What is Carbon Neutrality vs Carbon Offsetting?

Carbon neutrality means having a balance between emitting carbon and absorbing carbon from the atmosphere in carbon sinks. Removing carbon oxide from the atmosphere and then storing it is known as carbon sequestration. In order to achieve net zero emissions, all worldwide greenhouse gas (GHG) emissions will have to be counterbalanced by carbon sequestration.

Carbon sink is any system that absorbs more carbon than it emits. The main natural carbon sinks are soil, forests and oceans. According to estimates, natural sinks remove between 9.5 and 11 Gt of CO2 per year. Annual global CO2 emissions reached 38.0 Gt in 2019.

To date, no artificial carbon sinks are able to remove carbon from the atmosphere on the necessary scale to fight global warming.

The carbon stored in natural sinks such as forests is released into the atmosphere through forest fires, changes in land use or logging. This is why it is essential to reduce carbon emissions in order to reach climate neutrality.

Carbon Offsetting is another way to reduce emissions and to pursue carbon neutrality is to offset emissions made in one sector by reducing them somewhere else. This can be done through investment in renewable energy, energy efficiency or other clean, low-carbon technologies. The EU’s emissions trading system (ETS) is an example of a carbon offsetting system.

Another example of an initiative to reduce emissions is the carbon border adjustment mechanism, which would apply carbon prices on imported goods from less climate ambitious countries. This should help discourage companies moving production from the EU to somewhere with less stringent greenhouse gas emissions rules.