The “Carbon Neutral” Future is Not Emission-Free

By Alida Soileau

It’s no secret that carbon dioxide (CO2), among other greenhouse gases, plays a major part in climate change. The Paris Climate Agreement, a binding international treaty adopted in December 2015, set forth an ambitious goal: “limit the [global] temperature increase to 1.5°C above pre-industrial levels.” To achieve this, countries must limit their carbon emissions. Many big-name companies and sovereign states have pledged to become carbon neutral in the coming decades. For example, Amazon, Walmart, GM, and FedEx have set 2040 as their deadline. Countries including the U.S., U.K., and European Union members have pledged to reach net neutrality by 2050. And more recently, in October 2021, Saudi Arabia pledged to become carbon neutral by 2060.

When a company or country becomes carbon neutral, it “must rely entirely on renewable fuels or offset the burning of fossil fuels with the capture and storage of carbon dioxide in the atmosphere.” Achieving net neutrality does not mean ending  reliance on fossil fuels. While this seems counterintuitive, Saudi Arabia and FedEx provide examples of how this happens.

Saudi Arabia is simultaneously taking measures to reach net carbon neutrality and continuing to develop and export fossil fuels. Although it recently pledged to become carbon neutral by 2060, the country remains a top oil producer globally and has no intention of slowing its investment in oil and gas. This is feasible because the U.N. “holds countries responsible for emissions only within their own territory.” Thus, when Saudi Arabia exports oil, the emissions generated from that oil count towards the importing country’s emissions – not Saudi Arabia’s.

     Separately, FedEx has set 2040 as its deadline to become carbon neutral. By then, FedEx plans to have all-electric delivery vehicles. But even if FedEx meets this goal, the electric grids that FedEx vehicles use to recharge will likely rely on natural gas (a “cleaner” fossil fuel), meaning all-electric vehicles would, indirectly, still generate emissions. In sum, “. . . shipping packages around the world requires sending a lot of carbon dioxide into the atmosphere and probably still will in 2040.” This inability to totally do without fossil fuels necessitates the use of carbon offsets.

Carbon offsets, or credits, allow a company to pay a third-party -- often located on the opposite side of the globe -- to remove a certain quantity of carbon from the atmosphere. One carbon offset is equal to one metric ton of carbon. Offsets can take the form of restoring forest areas so that they sequester more carbon, using direct air capture to remove atmospheric carbon and store it underground, and more. By buying offsets to cancel out its emissions, a company may become carbon neutral. In addition, the development of carbon offset markets comports with the Paris Agreement’s aim of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” However, carbon offsets have drawbacks. By allowing a company to pay to offset emissions, a company may avoid prioritizing the reduction of emissions in-house. For this reason, carbon offsets should be a last resort in reaching net neutrality. Companies must focus on addressing the source of the problem: emissions.

One way countries are reducing emissions is nuclear energy. Nuclear, while “reliable and clean — that is, it emits no greenhouse gases” – also produces hazardous waste. In addition, it is not renewable. Nuclear energy is particularly controversial now, as the European Union is looking at designating nuclear “a means of achieving the bloc's climate goals.” A “green” designation from the EU will come with substantial market benefits. “In [the] future, for example, a lender to an EU-certified green business might be allowed to hold less capital against the loan, while the borrower pockets the coveted ‘greenium’ in the form of a lower interest rate.” France relies heavily on nuclear and is among the European countries calling for the EU to formally designate nuclear as a green investment. On the flip side, “opponents, such as Germany, raise concerns over hazardous waste . . . .” These concerns are valid. "For example, 10 years after removal from a reactor, the surface dose rate for a typical spent fuel assembly . . . [is] far greater than the fatal whole-body dose for humans . . .  In addition, “[i]f isotopes from these high-level wastes get into groundwater or rivers, they may enter food chains.” While nuclear power is non-renewable and generates environmental harms in the form of nuclear waste, it is arguably a necessary stepping stone in the journey to cutting CO2 emissions and scaling-up renewable energy in the long term.

Companies and countries pledging to become carbon neutral should prioritize developing renewables and cutting emissions over reliance on carbon offsets. Renewable energy sources are a long-term solution, whereas carbon offsets merely allow companies to “pay someone else to cut or remove a given quantity of greenhouse gases from the atmosphere.” For this reason, a company like FedEx or a country like Saudi Arabia may become carbon neutral but still rely quite heavily on fossil fuels. While carbon offset markets are a step in the right direction, they are insufficient to generate the rapid development of renewable energy sources the world so desperately needs to mitigate climate change.