What is Net Zero? Learn about the Net-zero emissions commitment

What is Net Zero?

Net Zero is the state where the amount of greenhouse gases (GHG) emitted into the atmosphere is balanced by the amount removed or offset. It can be achieved through reducing, absorbing, and offsetting GHG through environmental projects.

The goal of Net Zero is to reduce the impact of climate change. This is possible by ensuring the total emissions don’t exceed the capacity for absorption or offsetting. This is a crucial part of the effort to prevent global warming.

After one has minimized emissions to the lowest possible level (e.g., ~5 tons/year), absorption or offsetting removes another ~5 tons. As a result, the total emissions and offsets equal zero. This indicates the organization has achieved Net Zero.

Why is Net Zero important?

Net Zero is a crucial goal in the fight against climate change.

Greenhouse gases are the primary cause of global warming. They increase global temperatures by trapping heat from the sun in the atmosphere. This leads to the greenhouse effect. Imagine greenhouse gases as a blanket covering our planet. They trap heat instead of releasing it back into space.

Global warming has raised the average global temperature by 1.1°C compared to the late 19th century. This was around the Second Industrial Revolution. The rise in global temperatures can lead to serious consequences. These include climate change, rising sea levels, saltwater intrusion, damage to ecosystems, and impacts on agriculture.

According to the United Nations Environment Programme (UNEP), the top 5 countries/regions account for about 60% of global emissions (data in 2021). These include China, the United States, India, the European Union, and Russia. Meanwhile, the G20 (comprising 19 major economies and the European Union) emits up to 76%.

This indicates that GHG emissions primarily come from just a few most developed countries. Yet, they have the greatest responsibility in addressing the emissions issue.

To limit global warming, 196 countries/territories have signed the Paris Agreement (2015). Through this agreement, they commit to keeping global warming below 1.5°C.

Net Zero can help maintain global warming below 1.5°C, a threshold that causes severe impacts on climate. Achieving Net Zero protects the environment and ensures sustainability for future generations.

How are Net Zero and Carbon Neutrality different?

The concepts of Net Zero and Carbon Neutrality are often interchangeably understood. Yet, they have important differences.

Carbon Neutrality focuses on balancing the amount of CO2 emitted with the amount of CO2 offset. It calculates and offsets CO2 emissions without necessarily reducing emissions to a minimum.

Net Zero aims to reduce not only CO2 but all GHGs to the lowest possible level that cannot be further reduced. It then offsets the remaining emissions through absorption or investing in environmental projects.

Common greenhouse gases include:

• Carbon dioxide (CO2)
• Methane (CH4)
• Nitrous oxide (N2O)
• Fluorinated gases such as CFCs, HFCs, HCFCs, PFCs, and SF6

In short, Net Zero is a broader concept that includes all GHGs. It requires reducing emissions first and then offsetting the remaining.

What is CO2 equivalent?

Emissions involve not only CO2 but also many other gases. Each has a different impact on global warming. To compare the effects of different GHGs, the Intergovernmental Panel on Climate Change (IPCC) uses the Global Warming Potential (GWP) values.

The GWP index measures how much energy one ton of a GHG will absorb over a specific period in relation to one ton of CO2. A higher GWP means the gas warms the Earth more than CO2 over the same period.

Learn more about the GWP index of common greenhouse gases.

Using the GWP index, greenhouse gases other than CO2 can be expressed as CO2 equivalent or CO2e. For example, the GWP of methane (CH4) is 28. This means that 1 ton of CH4 has the same impact as 28 tons of CO2 or 1 ton of CH4 = 28 tons of CO2e.

To assess and calculate emissions, you need to understand GWP and CO2e. You can then calculate emissions from various GHGs in a standardized unit, which is CO2e.

What are Scope 1, 2, and 3 and how do they relate to Net Zero?

Net Zero, GHG Protocol, and Scope 1, 2, 3

To achieve Net Zero, one needs to minimize and offset all its GHG emissions. Calculating emissions is the first step to understanding the impact of its activities.

For accuracy, an organization needs to calculate emission sources according to the scopes defined by the GHG Protocol.

The GHG Protocol is a global standard designed to measure, manage, and report emissions. It was developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It provides specific guidance on how to identify and classify emission sources.

