Beyond transactional net zero: an alternative for companies and people
The allure of net zero
There is an increasingly strong appetite for companies and individuals to be ‘net zero’. The desire to say, “on balance we are not contributing to climate change”. The ‘we’ in question can be a person, a family, a company or even a government.
I’m often asked how many trees one would need to plant in order to make up for a short haul flight – to bring the balance sheet back to zero, to no longer be ‘part of the problem’. If my flight from Heathrow to Rome throws the equivalent of 250kg of carbon dioxide into the air, how many trees will it take to suck it back out? That’s the net zero transaction. With this flawed model there are two sides of the balance sheet which I will explain in more detail and then propose a simpler alternative approach that doesn’t throw the baby out with the bathwater.
Calculating your emissions
Beginning with the first side of the equation - the calculation of emissions. The maths is (fairly) straightforward for companies and individuals. For a company you add the direct emissions your company produces to the emissions from the energy you use and the indirect emissions of all it takes to create something and all it takes to distribute it.
There are a few hidden headaches with the emissions side calculation – it’s pretty hard to quantify the indirect emissions part. Such as how much greenhouse gas was produced from the rainforest that was cleared to feed the cow that grazed and farted, that was made into beef that was put in a container that went in a ship that got on a truck that turned into a burger that landed on the plate. There’s room for major differences in the figure you reach. It’s a bit of a fairground mirror set up – your company’s carbon footprint can look quite different depending on which mirror you stand in front of as there are so many variables.
So let’s say that we can get some moderately reliable data from this first side of the equation. This gives each company a number that represents their total emissions, a common currency denominated in tonnes of CO2. That is a useful number to share openly with investors and customers and indeed larger companies in countries like the UK are obliged to report on their carbon emissions. Setting a public target to reduce that number to a certain amount by a certain date can provide a meaningful way for a company to be accountable for reducing its carbon emissions. And that is a good thing.
Individuals and families can do the same thing – work out a rough and ready figure for the carbon footprint of their current lifestyle and take steps to get it down. And that is also a good thing.
How much damage does a tonne of CO2 cause?
This is known as the ‘social cost of carbon dioxide’ (SC-CO2) and it attempts to put a dollar figure on the damages caused by putting one more tonne of CO2 out there. Of course, depending on who’s doing the maths, the figure will vary wildly.
Recent research published in the journal Nature puts this at $185 per tonne. So if you or your company is responsible for 100 tonnes of CO2 being released into our warming atmosphere then the damage to the planet can be estimated to be in the region of $18,500. That number is much easier to get your head round – I have no mental picture of a colourless tonne of gas but I know what a dollar bill looks like. Shell’s planetary damage is approximately $254,745,000,000 (approx. 1,377 million tonnes times $185). Okay, that one’s quite hard to visualise. My family of five currently causes about $1,850 worth of damage per year– that doesn’t feel great.
Stumbling on the other side of the equation
Now back to the second side of the net zero equation, calculating the amount of greenhouse gas sucked out of the air. This is where it gets impossibly messy and sometimes unpalatably murky. Here are just two powerful reasons (from a long list) why it’s a headache that’s not worth having.
1. Buying carbon credits can encourage a race to the bottom in ways that are deeply unhelpful. Within tree-growing, the area I know best, it’s far cheaper to plant a fast-growing non-native species in a plantation lacking in biodiversity than to work with communities to recover ancient rainforest. In other words, incentives to go for the cheapest option means negative externalities that aren’t factored within the price – oh, that’s exactly what got us into this mess in the first place.
2. The armies of middlemen, experts, verifiers, calculator-wielding consultants that are required to come up with a number for some types of carbon credit is mind-boggling – it is a lucrative industry that skims the cream then drinks half the milk.
Some would say that this whole system is designed to be complex and opaque – that there are plenty of folk who are pleased that the reality is masked in a system that is hard to understand and communicate.
I’ve got a better idea. And it’s not complicated. But we should firstly take a quick detour to what investments do make a difference.
A quick detour - what makes a difference
We know that we need to make major investments at multiple levels to respond to this planetary crisis – to bend the curve of emissions. We also know what academic research and common-sense show to be most effective ways to do that. We also know which approaches have added benefits (co-benefits) such as increasing biodiversity and creating jobs. Here’s an inexhaustive list of ways I would spend money to address the mess:
Support Indigenous Peoples and Local Communities to protect their territories – we know how important those ancestral lands are for the planet
Support changes to climate change legislation as well as climate change litigation by organisations like ClientEarth who hold the most egregious planet polluters and nature destroyers to account
Give money to cutting edge research to develop new technologies for capturing and storing carbon dioxide
Invest in expansion of renewable energies from tidal to solar, from wind to geo-thermal
Invest in schemes that help those most vulnerable to the ravages of a warming planet to prepare for the worst and deal with the droughts and floods that they’ll inevitably face.
And with my own bias on this one, support community-led reforestation around the world (without bothering to calculate exactly how many kilograms of carbon dioxide each tree captures per year).
These are all good things.
If your company or family was investing in these sorts of schemes you might look to Project Drawdown’s 100 most substantive climate solutions to make informed choices. You would carry out your due diligence in the same way you would for any company investment.
The Carbon Positive Ratio
It could probably have a better name but let’s start with that. It’s just two numbers. What’s your damage in dollars? What’s your investment in dollars?
A family like mine might create, say, $1,850 of damage and give $925 to different causes and schemes that benefit our planet. That is a ratio of 2:1 ($925/$1,850). That family can then make different choices over time to reduce their damage, let’s say to $1,300, and increase their investments, perhaps to $1,300. That would give a ratio of 1:1 ($1,300/$1,300). Both sides of the equation matter.
It's not complicated for your company either. What’s the dollar damage in terms of your company’s footprint and what are you spending to help put things right?
These figures and the score they produce are easily comparable between similar companies in similar sectors. They help investors and customers compare organisations and make choices. They allow companies to set sensible targets and then go about reaching them. And we avoid the confusion and topsy turvy incentives of calculating carbon offsets. Like coal, we need to phase out the use of this unhelpful concept.
Who won’t like it? Companies who don’t want to be compared. Consultants who need complexity to justify their jobs. Serious ethical investors, values driven companies and committed individuals and families will.
The current company and individual net zero calculation system is deeply flawed and needs to change. We can shift to a measure that is more accessible, more ethical, simpler and drives greater positive action.
James Whitehead, is the CEO at the International Tree Foundation
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