So What the Heck Is Net Zero, Anyway?

The latest in corporate greenwashing, explained

By Nick Cunningham

February 7, 2022


Image by Junho Ji/iStock

In mid-January, ExxonMobil announced its “ambition” to reach “net-zero emissions” by 2050, following in the footsteps of some of its competitors in setting new climate-action targets.  

But, like many similar net-zero-by-mid-century promises, Exxon’s plan had some glaring holes in it. The announcement was light on details, and the pledge excluded the vast majority of the emissions for which the company is responsible. In addition, the emissions cuts hinge on speculative technologies that have not yet been commercialized. Most important, the “plan” does not preclude a growth in oil and gas production, which would make Exxon’s climate pollution even worse.  

ExxonMobil is not the only oil company to make questionable claims about climate change. In the last year or so, net-zero pledges have become all the rage among corporations and countries seeking to demonstrate a commitment to addressing the climate crisis.  

There’s no question that climate-action targets are important; they lay out a vision and policy pathway to reduce emissions over time. But “net-zero” emissions claims can be confusing.  

Companies use different metrics to define net-zero and often use creative carbon accounting so their aspirations will pencil out. Their targets vary in ambition and scope. And new net-zero pledges conspicuously serve a PR purpose—allowing a company to paint itself in a positive light at a time when public scrutiny on corporate climate records is increasing. All of which casts doubt on whether corporate net-zero plans are an honest effort or simply cynical greenwashing. 

Let’s look at what’s behind the recent rush to publish net-zero commitments. 

What is “net zero” supposed to mean? 

In the aftermath of the 2015 Paris Agreement on climate change, reaching net-zero greenhouse gas emissions by mid-century became a generally accepted international goal. There are legitimate criticisms and drawbacks to the net-zero concept, but, in general, the targets are intended to galvanize government, corporations, and the general public to slash emissions over time to somewhere close to zero. Residual greenhouse gas emissions from difficult-to-decarbonize sectors like the aviation industry or from, say, continued beef production would then be theoretically offset, thus achieving “net” zero emissions. 

Or, in the simplest terms, by the middle of this century, all human activities combined must be capturing or sequestering as much greenhouse gases as they are emitting, leaving us at zero total emissions. 

A few years after the Paris Agreement, scientists fleshed this idea out a bit more. The UN-backed International Panel on Climate Change stated that emissions would need to fall by roughly half by 2030 to ensure the world stays on track for the mid-century target. And last year, the International Energy Agency argued that the 2050 net-zero emissions pathway would require an immediate end to new fossil fuel projects, with existing production phased out slowly in the years ahead. 

While many governments have laid out net-zero targets (more on that below), corporations have also come under pressure from the public and from investors to map out how they will slash their carbon pollution. 

Big polluters like ExxonMobil, BP, and Shell have 2050 net-zero targets, while some corporations outside of fossil fuels have even more aggressive targets. Microsoft, Amazon, HP, Proctor & Gamble, Salesforce, and dozens of other major corporations have signed onto a pledge to hit net-zero by 2040 or earlier.  

The details vary from company to company, but the overall concept has become very mainstream. The UN-backed Race to Zero campaign, which seeks to rally support for net-zero commitments, has signed up pledges from over 5,000 businesses, 400 large investors, 1,000 universities, and more than 1,000 city and regional governments. Those commitments are aimed at reinforcing the country-level pledges at the core of international climate negotiations. 

“Net zero” sounds good. What’s the problem? 

Net zero can sound too good to be true—like a sugary beverage that promises it has no calories. And sometimes the net-zero pledges are more marketing spin than anything. 

One of the biggest problems with net zero is that there is no standardization. Companies use different dates, omit some of their pollution from their pledges, and rely on promised reductions at some point in the future. “There is not a lot of uniformity and very little regulation at the international or domestic level, which can lead to claims of greenwashing,” Lisa Benjamin, a law professor at Lewis & Clark Law School, told Sierra. 

