Sign up for Klimate Insights
Stay in the loop on all things Klimate, carbon removal, and the most important emerging news and policy.
Dive into the latest posts from us.
Check out the most recent news from us around all things carbon removal.
Net zero strategy – what is it, and what does it include?
What is net zero?
The term ‘net zero’ refers to a state where the amount of greenhouse gasses (GHGs) emitted into the atmosphere is balanced by the amount removed from it.
Achieving net zero emissions typically involves:
- Reducing emissions: This is done by adopting cleaner technologies, using renewable energy sources, and improving energy efficiency across sectors like industry, transportation, and agriculture.
- Carbon removal and offsetting: For emissions that cannot be eliminated, techniques like biochar production or carbon capture and sequestration are used to remove carbon from the atmosphere. Some entities balance out their own emissions by purchasing carbon credits to fund projects that reduce or remove emissions elsewhere.
Net zero is also a target countries, cities, and corporations often set – typically aiming for around or before 2050 – in alignment with the Paris Agreement. The global goals of the agreement include limiting global warming to 1.5°C above pre-industrial levels.
Companies and any private target setters use net zero standard setting organisations like the Science Based Targets initiative (SBTi) and the Oxford Net Zero Principles to ensure the targets they set are good, timely, and achievable.
On the topic of net zero, it should be noted that the terms ‘net zero’ and ‘carbon neutral’ are often mistakenly used interchangeably. ‘Carbon neutral’ refers to when a company offsets the same amount of carbon emissions as they are responsible for. To be classified as a net zero company, however, a company must offset all of their carbon emissions – enough to no longer emit any GHGs at all.
Read more: ‘Carbon neutral vs net zero – what is the difference?’
What is a net zero strategy?
A net zero strategy is a comprehensive plan that an organisation, country, or entity develops to reduce its GHG emissions to as close to zero as possible and balance out the remainder of their emissions through carbon removal.
The overarching goal of a net zero strategy is to effectively contribute no additional emissions to the global atmosphere.
A net zero strategy typically includes the following eight key elements:
1. Emission reduction targets
A net zero strategy begins with setting specific, science-based targets for reducing emissions across the entire value chain (Scope 1, 2, and 3 emissions).
These targets are aligned with global climate goals, typically include both near-term (e.g. 2030) and long-term (e.g. 2050) goals, and often follow guidance from organisations like the Science Based Targets initiative (SBTi), which we will revisit later.
2. Emission reduction across operations
Net zero strategies focus heavily on reducing emissions from direct operations (Scope 1) and purchased energy (Scope 2). They also address indirect emissions (Scope 3) from the company’s supply chain. Indirect emissions often account for the majority of a company’s carbon footprint, making them crucial to reduce.
A core example of emission reduction is switching from fossil fuels to renewable energy – e.g. solar, wind, or hydropower, or EV adoption. Transitioning to non-fossil energy allows companies to reduce their dependence on carbon-intensive power and minimise emissions from energy use.
Read more: ‘What are Scope 1, 2, and 3 emissions?’
5. Carbon removal and offsetting
The primary goal of a net zero strategy is to reduce emissions as much as possible. However, every organisation has some degree of unavoidable emissions.
To counter these, companies use carbon removal techniques to remove carbon dioxide from the atmosphere. Companies also use carbon offsetting to fund projects that sequester emissions, enabling them to balance out their remaining emissions.
6. Stakeholder engagement and supply chain collaboration
To ensure the effectiveness of a net zero strategy, it is important to engage with a wide range of stakeholders, including suppliers, customers, and governments. Companies often work with suppliers to decarbonise their supply chains. They may also encourage customers to adopt more sustainable practices or use products designed to reduce carbon footprints.
Industry partnerships and other collaborative efforts can also help accelerate progress towards net zero goals.
7. Reporting, monitoring, and accountability
A net zero strategy should always include clear mechanisms for tracking and measuring progress – e.g. regular emissions reporting and audits. This enables companies to compare with previous results and take action to improve their reductions over time.
Many companies use third-party verification to ensure that their emission reductions are accurate and in line with their targets.
8. Social and economic considerations
In addition to environmental goals, net zero strategies often take into account the social and economic impacts of transitioning to low-carbon operations.
This can include protecting jobs, supporting workers in affected industries and ensuring that the transition is just and equitable.
Net zero strategies and the Science Based Targets initiative (SBTi)
Above, we mentioned the Science Based Targets initiative (SBTi). Net zero targets are often informed by guidance from organisations like the SBTi or the Oxford Offsetting Principles: global efforts that provide companies and organisations with a clear pathway to reduce their GHG emissions in line with climate science.
The aim of the SBTi is to help companies and organisations set targets consistent with limiting global temperature rise to well below 2°C above pre-industrial levels, with efforts to limit it to 1.5°C, as outlined in the Paris Agreement.
