Hundreds of companies, including major emitters like United Airlines, BP and Shell, have pledged to reduce their impact on climate change and reach net-zero carbon emissions by 2050. These plans sound ambitious, but what does it actually take to reach net-zero and, more importantly, will it be enough to slow climate change?
As environmental policy and economics researchers, we study how companies make these net-zero pledges. Though the pledges make great press releases, net-zero is more complicated and potentially problematic than it may seem.
What is ‘net-zero’ emissions?
The gold standard for reaching net-zero emissions looks like this: A company identifies and reports all emissions it is responsible for creating, it reduces them as much as possible, and then — if it still has emissions it cannot reduce — it invests in projects that either prevent emissions elsewhere or pull carbon out of the air to reach a “net-zero” balance on paper.
The process is complex and still largely unregulated and ill-defined. As a result, companies have a lot of discretion over how they report their emissions. For example, a multinational mining company might count emissions from extracting and processing ore but not the emissions produced by transporting it.
Companies also have discretion over how much they rely on what are known as offsets — the projects they can fund to reduce emissions. The oil giant Shell, for example, projects that it will both achieve net-zero emissions by 2050 and continue to produce high levels of fossil fuel through that year and beyond. How? It proposes to offset the bulk of its fossil-fuel-related emissions through massive nature-based projects that capture and store carbon, such as forest and ocean restoration. In fact, Shell alone plans to deploy more of these offsets by 2030 than were available globally in 2019.
Environmentalists may welcome Shell’s newfound conservationist agenda, but what if other oil companies, the airline industries, the shipping sectors and the U.S. government all propose a similar solution? Is there enough land and ocean realistically available for offsets, and is simply restoring environments without fundamentally changing the business-as-usual paradigm really a solution to climate change?