What's the Difference between Carbon Neutral and Climate Neutral?

Liz Kim | Jun 07, 2021

Climate change involves a whole lexicon of scientific terms that aren't readily self-explanatory and can cause confusion when not used properly. For example, many automakers use the terms "carbon neutral" or "climate neutral" as a corporate goal to be achieved by 2040 or 2050, but there are differences between the two. We're here to define both terms and explain the differences.

carbon neutral vs climate neutral

Carbon Neutral Pertains Only to Carbon Emissions

Carbon dioxide is a gas that can both absorb and radiate heat. It's a natural emission – all animals inhale oxygen and release CO2, balanced by plants absorbing the CO2 and releasing oxygen.

However, human industrial activity, particularly the burning of fossil fuels necessary in transportation and manufacturing, releases vast amounts of carbon dioxide in a relatively short amount of time. As a result, it causes a surplus of CO2 and traps solar heat in the atmosphere, wreaking havoc on global climate patterns. According to published research, the excess carbon dioxide generated by human activity causes about 75-80 percent of the warming impact, which is the reason behind the urgency to regulate emissions.

Research shows that society can decrease carbon emissions by changing the methods by which we derive and use energy. Because electric vehicles (EVs) don't burn fuel, they produce zero harmful emissions. However, the sourcing of the materials required for their battery packs, the manufacturing of the vehicles in factories and industrial plants, and the production of the electricity to power an EV are activities that produce CO2 emissions. To meet new governmental regulations and satiate consumer demand, these processes must change, and it will be a slow process.

As a workaround when companies fail to meet CO2 reduction regulations, they can purchase carbon offsets from businesses that meet and exceed governmental measures to remove CO2 from the atmosphere. For example, if Company A has successfully replaced fossil fuels with renewable energy sources, and Company B has not, Company B can pay Company A for carbon offset credits to avoid hefty fines. Measured in tons of CO2 eliminated, carbon credits can be sold like a commodity, allowing firms that still emit carbon to claim carbon neutrality.

Climate Neutral Pertains to Carbon as well as Other Harmful Emissions

Climate neutrality is similar to carbon neutrality in that a company's overall emissions output achieves net-zero, either through reduction of CO2 emissions or by purchasing carbon offset credits. But climate neutrality also includes eliminating other harmful gases beyond carbon, including methane and nitrous oxide.

According to a report by the United Nations, methane has an even more significant warming potential than carbon; its global warming potential is about 56 times that of CO2 over 20 years. Meanwhile, nitrous oxide's warming potential is 280 times greater than CO2.

Why, then, does it seem that there is less urgency to lower the output of these other gases? Because most of the excess methane is produced by the vast lots of cattle needed to feed the burger-loving public, while the manufacture of fertilizers causes nitrous oxide. It's unlikely that either of these industries will see a demand reduction – or change their manufacturing methods – anytime soon. Methane also cycles through the atmosphere in about 12 years, a shorter period than CO2. And these other gases only account for around 20 percent of global warming's impact.

Meanwhile, reducing carbon emissions is easier to attain. Manufacturers can still produce cars, and people can still drive cars, but by using energy derived from sources that emit less carbon.


To reach the common goal of reducing harmful greenhouse gas emissions, private industry is working with legislation compelled by local and federal governments.

For example, California is leading the charge in the United States by committing to achieve climate neutrality – again, by not only reducing emissions but by purchasing offset credits – by 2045. California has also been instrumental in reducing other air pollutants that have an immediate impact on personal health.

For its part, the U.S. hopes to achieve carbon neutrality by 2050, while the United Kingdom and the European Union are more ambitious and target 2050 to achieve total climate neutrality.

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