The SBTi plays a crucial role in relation to net zero strategies. It offers a framework for companies and organisations to set science-based targets that align with achieving net zero by 2050.
The SBTi informs companies on net zero through:
- Net zero standard: The SBTi developed the world’s first corporate net zero standard to ensure companies commit to reducing emissions at the necessary pace and scale to limit global warming to 1.5°C.
- Deep emission reductions: Focusing on making deep cuts in emissions across the entire value chain, the SBTi ensures that the majority of emissions are eliminated before relying on carbon removal or offsets for residual emissions.
- Clear target setting: Companies aligned with the SBTi’s net zero standard must set both near-term (2030) targets to drive immediate action and long-term targets (2050) to map out the pathway to net zero.
- Credibility and accountability: By aligning with the SBTi, companies are held accountable for making real, science-backed progress. This helps prevent greenwashing and keep net zero strategies transparent, measurable, and verifiable.
- Alignment with national and global goals: Countries set their own net zero targets. The SBTi helps companies align their corporate net zero ambitions with broader national and global climate goals.
- Industry-specific pathways: By providing sector-specific guidance, the SBTi enables companies across sectors to develop net zero strategies that are realistic and achievable for their specific context.
In short, the SBTi is a helpful way for companies and organisations to create credible, science-based net zero strategies. It ensures net zero targets are not only ambitious, but also achievable and aligned with the latest climate science.
Ensuring a net zero future
Alongside guidance from organisations like the Science Based Targets initiative (SBTi), net zero strategies are vital in addressing and preventing the worst impacts of climate change and creating a more sustainable, resilient, and low-carbon economy.
When it comes to achieving net zero, reducing your emissions is an important and necessary step in the right direction. However, there is growing consensus that reduction is no longer enough to stay within the goals set forward in The Paris Agreement.
To truly reach net zero, companies must offset any remaining greenhouse gas emissions through effective carbon removal. Although this can be challenging, understanding and accessing reliable carbon removal options is key to meeting these climate commitments.
Avoidance vs removal: what's the difference?
Understanding carbon offsets
When discussing carbon offsets, it’s essential to distinguish between two primary categories: carbon avoidance and carbon removal.
Carbon avoidance projects aim to reduce future emissions. Examples include protecting forests from deforestation, developing renewable energy sources like wind or solar, and introducing energy-efficient technologies such as clean cookstoves. These initiatives are beneficial, but they don’t actually remove existing greenhouse gases (GHGs) from the atmosphere; they only prevent additional emissions from occurring. As a result, the net emissions remain the same, and no negative emissions are generated.
Carbon removal methods, on the other hand, actively extract GHGs from the atmosphere, resulting in negative emissions. This can include technologies like Direct Air Capture (DAC) or nature-based solutions like reforestation.
Key Differences between avoidance and removal:
- Carbon Avoidance prevents future emissions, while Carbon Removal extracts existing CO₂ from the atmosphere.
- Carbon avoidance helps slow down the accumulation of CO₂, whereas carbon removal actively reduces the total atmospheric concentration of CO₂.
- Both are crucial for addressing climate change, but removal is particularly important for long-term goals like reaching net zero and reversing global warming.
The critical advantage of removal methods is that they address existing emissions, making them more effective for companies aiming to achieve Net Zero. This is the the only pathway to stall warming, as they tackle previous and current emissions that are already warming the climate.
On the other hand, recent news has highlighted issues with avoidance-based credits for lacking quality, integrity, and additionality. This clouds the overall integrity of these types of programs due to inability to measure baselines and prove their additionality. With these issues in mind, companies that hope to avoid future risk and remain ahead of the curve must invest solely in removals.
Taxonomy of carbon credits.
The difference between the majority of carbon credits is whether they remove or avoid carbon. However, carbon removal credits actually differ in many different ways. The variations in method, storage location and type, and climate all affect the way and length of time carbon is stored, or their risk of re-releasing that carbon back to the atmosphere.
Short-term vs. long-term carbon removal
Removals can be further categorised based on their permanence—whether the removed CO₂ is stored for the short term or the long term. Long-term removal methods, which often have a permanence of hundreds to thousands of years, are essential for tackling the long-lasting impact of existing emissions. These methods are more aligned with emerging regulations and the Science Based Targets initiative (SBTi), which increasingly require the use of long-term removals to substantiate Net Zero claims.
Why shift towards permanent carbon removal solutions?
The Oxford Offsetting Principles emphasise the need to transition gradually but steadily towards permanent carbon removal solutions.
