What is actually CO2-neutral, greenhouse gas-neutral or climate-neutral? 

According to the German Climate Protection Act, Germany must be greenhouse gas neutral by 2045 in order to achieve the Paris climate protection targets. At the same time, companies are increasingly advertising that they are climate-neutral or CO2-neutral. Three different terms that are often mixed up and used as synonyms in political debates and everyday discussions, as the difference between the characteristics is not entirely clear. Companies are increasingly using these and other terms such as "environmentally friendly" in marketing or on product packaging. This leads to consumers making purchasing decisions based on these environmental claims. The problem is that there is often no sound data basis for all these statements as to why a product is climate-neutral or environmentally friendly, for example. 

In this article, we first explain why different greenhouse gases contribute differently to global warming, what CO2 equivalents are and how they are calculated. We then show what it means to be CO2-neutral, greenhouse gas-neutral or climate-neutral and what steps are required to achieve these goals.

Contents

• What are CO2 equivalents and how are they calculated?
• What does CO2-neutral, greenhouse gas-neutral, climate-neutral mean?
• What do the neutrality terms CO2-neutral, greenhouse gas-neutral and climate-neutral mean for the climate targets?
• Conclusion

What are CO2 equivalents and how are they calculated?

The international community has agreed on seven greenhouse gases that have the greatest impact on the climate: Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), halogenated fluorocarbons (CF4), hydrofluorocarbons (C2H2F4), nitrogen trifluoride (NF3) and sulphur hexafluoride (SF6). 

Properties of greenhouse gases

Greenhouse gases have the ability to absorb energy from solar radiation. After absorption, the energy is released back into the atmosphere via movement, which increases the temperature in the environment. We are all familiar with a similar phenomenon from everyday life: black surfaces become hotter than light-coloured surfaces with the same amount of solar radiation because they absorb more energy from the sun's rays. The various greenhouse gases can absorb and release different amounts of energy and have different residence times in the atmosphere. As a result, all greenhouse gases contribute to climate change to different degrees; this is referred to as the Global Warming Potential (GWP) of a greenhouse gas. It should be noted that the GWP is always related to a specific time period.

Figure 1 below shows the seven greenhouse gases in relation to their occurrence in certain sectors, their retention period and their global warming potential (GWP).

Greenhouse gas potential of CO2 and methane

If a company emits one tonne of methane and one tonne of CO2, the methane remains in the earth's atmosphere for around 12 years. CO2, on the other hand, can remain in the earth's atmosphere for several hundred years and have an effect on the climate. If we look at the climate impact of the two greenhouse gases over the next 20 years, a tonne of methane has 84 times the climate impact of a tonne of CO2, as it can absorb significantly more energy and release it back into the environment. Due to the significantly shorter lifespan of methane, it can only exert its full climate impact for around 12 years, which means that the longer the period under consideration, the lower the climate impact compared to CO2. According to the IPCC (Intergovernmental Panel on Climate Change), the climate impact of a tonne of methane over the next 100 years is only 28 times greater than that of a tonne of CO2.

Greenhouse gases in the CO2 balance

German, European and global climate targets and manufacturers' emission factors for products take a period of 100 years as the basis for calculating CO2 equivalents. If a company emits one tonne of methane from a business activity, this will have the same impact on the climate as 28 tonnes of CO2 over the next 100 years. Consequently, this activity is accounted for in the carbon footprint with 28 tonnes of CO2 equivalents. 

Once all company activities have been summarised in a carbon footprint, this is the first step towards achieving the company's climate targets. The climate impact of a company is now measured in CO2 equivalents. Taking into account all the greenhouse gases mentioned above in CO2 equivalents, the carbon footprint is actually a greenhouse gas footprint.

In our blog article "3 steps to a CO2 balance in the company" we explain the procedure for creating a carbon footprint. 

To be climate-neutral is the most ambitious neutrality goal - the goal that is not so easy to achieve by definition.

What does CO2-neutral, greenhouse gas-neutral, climate-neutral mean?

Neutrality is a state in which two variables in opposite directions cancel each other out. In our example, we relate the concept of neutrality to the global average temperature, the most important indicator of climate change and the global climate. In terms of climate protection, this means that all activities that have a positive impact on the climate must cancel each other out with those that have a negative impact on the climate. Climate-positive factors contribute to lowering the global average temperature, whereas climate-negative factors favour the progression of global warming. 

