Net-Zero 101

According to the U.S. Environmental Protection Agency (EPA), gases that trap heat in the atmosphere are called greenhouse gases (GHGs). The primary GHG is carbon dioxide (CO₂). Increasing levels of CO₂ and other GHGs are heating our planet. The resulting climate change, in addition to increasing temperatures, causes changes in weather patterns, impacting both humans and the natural environment.

Other common GHGs include:

• Fluorinated gases like perfluorocarbons (PFCs) and hydrofluorocarbons (HFCs) are powerful greenhouse gases emitted from a variety of industrial processes. They are sometimes used as substitutes for ozone-depleting substances like chlorofluorocarbons and halons.
• Nitrous oxide (N₂O) is emitted during agricultural and industrial activities, combustion of fossil fuels and solid wastes, as well as treatment of wastewater.
• Methane (CH₄) is emitted during the production and transport of coal, natural gas and oil. Methane emissions also result from livestock, other agricultural practices and from the decay of organic matter as in solid waste landfills.

An emissions reduction target is defined as “science-based” if it is developed in line with the scale of reductions required to keep global warming below 2 degrees Celsius from pre-industrial levels, nearly 150 years ago. The Science Based Targets initiative (SBTi) goes the next step to certify these targets. That’s the current goal of the Paris Agreement, which the U.S. rejoined in January 2021. Science-Based Targets are just one of many options for organizations seeking a methodology and clearly defined pathway to reduce their GHGs. Find out more from the Science Based Targets initiative.

This one is a bit tricky because all renewable energy is carbon-free. But not all carbon-free energy is renewable, for example nuclear energy. Truly renewable energy sources – like energy from wind, solar and geothermal sources – are naturally replenishing.

Carbon neutral and net-zero are often used interchangeably. Both terms are used to describe a commitment to eliminating carbon dioxide emissions altogether or to balance remaining carbon emissions with actions to achieve equivalent carbon savings. (Learn about RECs in our Financing Your Net-Zero Transition e-book.) These are activities that offset a company’s emissions or that remove CO₂ or other GHGs from the atmosphere through tree planting or artificial carbon capture/sequestration.

These are two terms for the same goals. Both mean the removal of more carbon dioxide or GHGs from the atmosphere than an organization produces. Being more efficient to lower overall energy use (without adding more energy use somewhere else) and investing in more renewable sources are great ways to achieve carbon negative/climate positive outcomes.

In the world of emissions reductions, this is the ultimate goal. Some organizations are choosing to commit to actions – such as purchasing more carbon offsets like RECs and over-investing in renewables – that exceed that organization’s estimated emissions from its founding date. In 2020, Google was the first major corporation to make the claim. The George Washington University made the commitment to displace its emissions produced since its founding in 1821.

Carbon offsets are units of CO₂-equivalent greenhouse gas emissions that are reduced, avoided or sequestered to compensate for emissions occurring elsewhere. Carbon offsets are generated by projects that reduce or avoid CO₂ emissions (like with the use of renewable energy) or that sequester CO₂ – either underground through mechanical means or through natural processes like modified agricultural practices and tree planting. Offsets are denominated in tons of CO₂ equivalents. Offsets must generally be certified to a carbon offset standard like the Climate Action Reserve.

RECs are market-based instruments that represent the property rights to the environmental, social and other non-power attributes of renewable electricity generation and supply. RECs can be bundled or unbundled from specific projects. Every MWh of clean energy generation can be claimed once, as either a REC or an offset, but not both. RECs can also be traded but when you sell them, you lose the associated environmental credit in your reporting.

Utilities provide data visibility for hourly-based views of electricity consumption and the source of grid-sourced energy, which can be renewables or other sources.

This is a measurement of carbon emitted per unit of energy consumed. It can be measured as pounds of CO₂ per kilowatt-hour of electricity. One way to reduce carbon intensity is to switch to using renewable energy.

Environmental, Social and Governance (ESG) is a megatrend in the investment world. It is the consideration of environmental, social and governance factors in the investment decision-making process. Approximately one out of every three dollars under professional management today is in a product that employs ESG criteria.

The sustainable full life cycle of renewables is the “cradle-to-rebirth” view of technologies. It takes into consideration what happens to equipment when it’s faulty or reaches the end of its productive service life as well as the upstream manufacture of things like solar panels and batteries. Recommissioning or repowering to improve existing solar, wind and storage site operations and decommissioning for sites no longer in use are integral to full life cycle success. Learn more with Sustainable Life Cycle Management for Renewables eBook.

A circular economy is an economic system that aims to eliminate waste and the continual use (or overuse) of natural resources. A clean energy economy falls within the circular economy by shifting energy production away from high emissions sources. It also includes job creation, building and maintaining renewables, and investing in the manufacture of energy storage and renewables technology.

This term describes the fair treatment and meaningful involvement of all people – regardless of race, color, national origin or income – in the development, implementation, enjoyment and enforcement of environmental laws, regulations and policies. For energy, it’s a means to bring better air quality, clean water and waste management to everyone while also protecting wild species and habitats.