Accordingly, GHG emission sources are divided into 3 scopes as follows:

Scope 1: Direct emissions from owned sources

Scope 1 includes direct emissions from sources owned or controlled by the organization. Examples include emissions from fuel combustion, vehicles, or industrial equipment. These are emissions that the organization has control over.

Scope 2: Indirect emissions from energy consumption

Scope 2 includes indirect emissions from the consumption of energy. Examples include electricity, steam, and heating purchased from external sources. An organization doesn’t directly emit GHGs from energy use. Yet, consuming energy is associated with emissions from energy production at power plants.

Scope 3: Other indirect emissions from value chains

Scope 3 is all other indirect emissions that are not covered by Scope 1 and 2. These arise from the entire supply chain and services related to one’s operations. This includes emissions from transportation, waste management, and the activities of suppliers.

Scope 3 is divided into 2 main groups. Upstream is the emissions during the production of goods. Downstream is the emissions during the distribution and use of products. These classify indirect emission sources based on their position in the value chain.

• Upstream: Emissions from activities in the supply chain not under one’s control. For example, emissions from raw material production, transportation of goods to the organization, and supplier activities.
• Downstream: Emissions from activities after the organization provides a product or service. For example, emissions from the use of products, disposal of product waste, and other activities related to product consumption by customers.

Scope 3 emissions are often difficult to calculate. Yet, they represent the largest part of emissions. Up to 90% of the total emissions for many organizations come from Scope 3.

Examples of Scope 1, 2, and 3 in GHG emissions

To simply cover all emission scopes, let’s use the example of a garment manufacturing company. The GHG emissions can be classified into Scope 1, 2, and 3 as follows:

Scope 1: Direct emissions from the combustion of fuel in boilers during the processes of softening, drying, and ironing textile products. Direct emissions also come from trucks used for internal transportation of goods.

Scope 2: Indirect emissions from the consumption of electricity for machinery, lighting systems, and air conditioning in the production facility and office. Steam and heat energy purchased from energy suppliers also fall under this scope.

Scope 3: Other indirect emissions, divided into 2 main groups:

Upstream (8 categories)

• Purchased goods and services: Emissions from the production of cotton and fabrics purchased by the garment company for product manufacturing
• Capital goods: Emissions from the production and transportation of garment machinery, such as sewing machines and fabric processing equipment, invested in by the company for use in production
• Fuel- and energy-related activities: Emissions from the production of electricity or steam supplied to the garment factory by energy providers
• Transportation and distribution: Emissions from the transportation of fabric materials from suppliers to the company’s production facility
• Operational waste: Emissions from the handling of waste fabric or scrap materials during the manufacturing process at the garment factory
• Business travel: Emissions from company employees traveling to trade fairs, exhibitions, or meetings with customers and suppliers
• Employee commuting: Emissions from employees commuting from home to work on a daily basis
• Leased assets: Emissions from renting industrial equipment or office space used by the company for production and management activities

Downstream (7 categories)

• Transportation and distribution: Emissions from transporting finished garments from the factory to retail stores and distribution agents
• Processing of sold products: Emissions from the handling or cleaning of sold garments when they become damaged or need maintenance
• Use of sold products: Emissions from the use of garments by customers, such as emissions from washing machines when laundering clothes
• End-of-life treatment of sold products: Emissions from the disposal or treatment of garments at the end of their life cycle, such as when customers discard old clothes
• Leased assets: Emissions from renting out assets like machinery or garment equipment to other companies
• Franchising: Emissions related to the operations of franchise stores using the company’s brand and products
• Investments: Emissions from the company’s investments in projects or businesses related to the production or consumption of garments

How to achieve Net Zero?

To achieve Net Zero, a business or organization needs to follow 4 main steps:

Step 1: Assess and calculate emissions

Assessing and calculating emissions is the crucial first step to achieving Net Zero. Each scope requires a specific measurement method.

Scope 1 includes direct emissions from activities owned or controlled by the reporting organization. To calculate emissions from machinery, record the capacity and operating time of each unit. Emissions are calculated based on the machinery’s capacity in proportion to operating hours. For transportation, emissions are determined based on the type of fuel consumed and the distance traveled. For better accuracy, the emission factor for each fuel type and consumption amount are required.

