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Net Zero Targets

Net zero has become the dominant guideline for national governments, regions, organisations and corporations aspiring to be climate champions. It is the ultimate target in the effort to mitigate climate change.

A growing group of companies, cities, regions, investors and civil society, accounting for nearly 25% global CO2 emissions and more than 50% GDP, have committed to achieve a net-zero GHG target by 2050. Ref 1

From the beginning, there has been debate over whether long-term targets were useful at all, or a distraction from short-term action. [2] The debate is specifically about whether the relying on long term projects and technology to remove carbon from the atmosphere hampers near term efforts to reduce emissions at source.

An emerging question is whether it is helpful to continue rolling two separate targets into one single ‘net zero’ target or if they should be separated. One potential mechanism would be to insist on formal separation of negative emissions targets and accounting for emissions reduction, rather than combining them in a single net zero goal. [2]

Contents
Definition of net zero target
Separating out net zero
Science based GHG targets
Science Based Targets for net zero
References

Definition of net zero target

A net zero target defines a date by which emissions become neutral. Net zero targets specify carbon neutrality, rather than actual emissions reductions. In other words, carbon offsetting through purchases of carbon credits can be used to satisfy a net zero target. Carbon offsetting does not necessarily imply a structural change for the emitter. [3]

Net zero targets also do not specify the rate of net decarbonisation. It may be that the emitter does not start to decarbonise until shortly before the target date. This could imply relatively high net emissions until that point. In other words, net zero targets are not necessarily compatible with limiting heating to 2°C world. There is also no established authority for evaluating them. [3]

When consistent with climate science, net zero targets are compatible with a 2°C world. [3]

Separating out net zero

Net zero could be considered as not one, but two combined targets: that of an emissions reductions target AND a negative emissions / emissions removal target. Some argue this combination risks delaying cuts to emissions while, paradoxically, also deflecting attention away from the practical development of negative emissions technologies (NETs). [4]

Net zero is achieved when residual emissions are offset by CO2 removals.  Concentrating on removals technologies can have negative side effects: carbon stored in forests, soils or even rock strata can leak back into the atmosphere. This is not the case with projects which reduce emissions. Furthermore, NETS such as BECCS are not yet ready for deployment. Some may never be feasible at all.  If NETs do not work as predicted, then efforts to mitigate emissions may not be enough to get us to net zero. [4]

Investing in research into NETs can heighten expectations that they will be sufficient to achieve net zero goals. This expectation could lead to less urgent attention being paid to the reduction of emissions now.  Assumptions about the role of NETs are often hidden within charts which show emissions falling smoothly until 2050. This distracts attention from the fact that the models rely on predictions of extremely high levels of future negative emissions. [4]

A way needs to be found to ensure carbon removal projects run in addition to projects to reduce emissions, rather than having the unexpected effect of diminishing the perceived importance of reduction efforts. One approach would be to formally separate negative emissions targets from targets which account for emissions reduction. It is claimed that this would maximise the additionality of carbon removal and place the appropriate value on negative emissions. This separation would occur at all levels from international to sectoral. [4]

Science based GHG targets

Science-based targets (SBTs) are an alternative to net zero targets. Net zero targets already cover roughly one-sixth of global GDP. [3] Carbon offsetting is not permitted by when setting an SBT. Furthermore, SBTs may require lower net emissions than permitted in the carbon budget of a net zero target.

SBTs are accepted and validated by the Science-Based Targets initiative (SBTi). Once validated, SBTs are released into the public domain by the SBTi for promotion. By late 2019, 373 companies had committed to set an SBT, and 250 had had their targets validated. A sample of 28 of the over 600 companies with either planned or validated targets had a combined market cap of over $1.3 trillion. [3]

As of August 2020, close to 1,000 companies were setting science-based GHG emission reduction targets through the SBTi. [5]

There are two main methods through which SBTs can be set: the sectoral decarbonisation approach (SDA) and the absolute-based approach. Each uses different guidelines to judge whether a target is compatible with a 2°C world. [3]

The SDA uses the International Energy Agency’s 2°C scenario (2DS), which characterises decarbonisation pathways for different sectors to aid in setting targets. It is useful for non-diversified businesses occupying a homogeneous sector. An example of a validated SDA SBT is the one set by Ørsted. The group committed to reduce its Scope 1 (direct) and 2 (upstream electricity) emissions 98% per kWh by 2025 from a 2006 base year. It also committed to reduce Scope 3 (indirect) GHG emissions 50% by 2032 from a 2018 base year. [3]

The absolute-based approach outlines minimum percentages in absolute emissions reductions. This is also known as a carbon budget. It uses guidelines from the IPCC Fifth Assessment Report RCP2.6 subcategory rather than the IEA 2DS to judge 2°C compatibility and requires a 49% to 72% absolute emissions reduction by 2050 from 2010 levels. An absolute-based approach might be chosen by a diversified company that does not find a niche for itself within the 2DS scenario modelling used by the IEA. An example of a validated absolute-based SBT is Mars’s target to reduce its value chain emissions 27% by 2025 and 67% by 2050 from 2015 levels. [3]

Science Based Targets for net zero

Despite the growth in SBTs, net zero targets have continued to be widely adopted. So much so that the SBTi is now developing a science-based framework for net zero targets in the corporate sector. This framework will include specific criteria and guidance following multi-stakeholder engagement. [5]

Whereas science-based GHG emission reduction targets ensure companies reduce their emissions at a rate that is consistent with the level of decarbonisation required to limit warming to 1.5ºC, the proposed science-based net-zero targets go beyond this. Building on science-based GHG emission reduction targets, the science-based net zero targets will ensure that companies take responsibility for emissions that have yet to be reduced, or that remain unfeasible to be eliminated. [5]

The problem with the net zero targets is that corporations setting these targets inconsistently. This makes it difficult to assess corporate targets’ contribution to the global net zero goal.

