Net-Zero Carbon emission


Corporate net-zero pledges are gaining momentum, but limitations in net-zero’s design and implementation reduce impact and jeopardize progress. Governments and businesses can leverage momentum while accelerating and strengthening net-zero commitments and progress toward climate sustainability.

Fifteen limitations are often manifest in many well-intentioned net-zero initiatives.


What does net-zero offer?

Now that a critical mass of the world’s largest companies and nations have committed to net-zero emissions, a snowball effect will encourage others to follow suit. As net-zero rapidly becomes the standard for government and corporate commitments, it’s appropriate to stop and ask: is net zero an excellent tool to address climate change?

At first glance, net-zero gives us a goal for keeping the climate stable and a way to track our progress toward that goal. It is also a platform that more and more people can use over time.

Net-zero reduces shareholder climate risk without causing a significant change in short-term returns. It also helps a company’s reputation if it serves customers or businesses that care about the environment.

But a closer look shows that the approach has some significant flaws that, if not fixed, could easily misrepresent and slow down progress toward making the environment sustainable. All of these things are already being done.


15 significant limitations of Net-Zero:


  • Definitional consistency/completeness:

Multiple accounting standards and ways of putting net-zero accounting into practice leave room for manipulation and give a false picture of how fast things are getting better. For example, pledges that only cover a small subset of activities can make heavy-emitting industries look like they aren’t putting out any pollution, which can slow down more fundamental changes.

  • Verifiability:

Verifying reported reductions and carrying out offset pledges is getting harder and harder, which leaves the scheme open to being manipulated.

  • Double counting:

A single carbon offset can be on the balance sheets of more than one entity at the same time, making the impact seem more significant than it is.

  • Delayed impact:

It takes time for nature-based offsets, such as afforestation schemes to have their desired effect on the environment. Short-term differences between when the offset is given credit and when it gives its full benefit can worsen the climate.

  • Postponement of decarbonization:

Carbon offsets are a “quick fix” that may keep companies from doing the hard but more critical and long-term work of cutting their carbon emissions.

  • Permanence:

To keep having an effect, carbon offsets must be taken care of properly after they are “bought.” For example, an acre of forest sold as a carbon offset this year could be destroyed next year because of neglect, a fire, or even the seller’s choice.

  • Non-additivity:

If buying a carbon offset leads to a reduction in greenhouse gas emissions that would have happened anyway, then the offset is not additive.

  • Leakage:

If you try to cut emissions in one place, they may move to another where they aren’t controlled or counted. For example, a carbon offset program that protects a section of rainforest in the Amazon from being cut down might cause an area of rainforest in the Congo Basin to be cut down.

  • Economic viability (inflation of offset prices):

When people promise to be carbon neutral in the future, they promise to buy offsets at a price that has yet to be set. But the cost of carbon offsets is likely to go up in the future because there will be fewer of them, and more people will want them. This could make planned offsets too expensive and impossible to keep promises.

  • Voluntarism:

To get to a net-zero planet, all companies and countries must become net-zero. But because net-zero is voluntary, only some people will participate. The biggest polluters will likely have the most challenging problems to solve and the slightest reason to change.

  • Moral hazard:

Most carbons offset solutions today involve paying someone not to do something (like cutting down a forest). This gives offsetting entities a financial reason to do something they hadn’t planned to do before and get paid for not doing it.

  • Inequity in economic development:

Net-zero may accidentally slow economic growth in poorer countries by using a country’s resources to pay for offsets outside its borders instead of economic growth. This could make it harder for the net-zero mechanism to grow on a political level.

  • Over-simplification of sustainability as carbon neutrality:

Many promises today are only about cutting down on carbon dioxide, even though methane and nitrous oxide trap 30 and 300 times more heat than carbon dioxide.

  • Over-simplification of sustainability as decarbonization:

Focusing more on reducing greenhouse gases (GHG) could hurt the environment if other ways of harming the environment are not stopped. For example, the loss of species and the destruction of natural habitats can reduce the planet’s natural ability to act as a buffer, which makes it harder to keep the climate stable.

  • A goal without a path:

Net-zero gives us a goal but not a plan for how to get there. Reaching net-zero emissions is possible only with a coordinated transition plan and the research, investments, policies, and regulations to support it. This is because the changes needed to reach net-zero emissions are complex, unprecedented, interdependent, and transformative.


Elements of a better way to move forward:

Given these limitations, how do we harness the momentum created by net-zero while evolving a more robust set of solutions? Some elements of a better path forward include the following. Some limitations of net-zero can be addressed through improved definitions and how these are applied in practice.

  • Establish consistent definitions/standards: 

Net-zero emission targets must account for all GHGs, covering the full scope of activities.

  • Distinguish carbon offsets from emission reduction in reporting: 

Using carbon offsets to delay or replace addressing emissions is not acceptable. Companies should disclose their offsets and emissions reductions separately.

  • Create robust mechanisms of verification: 

Audited inventories of carbon offset resources can support a marketplace for carbon offsets that can be verified and monitored over time.


Beyond net-zero

We must pursue a more multi-dimensional view of sustainability and put financial, operational, technological, behavioral, and cultural support in place to enable the necessary transformative actions.

  • Take a multidimensional view of sustainability: 

Consider sustainability in terms of other pertinent elements, such as additional GHG emissions, species variety, air and water quality, and the preservation of nature, in addition to the single dimension of carbon emissions.

  • Develop a behavioral strategy: 

Understand the behavioral economics of decarbonization and put in place the right nudges, sticks, and kicks to encourage the desired human behaviors.

  • Ensure sustainable economics for decarbonization and offsets:

Expect carbon economics to shift over time as demand for offsets and sustainable inputs create new scarcities and price inflation and bake this into pledges and projections.

  • Develop transition paths: 

Identify the significant economic, technological, and societal shifts we must make collectively to provide the foundation for individual agents to meet their net-zero targets. Coordinate and sequence these shifts to enable large-scale change.

  • Accelerate innovation: 

Accelerate the pace of discovery, scaling, and adoption of innovative solutions through increased funding, private & public partnership, and international cooperation. Decarbonization requires better and more cost-effective solutions than we have now and is, therefore, as much an innovation as an execution challenge.