But what are the factors that affect the climate and change the global average temperature and how do they relate to the various concepts of neutrality?

Factors influencing the global average temperature

There are both human and natural factors that have a negative or positive influence on the climate, which are explained below. The result of these influences is, among other things, the change in the concentration of greenhouse gases in the earth's atmosphere. The concentration of greenhouse gases increases continuously as a result of various corporate activities, causing the global average temperature to rise. One example is the combustion of natural gas in a power plant to generate energy. This has a negative impact on the climate.

Relationship between human and natural factors

The increase in temperature indirectly leads to other climate-negative natural factors. One example is the reduction of the so-called (natural) albedo effect. This indicates how well surfaces reflect solar radiation. Warmer ambient temperatures cause white glaciers and polar ice caps, which reflect solar radiation, to melt. If these surfaces disappear, more solar energy is absorbed by dark surfaces and the temperature rises. 

Other human factors include the emission of soot particles from coal-fired power stations and particulate matter from diesel engines. Although soot particles and particulate matter are not gases, they have the same ability as greenhouse gases to absorb and release energy from solar radiation. They also reduce the albedo effect, as the particles or dust particles settle on the polar ice caps and darken the surfaces. 

Human climate-positive factors include CO2 storage technologies, for example. Natural climate-positive factors are, for example, forests that naturally store CO2. Humans can promote climate-positive influences, for example by afforesting natural forests.

	Climate positive	Climate negative
Human factors	CO2 storage technologies Afforestation of forests Reactivation of moors	Greenhouse gas emissions Soot particles from coal-fired power stations Particulate matter from diesel engines
Natural factors	CO2 sequestration by forests, peatlands or the oceans	Reduction of the albedo effect Clouds

The overview shows that various human and natural factors have a positive and negative effect on the climate and the global average temperature. Although CO2 emissions are by far the biggest human factor influencing the climate, they are only one of many. While the climate impact of greenhouse gases can be determined very precisely, the far greater challenge is to determine the extent to which other factors that are not directly related to greenhouse gas emissions affect the global average temperature. 

Levels of the concepts of neutrality

The scope of the human factors included determines how the term neutrality is to be handled in the context of climate change. The terms are explained in more detail below.

The following diagram shows the different levels of the concept of neutrality, which are explained in more detail below.

CO2 neutrality

CO2 neutrality means that all of a company's CO2 sources are matched by the same number of CO2 sinks. In a scenario in which global CO2 neutrality prevails, the concentration of CO2 particles in the atmosphere remains constant. This is the least ambitious neutrality of the three levels and does not mean that global warming will not continue. With a share of 75% of all greenhouse gases emitted (CO2 equivalents), CO2 is by far the largest contributor to global warming worldwide. CO2 neutrality would therefore significantly slow down global warming, but not stop it.

Greenhouse gas neutrality

The concept of greenhouse gas neutrality is more comprehensive. As mentioned at the beginning, the remaining 25% of climate-impacting greenhouse gases (in CO2 equivalents) are defined by the Kyoto Protocol. To achieve greenhouse gas neutrality, a company must remove as many CO2 equivalents from the atmosphere as it emits. In a scenario in which global greenhouse gas neutrality prevails, the concentration of greenhouse gases in the atmosphere remains constant. However, global warming continues despite greenhouse gas neutrality, albeit at a slower rate compared to CO2 neutrality.

Climate neutrality

Climate neutrality is the most all-encompassing formulation. In a scenario in which global climate neutrality prevails, all human and natural climate-negative effects are as great as the climate-positive effects. In this case, all factors no longer have any effect on the climate. In a narrower sense, exact climate neutrality is probably unattainable by definition due to the many different and difficult-to-quantify factors mentioned above. At least as things stand today, research is not yet able to precisely quantify the climate impact of particulate matter or soot particles, for example. Through additional negative emissions or by taking other climate-positive measures, a company could override the uncertain factors so that there is a high probability of not being climate-negative. 

Certification of CO2 neutrality, greenhouse gas neutrality or climate neutrality

Companies can already become CO2-neutral, greenhouse gas-neutral or climate-neutral today by investing in climate protection projects or purchasing CO2 certificates. Climate protection projects range from the promotion of modern CO2 storage technologies to the reforestation of forests or the reactivation of moors. However, there are major differences in the quality of climate protection projects, which is why the investment and selection of projects must be well thought out. Many projects are not transparent and promise greenhouse gas offsets that are often unrealistic.