Scope 2 focuses on indirect emissions from the consumption of electricity, steam, and heat. Businesses can rely on utility bills provided by external sources. Each kWh of electricity can emit different amounts of CO2 depending on the power source. Therefore, emission factors should align with the country’s electricity grid.

Scope 3 is the most complex and often accounts for the largest part of emissions. Calculating Scope 3 requires cooperation among stakeholders in the supply chain. First, emissions from 15 categories of Upstream and Downstream need to be listed. For each activity, emissions are calculated based on the associated emission factor. Scope 3 data is often estimated due to its vast scope and the diversity of emission sources. This is because a product continues to emit during its use and at the end of its life cycle.

Step 2: Set emission reduction targets

Setting clear and specific targets is crucial. This ensures emission reduction efforts can be achieved within the set timeframe.

According to the Paris Agreement and the IPCC, to limit global temperature rise to below 1.5°C, countries must reduce emissions by at least 45% by 2030. In Vietnam, this target is 43.5%. By 2050, the goal is to achieve Net Zero. Therefore, countries and businesses need to undertake comprehensive transformations starting now.

To meet long-term goals, you should break down targets into shorter-term phases, such as 5 or 10 years. This helps create specific and feasible strategies.

Setting targets by emission scope is also effective. For Scope 1 and 2, which are more controllable, targets can be set as specific percentages. Scope 3 is more difficult to control but with the highest emissions. It, therefore, needs reasonable targets to achieve optimal results without disrupting operational processes.

Step 3: Implement emission reductions

This step is crucial for cutting GHG emissions and moving towards Net Zero. Here are 2 main strategies widely adopted by organizations and businesses:

Switch to renewable energy

Transition from fossil fuels (coal, oil) to renewable energy sources (solar, wind, hydroelectric). For example, install solar energy systems or use electricity from renewable sources.

Optimize operational processes

Improve efficiency in production and operational processes. This may include upgrading machinery and enhancing production processes to reduce energy waste. Businesses can also implement energy-saving measures.

Step 4: Implement emission offsets

Once emissions are reduced, continue to offset the remaining to achieve Net Zero. There are 3 main methods for offsetting emissions:

Reforestation and forest protection (natural absorption)

Planting new forests and protecting existing forests help absorb CO2 from the atmosphere. Businesses can invest in reforestation projects or protect existing forests. A mature tree can absorb up to 25 kg of CO2 per year. Thus, one hectare of forest with 2000 trees can absorb up to 50 tons of CO2 per year.

Purchase carbon credits (emission trading)

Carbon credits are certificates showing an organization has funded emission reduction projects elsewhere. Purchasing carbon credits means you’re relying on a third party to offset emissions that cannot be further reduced.

One carbon credit is equivalent to 1 ton of CO2 or CO2e.

Carbon capture and storage technology (artificial absorption)

Carbon capture and storage (CCS) technology captures CO2 from large emission sources like industrial plants. It then stores CO2 underground to prevent it from entering the atmosphere. You can invest in this technology or collaborate with facilities using CCS to offset your remaining emissions.

How does Net Zero affect tourism?

Net Zero is becoming an important standard in the tourism industry. It's bringing both opportunities and challenges. Businesses must balance between benefits and the difficulties of achieving Net Zero.

Opportunities from Net Zero

Net Zero promotes green tourism development

Net Zero encourages tourism businesses to invest in sustainable solutions. These include renewable energy and green transportation. This reduces emissions and helps meet the growing demand for sustainable travel options.

Net Zero saves operating costs and increases profitability

Adopting energy-efficient and emission-reducing technologies helps lower long-term operating costs. For example, using solar power systems reduces energy expenses for hotels and restaurants. Thus, it increases profitability.

Net Zero builds brand image

Tourism businesses that achieve Net Zero can promote themselves as environmentally friendly companies. This helps build a strong brand and stand out in the market.

Net Zero attracts and retains customers

Customers are increasingly concerned about environmental issues. They often prioritize businesses committed to sustainability. So, achieving Net Zero can attract more customers and maintain long-term relationships.