Corporate targets to date differ in three ways:

• the range of emission sources and activities included 
• the timeline
• how companies plan to achieve their target. [5]

This makes it difficult for stakeholders to compare goals and to assess whether these actions help progress to wider net zero goals [5].

SBTi sets out to define a science-based framework for setting corporate net zero targets. The more carbon continues to be emitted in the near term, the more must be removed by NETs from the atmosphere at a later date. The deployment of negative emission technologies at a large scale is subject to uncertainty and unintended side effects (such as competition for land use). The initiative to create SBTs for net zero works on the basis that steps are taken to limit warming to 1.5ºC with limited reliance on the deployment of NETs. This sees a significant reduction in CO2 and other GHG emissions between 2020 and 2050, while measures to remove carbon from the atmosphere are scaled up.

This implies two objectives for companies:

1. Reduce emission in companies value chains in line with levels required to limit warming to 1.5°C – To achieve this, the initiative estimates that companies must reduce about 90% of all GHG emissions by mid-century. Companies setting science-based net-zero targets are expected to attain a level of reduction in Scope 1, 2 and 3 emissions consistent with the levels of reductions needed to limit warming to 1.5°C.

2. To offset any residual emissions by permanently removing an equivalent amount of atmospheric CO2. Offsetting by companies can take two forms: either actions that help society reduce emissions outside of their value chain (compensation measures); or taking measures to remove carbon from the atmosphere within or beyond the value chain (neutralisation measures)

The initiative is clear that neither form of offsetting should replace the reduction of emissions from a company’s value chain.

Nature based climate solutions can be part of a company’s emissions abatement plan. For instance, a food company makes intensive use of land as part of its value chain. By eliminating deforestation from its supply chain it reduces its carbon emissions.   NBCs can be used to compensate for emissions released by preserving or enhancing carbon storage through  tree planting or other land use solutions. Where companies produce emissions that are not feasible for society to abate, they can use nature-based carbon sequestration measures to counterbalance the impact of unabated emissions. [5]

Initial recommendations for corporate net-zero target setting [5]

1. Boundary: A company’s net-zero target should cover all material sources of GHG emissions within its value chain.

2. Transparency: Companies should be transparent about the sources of emissions included and excluded from the target boundary, the timeframe for achieving net-zero emissions, the amount of abatement and neutralization planned in reaching net-zero emissions, and any interim targets or milestones.

3. Abatement: Companies must aim to eliminate sources of emissions within its value-chain at a pace and scale consistent with mitigation pathways that limit warming to 1.5°C with no or limited overshoot. During a company’s transition to net zero, compensation and neutralization measures may supplement, but not substitute, reducing value chain emissions in line with science. At the time that net zero is reached, emissions that are not feasible for society to abate may be neutralized with equivalent measure of CO2 removals.

4. Timeframe: Companies should reach net-zero GHG emissions by no later than 2050. A more ambitious timeframe should not come at the expense of the level of abatement in the target.

5. Accountability: Long-term net-zero targets should be supported by interim science-based emission reduction targets to drive action within timeframes that are aligned with corporate planning and investment cycles and to ensure emission reductions that are consistent with Paris-aligned mitigation pathways.

6. Neutralization: Reaching net-zero emissions requires neutralizing a company’s residual GHG emissions with an equivalent amount of carbon removals. An effective neutralization strategy involves removing carbon from the atmosphere and storing it for a long-enough period to fully neutralize the impact of any GHG that continues to be released into the atmosphere.

7. Compensation: While reaching a balance between emissions and removals is the end goal of a net zero journey, companies should consider undertaking efforts to compensate unabated emissions in the transition to net zero as a way to contribute to the global transition to net-zero.

8. Mitigation hierarchy: Companies should follow a mitigation hierarchy that prioritizes eliminating sources of emissions within the value chain of the company instead of compensation or neutralization measures. Land-based climate strategies should prioritize interventions that help preserve and enhance existing terrestrial carbon stocks, within and beyond the value chain of the company.

9. Environmental and social safeguards: Mitigation strategies should adhere to robust social and environmental principles.

10. Robustness: Compensation and neutralization measures should: (a) ensure additionality, (b) have measures to assure permanence of the mitigation outcomes, (c) address leakage and (d) avoid double-counting.

The SBTi intends to develop criteria for the formulation of science-based net-zero targets in the corporate sector; a validation protocol to assess net-zero targets against the set of criteria to be developed as part of this process; detailed guidance for science-based net-zero target setting in the corporate sector.

References

[1] Commitments to Net Zero Double in Less Than a Year https://unfccc.int/news/commitments-to-net-zero-double-in-less-than-a-year

[2] Net zero: the story of the target that will shape our future https://www.climatechangenews.com/2019/09/16/net-zero-story-target-will-shape-future/

[3] Net zero targets – Alfa Energy Blog https://blog.alfaenergygroup.com/science-based-vs-net-zero-targets-for-businesses/

[4] The problem with net zero emissions targets https://www.carbonbrief.org/guest-post-the-problem-with-net-zero-emissions-targets

[5] Foundations for science-based net-zero target setting in the corporate sector https://sciencebasedtargets.org/resources/files/foundations-for-net-zero-full-paper.pdf