“An immediate transition to 100% carbon removals is not necessary, nor is it currently feasible, but organisations must commit to gradually increase the percentage of carbon removal offsets they procure with a view to exclusively sourcing [permanent] carbon removals by mid-century.”- Oxford Offsetting Principles
This transition involves two key shifts:
- From avoidance to removal: Avoidance methods, while useful, do not contribute to negative emissions and are becoming less favoured as regulations tighten. As we move forward, the focus should increasingly be on removal strategies that directly counterbalance emissions.
- From short-term to long-term removal: Long-term solutions provide a more reliable and permanent solution to GHGs, ensuring that emissions are not only offset but effectively neutralised for the foreseeable future.
Challenges and the path forward
Transitioning from avoidance to removal, and from short-term to long-term removal, is challenging and cannot happen overnight. The carbon market must rapidly scale up removal technologies to meet the growing demand for permanent solutions. At the same time, companies must be proactive in aligning their carbon offset strategies with upcoming regulations, which are not expected to allow the use of avoidance credits for Net Zero claims.
The key takeaway is that while avoidance projects have played a role in reducing potential future emissions, they do not address the urgent need to remove existing GHGs from the atmosphere. For a credible path to Net Zero, the focus must shift towards removal methods, particularly those that offer long-term permanence. This approach will ensure that companies not only meet regulatory requirements but also contribute meaningfully to the fight against climate change.
.jpg)
Raising the bar: Klimate's updated due diligence
Staying ahead of the curve.
The newest version of Klimate’s Due Diligence expands on the previous iterations primarily by allowing us to gather more and better quality information. As we push for greater transparency and higher quality of data, this led us to ask more tailored and specific questions, for example, to individual methods.
Carbon removal is a rapidly changing market. Not just in regulatory terms, but the space as a whole, with new technology, certifications, and actors forming all the time. Best practices evolve to reflect new challenges, as shown by the revision of the Oxford Offsetting Principles, which highlights the need for ongoing strategy reviews (notably in Principle 1). We meet these expectations through continual reassessment and realignment to stay ahead of any challenges that may rise out of gaps in the market, thereby creating the market of the future.
Quality over quantity.
We’ve always worked to have the most stringent analysis and put a lot of effort into leading the market in that way. By releasing this new DD, we are adding on to, rather than discounting, it. Our core DD process remains the same and builds on previous strengths:
- Setting a high bar. It contains compulsory questions and minimum standards. These have been increased, for example requiring internal governance, setting higher expectations for projects to rise to.
- Finding the right projects for our clients. We pride ourselves on having the best projects rather than prioritising quantity. This process of data collections allows us to know the projects well, and better match projects with clients wants and needs.
- Strong market position. We develop relationships throughout the process. Not only can we get better insight on the actual impact taking place, we curate important relationships with key players in the market, setting us up for better access.
What happens to the scores of already approved projects?
Through raising the bar and setting higher standards for our projects, we understand that this may result in lower scores. We see this as a good thing, as in this changing legislative arena, we need to not just keep up to date, but remain ahead of the curve. In doing so, we mitigate risk of investment for our clients and ensure impact for their investment.
As the market continues to remain under scrutiny, we’re taking an offensive approach to better assess risk. We want to make sure that we work with suppliers that have suitably identified risks and put mitigation measured in place. Part of this is asking better questions, seeking specific data points based on specific methodologies and their related challenges. We recognise that no method is perfect and we’re in a nascent space, which is why we take the initiative to evolve ahead of the curve.
Tracking key changes in our analysis.
To ensure that our due diligence process remains thorough and aligned with certification and legislation, we have updated our assessment on an annual basis. The team started by carrying out a review of the requirements within market standards (such as ICVCM), and certification bodies, as well as the data gathered within our competitors due diligence processes. This allowed us to conduct a gap analysis and ensure that our updated DD remains ahead of market expectations or at least equivalent to best practices.
The graph above highlights how the number of data points we collect has increased each year, allowing us to gather more detailed information on projects across the 4 parameters we assess.
Launching this version of the due diligence involved the most extensive review we’ve done to date. Some of the changes we’ve implemented are:
- Method specific questions
- Significant increase in questions within Integrity category
- Increased questions on biodiversity, climate adaptation, welfare and land use
- Improved scoring process and approach to question weighting
- Guidance for suppliers, to improve the efficiency of completing the assessment
These are just a few of the key measures we have put in place to raise the bar through our analysis.
While we are are still hard at work updating scores across all thirty-some projects, we thought now was the right time to let our community know about these changes.
How we get to gigatonne capacity
Scaling the carbon removal market to gigatonne capacity requires data transparency and trustworthy infrastructure. We pride ourselves on going above and beyond the expectations of integrity and quality in the market, and our due diligence is a key way to accomplish this. As this market develops, continual improvement is necessary to keep pushing for more. Continually raising the bar for carbon removal solutions is the only way we can achieve our common climate goals and solve the massive physical problem of the climate crisis at scale.