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Carbon neutrality is a state in which the net carbon dioxide emissions linked to an entity or activity equal zero. It is reached by measuring emissions, reducing them as far as possible, and compensating for the remainder through carbon offsets. Carbon neutrality differs from net zero, which usually requires deeper absolute emission reductions.
While carbon neutrality claims have proliferated, regulators are tightening rules around their use to prevent greenwashing. The distinction between carbon neutrality and the more ambitious net zero target is increasingly important for credibility.
Net zero is a state in which the greenhouse gases an organisation adds to the atmosphere are balanced by an equal amount removed from it. Reaching net zero means cutting emissions as deeply as possible, then removing any residual emissions through carbon removal projects. The aim is to limit global warming to 1.5°C above pre-industrial levels.
A carbon offset is a reduction or removal of greenhouse gas emissions made to compensate for emissions occurring elsewhere. Offsets are typically measured in metric tonnes of CO2 equivalent and can be generated through projects such as reforestation, renewable energy, or methane capture. They are purchased as credits on voluntary or compliance carbon markets.
A carbon credit is a tradeable certificate representing the right to emit one metric tonne of carbon dioxide or its equivalent in other greenhouse gases. Credits are generated through verified emission reduction or removal projects and can be traded on voluntary or compliance carbon markets. They serve as a market-based mechanism for incentivising emissions reduction.
Greenwashing is the practice of making misleading or unsubstantiated claims about the environmental benefits of a product, service, or company practice. It can range from vague or irrelevant green claims to outright fabrication of environmental credentials. Greenwashing undermines consumer trust and diverts resources from genuinely sustainable alternatives.