What You Must Know: Global Commitment to Carbon Neutrality

In recent years, keywords such as "climate change", "climate crisis", "carbon neutrality", "carbon emission" and "carbon footprint" have received more and more attention by governments, international companies, environmental organizations and the general public. Environmental and climate issues are not only issues that major companies and governments must pay attention to, but their management is essential to sustainable development.

Understand keywords of climate development:

Net Zero/ Net Zero Emissions

This refers to the balance between the "emissions" and "removals" of "all greenhouse gases" by companies and organizations during a specific measurement period.

Carbon Neutral

This is a goal for enterprises and organizations to reach within a specific measurement period, where "carbon emissions" and "carbon removals" are equal. That is, carbon neutral.

It is worth mentioning that Net Zero and carbon neutrality do not mean "carbon free". Carbon neutrality emphasizes that the carbon emitted in the production process is removed or offset by other means. Carbon free means no greenhouse gases are emitted during production and manufacturing.

Carbon Negative

The "carbon removals" of enterprises and organizations far exceed the "carbon emissions" during a specific measurement period.

Carbon Neutrality Is Increasingly Important to Tackle the Climate Crisis

"Carbon neutrality" or "net-zero carbon" means that carbon emissions and carbon reductions offset each other to achieve the effect of net-zero carbon emission. There are two ways to achieve this:

1. Use carbon offsets to absorb released carbon, for example by planting more trees.
2. Reduce carbon emissions at the source. This is a more direct approach.

Carbon emissions come from various human activities. The burning of fossil fuels accounts for 70% of the greenhouse gases in the atmosphere, and continues to have a profound impact on global warming. Meeting the challenge of carbon neutrality is critical to addressing the climate crisis, and slowing, adjusting, and even reversing carbon emissions to ensure the survival of human civilization. Scientists agree that to keep global temperature rise below 1.5 degrees Celsius, the world must be carbon neutral by 2050 or earlier. In recent years, governments, businesses and investors around the world have paid increasing attention to "net-zero" emission policies, seeking to accelerate the decarbonization process of economies, which is not limited to power generation, but also includes transportation, construction, manufacturing, and our everyday life.

Countries Around the World Announce Carbon Neutrality Pledges

This year, a number of countries and regions have announced plans to achieve carbon neutrality by mid-century, including:

• China has declared carbon neutrality by 2060.
• EU, Canada, South Africa, Japan, South Korea, Hong Kong have committed to carbon neutrality by 2050.
• US has committed to carbon neutrality by 2050, and power generation to be carbon neutral by 2035.
• New Zealand, Chile, Denmark, France, Hungary and the UK have further enshrined the 2050 targets into law, creating a greater sense of responsibility.
• Some countries have set more aggressive targets, such as Austria and Iceland by 2040, and Finland by 2035.

Under current commitments, about two-thirds of global emissions and 75% of GDP could be fully decarbonized by mid-century. In response to the problems of global warming and climate change, governments of various countries and regions have accelerated their actions.

As more and more countries and regions agree to the commitments and policies of the "Paris Agreement" climate agreement, and add relevant considerations to trade agreements, it will greatly affect the carbon emission policies of other countries and regions, and drive more countries and regions to join the ranks of those reducing emissions and pursuing decarbonization.

The renewable energy industry is developing more and more vigorously. In recent years, the cost of solar and wind power generation has become lower and lower, making renewable energy more popular. Looking to the future, renewable energy development will lead the global energy industry. Countries, regions, and companies around the world can leverage cheaper and more diversified energy supplies to unlock greater growth potential.

Companies Are Joining the Ranks of Those Responding to Carbon Neutrality

At the corporate level, many companies have also made their own climate commitments accordingly. A leading technology company in the United States announced in July 2020 that the entire company’s manufacturing industry chain and product life cycle will achieve carbon neutrality by 2030. Another large multinational software company announced in January 2020 that it seeks to offset the company's entire corporate emissions footprint by reducing carbon dioxide and eliminating carbon dioxide from the environment, and to achieve carbon negative emissions by 2030. The company has also co-founded the “Transform to Net Zero” alliance with nine large companies from all walks of life from around the world to promote global industries to work towards carbon neutrality.

As fossil fuel energy sources (oil, gas and coal) account for about two-thirds of the world's total emissions, oil and gas companies are the key to the energy transition, and some of them have disclosed their long-term plans to significantly reduce energy-supply carbon intensity and even achieve net zero carbon.

Global Megatrends

Taking a look at the global megatrend of carbon neutrality, we can examine which industries and companies around the world can benefit from carbon neutral policies:

• Renewable Energy: Manufacturers of wind turbines, solar panels, and power converters, all of which can see their revenues soar as the industry grows.
• Construction industry: The average building accounts for one-third of global carbon emissions. Companies that produce low-cost insulating building materials, and companies that use building technology to help manage the use of water, heat and energy in buildings, all offer different solutions to enable us to live a low-carbon life.
• Agencies that help protect forests and oceans.
• Agriculture: Technology drastically reduces the environmental impact of the industry while producing more food.
• Technology industry: Software companies can locate data centers next to renewable energy power stations.
• Other industries: companies using renewable energy, companies gradually decarbonizing, brands that consider ecological sustainability, etc.

However, beyond net zero, it will be more difficult to achieve "zero carbon emissions". To achieve zero carbon emissions, a comprehensive transformation of production and supply chains is required. In fact, there are still no cases of zero carbon emissions products, so this will become a major issue for sustainable development in the future.