What does carbon neutral mean?

What does carbon neutral mean?

In its simplest meaning, carbon neutrality means that there is a balance between CO2 emissions and the carbon sink in the atmosphere. When companies call themselves carbon neutral, they are claiming that there is a 100% balance between how much CO2 they emit and how much CO2 they absorb from the atmosphere.

CO2 equivalents

When we talk about CO2 emissions, we often use CO2 as a collective term for all greenhouse gases, better known as CO2 equivalents (CO2e).

CO2 equivalents is a unit of measurement used to compare the relative impact of different greenhouse gases on climate over a specific time period, typically 100 years. As different greenhouse gases have different abilities to absorb and retain heat in the atmosphere, it is useful to be able to compare their impact in a standardized way.

CO2 (carbon dioxide) is the most well-known greenhouse gas and is often used as a reference point. Other greenhouse gases, such as methane (CH4) and nitrous oxide (N2O), have a much stronger greenhouse effect per unit than CO2, even though they are in lower concentrations in the atmosphere.

To compare these different gases, CO2 equivalents are used. This means converting the amount of another greenhouse gas to the amount of CO2 that would have the same climate impact over a specific time period.

For example:

• 1 ton of methane (CH4) can have a climate impact equivalent to around 25 tons of CO2 over a 100-year period.
• 1 ton of nitrous oxide (N2O) can have a climate impact equivalent to around 298 tons of CO2 over a 100-year period.

By using CO2 equivalents, you can better assess and compare the overall impact of different greenhouse gases on the climate.

Carbon sinks

Carbon sinks refer to natural or man-made systems that capture and store carbon from the atmosphere. These systems help reduce the amount of CO2 in the atmosphere by capturing carbon and preventing it from being released into the atmosphere as a greenhouse gas.

Here are some examples of carbon sinks:

1. Forests and tree planting: Forests act as natural carbon sinks by absorbing CO2 through photosynthesis and storing the carbon in wood and soil. Tree planting and reforestation can therefore be effective ways to remove CO2 from the atmosphere.
2. Soil improvement: Some agricultural practices can increase carbon storage in the soil. For example, using methods such as composting, agroforestry or growing deep-rooted crops can increase the amount of carbon in the soil.
3. Carbon storage in the oceans: Oceans also play a role as carbon sinks by absorbing and storing CO2. Deep seas can store CO2 for longer periods of time, helping to reduce the concentration of CO2 in the atmosphere.
4. Technological solutions: Technologies are being researched that can capture CO2 directly from the air (Direct Air Capture) and store it underground or use it to produce other materials or fuels. These can also be considered forms of carbon sinks, although they are more man-made and technologically advanced.

Can a company be carbon neutral?

Over the past few years, many companies have advertised being carbon neutral, but is it even possible?

What have companies done so far to call their business or some of its products carbon neutral?

The typical process associated with companies working to achieve carbon neutrality has often looked something like this:

1. CO2 accounting: The company starts by mapping its CO2 emissions through a CO2 inventory. Then, reduction actions are initiated based on insights from the inventory.
2. Energy reduction: Businesses can reduce energy consumption by investing in energy-efficient technologies, optimizing operational processes and improving building insulation.
3. Renewable energy: Switching to renewable energy sources such as solar, wind or hydropower can help reduce your company's dependence on fossil fuels and thus reduce CO2 emissions.
4. Energy sources and suppliers: The company can also choose suppliers and partners that have sustainable and less carbon-intensive operational processes.
5. Offsetting: Even after reducing as much CO2 as possible, the company will have some unavoidable emissions. These can be offset by investing in projects that reduce or remove CO2 from the atmosphere, such as afforestation, soil carbon storage or Direct Air Capture technologies.
6. Certification: There are various certification programs that companies can participate in to be recognized as carbon neutral. These programs typically require the company to have reduced its emissions as much as possible and offset the rest through recognized climate projects.

Carbon neutrality is not a realistic goal

While this approach can be a good guideline, it will soon no longer be possible to use claims such as "carbon neutral", "carbon positive", "climate neutral" or similar claims through this approach. And with good reason. While carbon credits can be a nice addition to a company's climate strategy, it is inevitable that the company will emit CO2 through its processes. This is precisely why a new EU directive will outlaw the use of terms like carbon neutral. It has also been seen many times that companies do not reduce the carbon footprint of their own processes, but simply buy unreliable and unverified carbon credits and claim the product as carbon neutral.

Consumers have also become more aware of companies' use of the term and many consider it to be greenwashing. The last few years have seen a number of greenwashing cases among Danish companies, including Danish Crown, Arla and Zalando.

Green Claims Directive changes the rules

The EU Green Claims Directive changes the rules for what you can say as a company. From 2026, you will no longer be able to call your company's products and services carbon neutral. Many companies have bought carbon credits and try to market their products as "carbon neutral". It could be products and services such as milk and airplane rides that companies want to make carbon neutral by purchasing carbon credits.

The directive requires companies to prove that their CO2 emissions have a direct correlation with the climate claims they make. An airline cannot market that a flight will be carbon neutral because they are helping to plant trees somewhere in the world. Although buying climate credits is smart if done correctly and can help do something good for many local areas and ecosystems, it will become a dirty word to market with in the future.

The directive is designed to combat greenwashing. You can read more about greenwashing here.

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