Carbon neutral
A claim that the CO2 emissions attributed to an entity, product or event have been reduced and the remainder compensated, usually by purchasing carbon credits.
Carbon neutrality is often used interchangeably with net zero, but in standards and regulation the two differ. A carbon-neutral claim typically allows any remaining emissions, of any size, to be balanced with offsets, including avoidance credits such as avoided deforestation or renewable energy projects. Net zero requires deep reductions aligned with science-based pathways and neutralisation of residuals with permanent removals.
Key differences:
- Scope: carbon neutral often covers only CO2 and Scopes 1–2; net zero covers all greenhouse gases and all scopes.
- Reduction requirement: PAS 2060 (now superseded by ISO 14068-1:2023) requires a reduction plan but no fixed percentage.
- Credit type: avoidance credits are accepted for neutrality claims, generally not for net-zero neutralisation.
Regulators are tightening use of the term. The EU Empowering Consumers Directive (2024/825) bans, from September 2026, product claims of climate neutrality based solely on offsetting. Investigations into rainforest REDD+ credits since 2023 found many over-credited baselines, which has reduced corporate appetite for offset-based neutrality claims and pushed companies towards reporting reductions and contributions separately.
Related terms
All terms →- Net zero
A state in which anthropogenic greenhouse gas emissions are balanced by anthropogenic removals over a specified period, so net additions to the atmosphere are zero.
- Carbon offset
A tradable credit representing one tonne of CO2e reduced, avoided or removed by a project outside the buyer’s own operations, used to compensate for the buyer’s emissions.
- Scope 1 emissions
Direct greenhouse gas emissions from sources owned or controlled by a reporting organisation, such as boilers, furnaces, vehicles and process emissions.
- Scope 2 emissions
Indirect emissions from the generation of purchased electricity, steam, heat or cooling consumed by a reporting organisation.
- CO2e (CO2 equivalent)
A common unit that expresses emissions of different greenhouse gases as the mass of CO2 that would cause the same warming over a chosen time horizon.