Demystifying decarbonisation: Net zero
Decarbonisation and the drive to net zero affects every person and every business. Our cross-practice international team of lawyers at Stephenson Harwood can help you both navigate through these challenges and help your business make the most of the opportunities no matter where you are on your journey.
Part of the journey is understanding the sometimes confusing and constantly evolving jargon that often surrounds the topic of climate change and decarbonisation. Our demystifying decarbonisation series breaks down the key terms, policies, regulations and drivers that businesses need to know.
Net zero means cutting greenhouse gas ("GHG") emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere (such as through oceans and forests). Even with GHG emission reductions there are remaining emissions, but as these are equal to the removal efforts, this has a "net" effect.
Why do we need to reduce GHG emissions?
Reducing our GHG emissions and achieving net-zero is crucial to avoiding the worst effects of climate change. The Paris Agreement 2015 provides that global temperatures need to be limited to 1.5 °C above pre-industrial levels. Currently a 2.7 C temperature increase is expected based on current climate policies.
How are we doing so far?
Governments and an increasing number of companies (over 20% in the Forbes Global 2000) are making net-zero commitments. In 2019, the United Kingdom became the first major economy to legislate for net-zero, changing the long-term target in the Climate Change Act of 2008 to net zero by 2050. The year 2050 was seen as the first realistic date for net zero emissions to be achieved, balancing the urgent need to take action with the inevitable impact on the economy. This goal will be underpinned by an increase in renewables, with a focus on offshore wind, onshore wind and solar, as well as nuclear power stations, hydrogen and gas with carbon capture and storage. The Government was following guidance from its independent advisory body, the Climate Change Committee, which stressed that a net-zero target was essential for the UK to meet its commitments to the Paris Agreement goals. China, the European Union and the United States have also set a net-zero target, which covers about 75% of global emissions. However, it is not clear that we are globally on track to meet the net-zero targets. More Nationally Determined Contributions (climate plans to cut emissions and adapt to climate impacts) are required.
What's carbon off-setting? And what does "carbon neutral" mean?
Achieving net-zero will involve a complete transformation of how we produce, consume and travel. The energy sector is the source of around three-quarters of GHG emissions today. Replacing coal, gas and oil-fired power with energy from renewable sources such as wind and solar would dramatically reduce emissions, as well as reforestation. Another way that is becoming mainstream among businesses in achieving net zero is carbon offsetting. The principle of paying someone else to reduce carbon emissions has long been a tool to address climate change, however, there is argument that this is greenwashing or should be used as a last resort as buyers are paying someone else to adopt climate-friendly actions rather than cutting their own emissions. Often the terms 'carbon neutral and 'net-zero' are used interchangeably as they have the same result of removing harmful emissions from the earth's atmosphere, however they are distinct in terms of the scale and type of emissions removed. Carbon neutrality specifically refers to offsetting from the atmosphere an equivalent amount of carbon for the amount produced (as mentioned above). Net-zero encompasses carbon neutrality, however it is broader in that it refers to the long term goal of reducing overall GHG emitted into the atmosphere which includes methane, nitrous oxide and other hydrofluorocarbons through changing our activities and consuming, rather than just off-setting carbon.
Our decarbonisation team
At Stephenson Harwood, we have market-leading expertise in three sectors that will be the key pillars in decarbonising and achieving net zero:
- energy,
- transportation and trade, and
- the built and natural environment.
This gives our clients the benefit of cross-sector insights as we support them on their pathway to net zero.
Our decarbonisation team is international, with specialists spread across eight offices in Europe, Asia and the Middle East. When coupled with our strategic relationships with other key independent law firms, this means we can support our clients wherever their business interests are based.