There are many institutions and companies on the market that certify CO2, greenhouse gas or climate neutrality. For the reasons described above, climate neutrality in particular is not actually feasible or comprehensible. 

Greenwashing the terms CO2-neutral, greenhouse gas-neutral, climate-neutral

As already mentioned at the beginning, misleading use and product declarations of CO2 neutrality are becoming increasingly common. Companies advertise that they are climate-neutral. As a result of the European Union's Green Claims Directive, companies will have to substantiate these claims on sustainability issues in future. This also includes environmental claims such as "CO2-neutral", "greenhouse gas-neutral" or "climate-neutral". As a result, companies should rethink the neutrality terms and use them more consciously in their corporate communications out of fairness to consumers and in view of upcoming changes to the law. The "Green Claims Directive" is currently being transposed into German law. It is expected to apply in Germany from September 2026.

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What do the neutrality terms CO2-neutral, greenhouse gas-neutral and climate-neutral mean for the climate targets?

The global temperature rise began around 1980 and is mainly due to industrial human activities and the associated greenhouse gas emissions. In 1980, the global average temperature was 0.06°C higher than in 1900. After 1980, the continuous upward trend began, so that the temperature difference was already 0.77°C in 2020.

To avert the worst consequences of climate change, the goal is to limit the increase in the global average temperature to 1.5 degrees by 2100. 1.5 degrees compared to the global average temperature from 1850 to 1900 (pre-industrial era).

In order to achieve this goal, one of the German government's targets is to be greenhouse gas neutral by 2045. However, other countries or organisations do not set the target of greenhouse gas neutrality until 2050. The year in which greenhouse gas neutrality is achieved is also known as the net zero year. 

The path to greenhouse gas neutrality

However, this target alone says nothing about achieving the 1.5 degree target. The reduction process of greenhouse gas emissions and the so-called global CO2 residual budget, which we must not exceed, are decisive until the net zero year. Worldwide, 280 Gt of CO2 are still available for emissions in order to limit global warming to 1.5 degrees with a probability of 67%. If emissions remain constant at today's level, the remaining budget will be used up in around 6.5 years. This would mean that we would have to strive for global greenhouse gas neutrality in 6.5 years. 

In order to limit global warming to 1.5 degrees, it is therefore of great importance to continuously reduce greenhouse gas emissions by the net zero year in order not to exceed the remaining CO2 budget. Storage methods for greenhouse gases, whether technical or natural, will never be available on such a large scale that all the greenhouse gases currently emitted by humanity can be stored again. It is equally unrealistic to reduce all sources of emissions to zero, as certain sectors will continue to produce unavoidable emissions in the long term. These include in particular the basic materials industry (cement or chemical industry). Only the remaining, unavoidable residual emissions are to be neutralised by storage technologies from the net zero year onwards. In order to limit global warming to 1.5 degrees by 2100, even more greenhouse gases must be stored than unavoidable residual emissions from the net zero year onwards. That means being climate-positive.

The Science Based Targets Initiative (SBTi), a consortium of several organisations, has developed science-based reduction pathways and strategies. Sector-specific pathways and strategies thus create a basis for companies to develop measures and plans to achieve the climate targets set in accordance with the Paris Climate Agreement.

Conclusion

The terms CO2-neutral, greenhouse gas-neutral and climate-neutral do not have the same meaning. Each desired state has a different effect on the climate.

There are many different factors that influence the global average temperature, both human and natural. Some of these are easier to quantify, some less so. For this reason, climate neutrality in particular is difficult to achieve by definition. This does not mean that a company can take measures to have a positive impact on the climate. Realistically, however, a positive climate impact cannot be achieved through certificates and offsetting, but requires a strategic reduction process for greenhouse gas emissions and greenhouse gas storage measures. 

The goal of the Paris Climate Agreement to limit global warming to 1.5 degrees by 2100 cannot be achieved with the goal of CO2 neutrality or greenhouse gas neutrality alone, for example by 2045. If more greenhouse gas emissions are emitted by this year than the company is entitled to, it will not be 1.5 degrees compliant, even though it will be greenhouse gas neutral in 2045.

Last but not least, companies should be prepared for the fact that environmental claims such as "climate-neutral", "environmentally friendly" or "biodegradable" will have to fulfil stricter verification criteria in future in order to advertise products.

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