporating either offsets or some other negative emissions technology. And the benefits of offsets are very simple,” said Usher. “They’re economically very efficient because you’re using the market to direct capital to the lowest cost emission reduction. And they’re the most flexible way of reducing emissions, because you’re not forcing a company [or country] to do X, you’re giving them lots of options.”
But carbon offsets also have drawbacks. Nature-based carbon offsets, such as tree planting, require a great deal of land and water. Oxfam maintains that for four large oil and gas producers to achieve net zero through carbon offsets, a plot of land twice the size of the U.K would be required. For the world to reach net zero, an area the size of Brazil would need to be reforested, according to Shell.
Moreover, much of the tree planting occurs in poor and developing countries in the Global South where people who are least responsible for greenhouse gas emissions depend on the land for their livelihoods. Climate justice organizations call this a form of “carbon colonialism” because these offsets often do not consider their social, economic, and cultural impacts, or the biodiversity loss that results from their actions.
In addition, trees can take 20 years or more to grow so they cannot really compensate for emissions that are occurring today. And if they are attacked by pests or consumed by wildfires, their carbon offsetting benefits are wiped out. Farm-based offsets assume that carbon will be stored in the soil over the long term, but agricultural decisions can change from year to year due to market and environmental conditions.
Another problem is “leakage,” because avoiding emissions in one place doesn’t necessarily mean they will not occur elsewhere. For example, protecting one plot of forest from being cut down to grow soy beans will not stop another from being cut down elsewhere to plant soy beans.
Technology-based solutions
Technological solutions, such as carbon capture and removal, are continually advancing but are still very expensive and have not been scaled up.
As of 2021, carbon capture, utilization and storage capacity has reached 40 metric tons per year, but according to the International Energy Agency, the technology’s capacity needs to grow to 1.6 billion metric tons per year by 2030 and 7.6 billion metric tons per year by 2050 to reach net zero. Momentum is picking up, but so far carbon capture has fallen short of expectations.
The world’s largest direct air capture plant, which sucks carbon straight from the atmosphere, opened recently in Iceland. But how many of these plants would be necessary to be effective? Peter Kalmus, climate scientist at NASA’s Jet Propulsion Laboratory, calculated that “If it works, in one year, it will capture three seconds worth of humanity’s CO2 emissions.”
The quality of offset projects
Many carbon offsets are of questionable quality, outdated, or hard to verify.
“Because the whole purpose of carbon offsets is to reduce emissions at the lowest cost possible, participants will do whatever they can to reduce costs, which means playing by whatever the rules are, they will go after the lowest cost solution,” said Usher. “And that means the incentive is to do what’s cheapest—quality is irrelevant. With carbon credits, we have no way to measure the quality, so unless you have good regulations that are actually enforced, you’ll end up with a lot of poor-quality credits.”
To assess the integrity of carbon offsets, Carbon Plan studied California’s government-regulated $2 billion forest carbon offset program. It found that more than 29 percent of the offsets were over-credited, equal to 30 million tons of CO2 worth $410 million. Over-crediting actually increases emissions because whenever a polluter uses a credit that doesn’t reduce a ton of carbon, the total amount of emissions is increased.
Some companies offset their emissions by investing in projects that were established long ago. This is not actually additional since the offset is not removing any extra carbon from the atmosphere. Other projects may claim credit for something that would not occur. For example, the Massachusetts Audubon Society made $6 million from selling offsets based on preserving 9,700 acres of forest that were never going to be cut down in the first place.
“Demonstrating additionality and preventing leakage at the global level are extremely difficult to do with certainty,” said Usher. “If everybody’s chasing carbon credits, it’s almost certain we’re not going to have additionality unless we eventually get to direct air capture. With direct air capture, there’s true additionality. It’s clearly quantifiable and measurable. And there’s no issue of leakage. But then it’s really expensive. And we don’t even know if it’s scalable yet.”
How net zero pledges can be more effective
Despite these challenges, Usher thinks the net zero pledges are critical. “The process of trying is really important and necessary for us to address climate change,” he said. “And the faster companies [and countries] try, the faster they reduce emissions internally, the faster they start investing in carbon offsets, the faster that we develop direct air capture technologies, the better position we’ll be in.”
Net zero pledges do need to be more effective and credible, however. While there are voluntary markets and a few local compliance markets in California and the E.U., what is necessary is a global compliance market with very clear regulations. “How do you monitor, verify and ultimately enforce those regulations?” asked Usher. “If there’s no penalty for violating whatever those regulations are, you’re going to get credits that are not really reducing emissions.”
According to Net Zero Tracker, net zero timelines also need to jibe with the science. In other words, emissions must be cut 45 percent from 2010 levels by 2030 to reach net zero by 2050.
Net zero pledges must include all greenhouse gases, including methane, and all emissions a country produces, including exports and the emissions of products made outside a country. For companies, this means direct emissions, emissions produced by the power they use and everything in their value chain. And the priority should be on cutting emissions, not just offsetting them.
Countries need to have specific policies they will implement to reach net zero, such as strategies to increase renewable energy, plans for natural climate solutions, or clean energy incentives for industries. In addition, the policies should be legally binding so that there is accountability.
Despite the imperfection of current net zero pledges, however, Usher is optimistic because of what he learned as CEO of a company that developed offset projects. “Entrepreneurs and established businesses react very quickly to the market signal, when you’re told if you reduce emissions, you can earn X dollars,” he said. “It’s pretty impressive, not just that people react, but how innovative they are in ways that we cannot predict today. All I can tell you is it works and works faster than people think. It’s one of the few times when the results seem to exceed expectations. So, if we have a path to 1.8 C degrees now and we really incentivize that path the right way, we could probably actually beat that.”