Challenges from Net Zero

Net Zero increases investment and maintenance costs

Achieving Net Zero requires significant investment in green technologies and infrastructure. This includes renewable energy systems and waste management technologies. Initial investment and maintenance costs can be high, especially for small businesses. However, not all Net Zero initiatives require such high costs. There are many simpler and less expensive ways to start the Net Zero journey.

Net Zero requires standardized measurement processes

To achieve Net Zero, businesses need to measure and track their emissions accurately. This may require standardized measurement processes. You can consider hiring reputable third parties to ensure transparency and accuracy.

Net Zero presents challenges in the supply chain

Ensuring the entire supply chain complies with Net Zero standards can be difficult. Businesses must work closely with suppliers to reduce emissions. The environmental impacts must be controlled throughout the supply chain.

Net Zero creates challenges in awareness transition

Changing people’s perception about the importance of Net Zero can be difficult. Shifting human behavior to support sustainability goals requires time and resources.

Commitment and action towards Net Zero

In many countries and businesses like Oxalis, commitment and action towards Net Zero is taking place strongly.

Net Zero in the World

According to a report by NewClimate Institute, Oxford Net Zero, the Energy and Climate Intelligence Unit (ECIU), and Data-Driven EnviroLab:

Global progress in committing to and implementing Net Zero reveals several key points. Although the number of Net-zero targets set by countries has slowed, those set by companies have grown significantly. Since 2019, the proportion of Net-zero targets established in legal documents by countries has increased from less than 10% to 75%. Yet, many countries, including those in the G7, still lack specific targets.

The transition to Net Zero has moved from the commitment phase to the implementation phase. Demands for short-term emission reductions are growing strongly. Of the over 4,000 countries/organizations tracked in the report, more than 1,400 have set Net-zero targets. This is a significant increase compared to previous years. Yet, many still lack reliable strategies and haven't committed to eliminating fossil fuels.

The report also shows progress in adopting Net Zero standards with the emergence of policies and laws. Examples include the U.S. Inflation Reduction Act (IRA) and the European Union’s Net-zero Industry Act. However, many current Net-zero targets still lack reliability. More need to take part in achieving the goals of the Paris Agreement.

Net Zero in Vietnam

Vietnam is striving to achieve Net Zero by 2050, with a commitment to reduce emissions by 43.5% by 2030. Yet, pressure from increasingly stringent regulations from developed countries requires the Vietnamese government and businesses to act more swiftly in green transition and sustainable development.

In Vietnam, businesses are facing pressure from the European Union's Carbon Border Adjustment Mechanism (CBAM). This requires emission reductions in the production of exported goods such as steel, aluminum, and cement. Ho Chi Minh City contributes the largest share of national emissions (23.3% of the country). The city is implementing the Green Development Framework to become a more sustainable urban area.

Vietnam has introduced the National Strategy and Action Plan for Green Growth and Circular Economy. However, implementing these commitments requires the participation of both the community and businesses, along with support from social resources and international investments. Businesses and the government need to quickly adapt to new environmental standards to remain competitive in the global market.

Net Zero at Oxalis

Oxalis Adventure is taking several measures to achieve Net Zero by 2030. We use renewable energy, such as solar power, to provide electricity for our offices, campsites, and vehicles. To reduce waste, we apply the principle of “reduce, reuse, recycle.” We also calculate food portions for tour guests and staff to reduce food waste.

To offset carbon emissions, Oxalis supports reforestation projects and contributes to environmental organizations. We also focus on educating staff, tourists, and local communities about environmental conservation. We collaborate with local agencies and experts to protect Phong Nha-Ke Bang National Park.

In December 2023, Oxalis signed an agreement with Intertek Vietnam to achieve Net Zero. Intertek Vietnam assists us in measuring, reducing GHGs, and improving our sustainability performance. They also provide emission assessment solutions, sustainability consulting, and Net-zero verification. Also, they help the company install the best technologies to reduce emissions.

Conclusion

The commitment towards Net Zero is becoming a global trend among countries to businesses like Oxalis. Although progress varies across regions and sectors, the reduction of GHG emissions and green transition are being pursued with determination.

Achieving Net Zero requires coordinated efforts from governments, businesses, and communities. The continuous efforts of all parties will determine the success of the fight against climate change.

The Oxalis Experience.