A company is carbon neutral if its emitted greenhouse gases (GHGs) are balanced with avoided or removed emissions. Businesses typically reduce their GHG emissions as much as is reasonably possible given financial and operational considerations; the remaining GHGs are “neutralized” by purchasing emission reductions (often formalized as marketable and tradable carbon offsets).
The Five General Steps to Carbon Neutrality
Emission reductions are created by emission-reduction projects. For example, in Saskatchewan’s primarily fossil-fuelled electricity grid, developing a wind farm to generate grid electricity will overall reduce the emissions from the province’s electricity sector.
High-profile organizations, including Cenovus Energy, Maple Leaf Foods, and Microsoft, have committed to becoming carbon neutral in the short term. The Government of Canada has set a goal to achieve carbon neutrality by 2050.
The scope of carbon neutrality can be extensive and include direct emissions (e.g., vehicle exhaust, on-site building heating sources) and indirect emissions (e.g., electricity generation sources). The indirect scope can be extended further to upstream and downstream emission sources. For example, many organizations include ‘embodied carbon’ in carbon neutrality, particularly for built infrastructure. Embodied carbon refers to the total GHGs emitted by the extraction, manufacture, and supply of construction products and materials, as well as the construction, maintenance, and end-of-life disposal processes.