The word “net” in Net Zero is inextricably linked to carbon offsetting, otherwise 91% of global GDP would be pursuing "Actual Zero" by 2050. Without carbon dioxide removals (‘CDR’) from nature (and eventually engineered CDR), experts such as the Intergovernmental Panel on Climate Change ('IPCC') conclude that we cannot get to Net Zero. This article will explain why Actual Zero is not the goal and why offsetting is one of many vital tools.
Try as an experiment to go a single normal day of your life without interacting with excess carbon emissions. Essentially, every product you consume will have been delivered by fossil fuelled trucks, because we haven’t figured out how to decarbonise long haul trucking yet (road transport is ~8% of total emissions). Transport in general continues to rely on oil products for 91% of its energy, which is only a 3% reduction from the 1970s. It will have been processed and stored in warehouses that are almost certainly fossil fuel powered (commercial building energy use is ~7% of emissions) because most national energy grids, even in climate ambitious countries, will struggle to reach 50% renewable energy by 2030.
Net Zero Scenario for decarbonising trucks and buses by 2030 is equivalent to 2009 diesel consumption
Source: IEA
Renewables are going to be the single biggest contributor to the long-term reduction of emissions. But the rollout of a new global energy infrastructure has some hurdles to overcome. Wind and solar, which will do the bulk of the heavy lifting, currently remains unreliably intermittent with insufficient battery storage, they are raw material intensive which exposes developers to significant commodity price fluctuations, particularly as the majority of the world simultaneously pursues the same raw materials; the extraction and refining of these materials having their own significant carbon footprint. Renewables development are subject to skilled labour shortages as they are relatively new high demand industries, it is difficult to store the energy at scale, most buildings are AC whereas DC is the more efficient electrical current for renewables and large scale projects often face strong opposition from NIMBY activists (not in my backyard) or environmentalists, who not infrequently oppose the most viable large scale renewables, being wind turbines (risk to birds and biodiversity) and nuclear (expensive and “dangerous”). This can delay permits and construction, which in turn deters investors for obvious time preference and opportunity cost reasons. All of these constraints are surmountable, it will however take decades.
If your product was imported, then the ship (~2% total emissions) or flight (~2% total emissions) would have been fossil fuel powered as we are yet to figure out how to decarbonise these vital long haul transportation industries. It was also likely made in a fossil fuel powered manufacturing plant in a developing nation, where growing GDP and pulling their people out of poverty will continue to take national priority over climate mitigation in the short to medium term.
Just walk from your home (residential buildings are ~11% of total emissions) to your local coffee shop for a cup of coffee. That pavement your leather shoes stride on (livestock combining land clearing and feedstock are ~16% of total emissions) is made of cement that we haven’t figured out how to decarbonise at scale (~7% of all emissions). The coffee shop building is made of cement and steel (steel is ~7% of total emissions). Some say powering the manufacturing of cement and steel with green hydrogen will end their future carbon footprints. To replace all current grey hydrogen (natural gas produced hydrogen) with green hydrogen (never mind the ambition to fuel vehicles, replace natural gas and various other new and novel use cases being proposed for green hydrogen), this alone would require 3,600 TWh/year of concentrated renewable energy. For context, that’s equivalent to 88 per cent (4108 TWh) of the total 2021 energy consumption of the United States (fossil fuel and renewables combined). That much energy would be required to power nothing but electrolysers to split water molecules to generate green hydrogen. The beans, cup, milk, sugar and the phone you tap and pay with will have all followed the aforementioned journey to end up in your hand, as have the raw materials used in their respective creation.
The two fundamental causes of emissions for companies are land clearing and/or energy consumption. Agriculture, forestry and property development feed and house the world. There is already an emerging food security crisis following Russia’s invasion of Ukraine, the breadbasket of Europe. This is driving a growing appetite for national self-sufficiency, which means new land will be cleared for farming. Many emerging nations continue to increase their per capita income and there is a direct correlation between per capita income and protein consumption, which again, means more land will be cleared for farming. Lab produced meat is decades away from viably scaling. The global population just surpassed 8 billion, which will require more housing and infrastructure, which needs more timber, land and energy intensive building materials. With energy, it took 150 years to build out the coal, oil and natural gas facilities to power the world’s existing operations and supply chains, powering and heating buildings, vehicles and equipment. That all has to be replaced, globally, whilst simultaneously growing in line with population growth.
So even with the purest of heart and all requisite capital continuing to flow (nobody mention the words pending global recession), it is all going to take time. Companies can improve their energy efficiency, certain companies can facilitate their own renewable energy sources and they can opt for more sustainable products such as a fleet of electric vehicles. Even then however, if the recharge station their employees use is connected to a fossil fuel powered grid system, then that company is responsible for offsetting those unavoidable emissions. Some emissions are going to take decades to avoid, best endeavours be damned. Even with 100 per cent renewables, energy efficiency and electrification, the world will still have billions of tons too much CO2 in the atmosphere. Here lies the utility of carbon offsetting. The cost for a company to emit those unavoidable tonnes of CO2 is to fund a project that sequesters equal tonnage of CO2.
At present, the two carbon removal options are nature-based solutions and engineered CDR such as Direct Air Capture (DAC). The latter does precisely what it says on the tin. It is however currently unviable at scale. Whilst there is too much carbon in the atmosphere, the ratio as you all remember from high school science is approximately 78% nitrogen, 21% oxygen and the remaining 1% is carbon dioxide and other gases. That lack of carbon density means DAC machines need to be perpetually in operation, processing large volumes of air to capture sufficient carbon. The energy consumption therefore requires an estimated 1200 kilowatt-hours of energy per ton of carbon. The national average for a kilowatt-hour of energy in the U.S. in 2022 was $0.16. Expecting companies to voluntarily pay 10 billion x ($0.16 x 1200kwh) per annum = totally unviable. Even 1/10th of the requisite annual sequestration and a halving of the energy price is financially unviable. DAC is essential and the technology will greatly improve, but again, it will take time.
Source: The State of Carbon Dioxide Removal (2023) Nature-based CDR can provide immediate and cost-effective ways to reduce emissions and sequester carbon, whilst we navigate the many pitfalls of the energy transition. It is not an alternative to the transition, it is a vital partner to offset the residual emissions we cannot yet avoid. Nature buys us time as it expands the carbon budget. If we simply wait the decades it will take to resolve these issues, we will already have started experiencing the worst effects of climate change.
*Please note that total carbon emission estimates for specific sectors are indicative and not seen as an exact measurement.