What is Carbon Neutral?
A state where an organisation's net carbon emissions equal zero, typically achieved through a combination of emission reductions and carbon offsets. Carbon neutral differs from net zero as it allows greater use of carbon offsets.
Why it matters
Carbon neutrality can be a meaningful stepping stone towards net zero, but it carries reputational risk if achieved primarily through offsets without genuine reductions. The CMA's green claims code requires businesses to be transparent about how neutrality is achieved.
Example
A hotel group achieves carbon neutrality by reducing energy emissions by 35% through LED upgrades and heat pumps, then purchasing verified offsets for the remaining 200 tCO₂e from a UK woodland creation project.
Related terms
Net Zero
Achieving a balance between greenhouse gas emissions produced and emissions removed from the atmosphere. Net zero requires deep emission reductions across Scope 1, 2, and 3, with residual emissions addressed through carbon removal rather than offsets.
Carbon Offsets
Credits purchased to compensate for emissions by funding projects that reduce, avoid, or remove greenhouse gases elsewhere. Examples include reforestation, renewable energy projects, and methane capture. One offset typically equals one tonne of CO₂e.
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