The Economics of Climate Change
What Net Zero Means
What net zero emissions targets mean, why they became the global goal, and how countries and companies plan to reach them.
Many countries and companies have set net zero targets. Understanding what this means helps judge whether climate plans are credible.
The definition
Net zero means that any greenhouse gases still emitted are balanced by an equal amount removed from the atmosphere. It does not require zero emissions; some residual emissions, from sectors that are very hard to decarbonise, can be offset by removals, such as through forests or technologies that capture carbon.
Why net zero
Climate science shows that global temperatures stop rising roughly when carbon dioxide emissions reach net zero. The Intergovernmental Panel on Climate Change found that limiting warming to 1.5 degrees Celsius requires reaching net zero carbon dioxide emissions globally around 2050, and limiting it to 2 degrees requires reaching it around the early 2070s.
National targets
- The European Union and the United Kingdom have legally committed to net zero by 2050.
- China has pledged carbon neutrality before 2060.
- India announced a net zero target for 2070 at the COP26 conference in Glasgow in 2021.
How to get there
Most pathways involve:
- Clean electricity from renewables and other low-carbon sources.
- Electrifying transport, heating and parts of industry.
- Energy efficiency.
- New fuels, like green hydrogen, for hard-to-electrify sectors.
- Carbon removal to balance residual emissions.
Credibility
Critics warn that some net zero pledges, especially by companies, rely heavily on offsets of questionable quality or lack near-term actions. A United Nations expert group in 2022 set out recommendations to prevent “greenwashing” in non-state net zero pledges, including requiring interim targets and limiting reliance on cheap offsets.
A company pledges net zero by 2040. A credible plan would cut its own emissions steeply, switch to renewable electricity, work with suppliers and set targets for 2030. A weak plan might continue emitting while buying cheap offsets. The same pledge can hide very different levels of effort.
Net zero allows some emissions if they are balanced by removals. But removals are limited and costly, so most emissions still need to be cut directly.
- Net zero means remaining emissions are balanced by equal removals.
- Global temperatures stabilise roughly when carbon dioxide emissions reach net zero.
- The EU and UK target 2050, China 2060 and India 2070.
- Credible plans need near-term cuts and limited reliance on offsets.
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