Net Zero for the UK: What it is and why it matters

​The 2015 Paris Climate Agreement, (also known as COP 21) was signed by 197 countries and came into force in November 2016. The agreement was limits greenhouse gas emissions with the aim of limiting global temperatures rise to significantly less than 2°C above pre-industrial revolution levels. Subsequent work by the Intergovernmental Panel on Climate Change (IPCC) published in 2018 identified that:

• Human induced warming was approximately 1.0°C above pre-industrial levels by 2017
• An increase of 1.5°C will result in an increased frequency and an increased geographic spread of extreme weather events.
• An increase of 2.0°C significantly accentuates these impacts:
  • Extreme heat events affect nearly 40% of the world’s population rather than 15%
  • Arctic is ice-free one summer in 10 rather than 1 summer in 100
  • Sea level rises by 0.5m rather than 0.4m
  • Significant increases in flooding, drought, heat related deaths, and impact on marine and terrestrial ecosystems
• To limit the temperature increase to 1.5°C we need to reduce 2030 global CO2 emissions by 45% compared with 2010 and we need to achieve net zero emissions by 2050.
• To limit the temperature increase to 2.0°C we need to reduce 2030 global CO2 emissions by 25% compared with 2010 and we need to achieve net zero emissions by 2070.

 
In 2019 the UK government passed legislation in an amendment to the Climate Change Act, committing the UK to achieve net zero by 2050.
 
So getting to Net Zero is important, but also the timescale in which we achieve this goal is equally important.
 
So what does Net Zero mean?
 
Net zero simply means achieving a balance between greenhouse gas emissions produced and those removed from the atmosphere. The UK government defines it as follows:
 
Net zero means that the UK’s total greenhouse gas (GHG) emissions would be equal to or less than the emissions the UK removed from the environment.
 
Compared with the current situation this can be achieved through:
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• a reduction in greenhouse gas emissions – for instance in energy generation, transportation, manufacturing and agriculture
• an increase in emission removal, primarily through a combination of natural processes (e.g. photosynthesis) or industrial processes such as carbon capture and sequestration.

 
All well and good on a national level, but what does it mean for an individual business?  Not many companies are going to instigate their own carbon capture capability and other mechanisms for offsetting your emissions can be hard to fathom. Every day brings a new announcement of a net zero target by a large organisation but there is still no universally agreed definition. That can make it difficult and confusing on where and how to start. A number of organisations such as the Carbon Trust and Science Based Targets are working towards a standard definition but it is still a work in progress.  That said, there two common themes applicable to companies of any size:

1. Emissions reduction is better than offsetting
2. Time matters. The sooner you start, the better.
 
In terms of emissions reductions the first step is to establish a benchmark – what you are doing at the moment. The good news here is that there is a generally agreed framework for emissions categorisation.

• Scope One – direct emissions made by the business. These come from things like company vehicle emissions and fuel combustion emissions for your heating.
• Scope Two – energy indirect emissions – purchased electricity, heat and steam. For a lot of small and mid-sized companies it is likely to be limited to the electricity you use for heating, lighting and cooling– which doesn’t emit anything on your premises but which emits greenhouse gases at the point of generation.
• Scope Three – any other indirect emissions. This covers emissions from everything else you use in your business not covered by Scopes One and Two. Things like business travel, emissions associated with purchased goods and services, employee commuting, product use, waste disposal, transportation, distribution and employee business travel. The extent of Scope 3 is still poorly defined and can be bewildering but is likely to be the biggest source of emissions for most companies.

 
In the UK the Streamlined Energy & Carbon Reporting (SECR) regulations introduced in April 2019 require large companies to report on Scope One and Scope Two emissions. For these purposes a “large” company is defined as: meeting two of the following three conditions:

• More than 250 employees
• Annual turnover more than £36m
• Balance sheet total in excess of £18m

 
Whilst is easy to get hung up on definitions and getting it right, and tempting to take the view that the legislation doesn’t apply to me, you can be certain of two things:

• The legislation may not apply to your business right now but before long it will
• The benefits in the market form getting ahead of the curve are palpable. Think 'Brewdog'.

 
Net zero definitions might be unclear and the UK legislation might not apply to your business, but it still makes sense to start monitoring your Scope One and Scope Two emissions and to take steps to reduce them.
 
Is Net Zero enough?
 
In short, almost certainly not. Achieving net zero by 2050 is a step on the way to zero emissions and carbon negativity. But that is a topic for another day.

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