That leads to a second major problem. Many companies promise to cut emissions only from their immediate operations but take no responsibility for the pollution that comes from the products they sell.  

Emissions are broken down into Scope 1, Scope 2, and Scope 3 emissions. The first two relate to a company’s operations. Emissions coming directly from the smokestack at a factory are Scope 1. The indirect emissions related to those operations, such as from its electricity use or from employees traveling for business, are Scope 2.  

Scope 3 emissions mostly relate to pollution released by consumers at the other end of the business chain. Depending on the industry, these can be difficult to track, and some companies simply refuse responsibility altogether.  

For a software company, Scope 3 may not be a big headache. But for the world’s largest polluters, addressing Scope 3 amounts to an existential threat.  

So why is it a problem that Exxon and others are only addressing some emissions? 

Look closely at ExxonMobil’s latest announcement. Roughly 80 percent of ExxonMobil’s emissions come from the burning of the oil and gas it produces, markets, and sells. But Exxon only pledged to reach net zero on its Scope 1 and 2 emissions. It said nothing about the pollution from the burning of millions of barrels of oil and gas. 

“It is good that they're finally doing this, but it is a small piece of a pie that is enormous,” Paasha Mahdavi, a political science professor at the University of California Santa Barbara, told Sierra

“Can they reach that goal? Sure. The problem is the goal. The goal is kind of useless,” he said. Exxon and other oil companies could plug methane leaks, electrify some their operations, and, at some point perhaps, use carbon capture. By mid-century, the company could conceivably reach net zero from its drilling operations. But that would still ignore the vast majority of the company’s emissions.

“It's like, ‘Great you can get a first down from the 20- to the 30-yard line. OK cool. But what about the rest of the field?’” Mahdavi said. “It’s not a big announcement. That's how we should be thinking about it. It is too little, definitely too late, and the ambition isn't there.”

Other companies have similar challenges. The auto industry, for instance, has been promising to clean up its operations for a long time. But what about the pollution that comes from millions of cars added to roadways every year? On this front, at least, the major automakers are making bigger strides than the oil industry. For example, Ford announced last year that it would cut Scope 1 and 2 emissions by 76 percent by 2035, and Scope 3 emissions by 50 percent. 

Meanwhile, GM, Ford, and nine other major automakers signed an agreement in December 2021 to aim for selling 100 percent zero-emission cars by 2040. There are very serious problems with how the new electric car boom is playing out, such as around where and how metals are mined for batteries, but automakers are on track to make substantial strides on tackling Scope 3 emissions. 

Aviation and heavy industry, such as steel and cement, also have enormous Scope 3 problems and no easy answers. All will require progress on costly technologies. Still, there are reasons for hope here as well. The steel industry, at least, is very enthusiastic about the future prospects of “green steel,” which replaces coal with hydrogen and renewable energy. Decarbonization in the steel sector is starting to look like it might occur faster than previously expected.

The “net” part of “net zero” relies heavily on offsets. Is that OK?

In order to stabilize the climate, the world needs to slash emissions as close to zero as possible. But some portion of emission cuts may be unfeasible for a long time. Offsetting that leftover slice of emissions can be done in a variety of ways. Companies can purchase credits that finance projects to build renewable energy, for example. A popular avenue is to pay for nature-based projects, such as soil management or reforestation. Someday, perhaps, it may even be economically feasible to directly remove carbon from the air.

Carbon offsets are a complicated topic, and offsets are plagued with a long list of problems. Ensuring that a specific project genuinely removes carbon dioxide from the atmosphere is difficult, the accounting is complex, and the lifespan of a tree-planting endeavor, for example, is uncertain. What if a forestry-related carbon offset project goes up in flames because of a wildfire, something that is becoming increasingly commonplace as a result of the climate crisis? Companies can claim credit for offsets that inflate their actual impact, and go on polluting with a clean conscience. 

Bloomberg Green reported last year on the effort by French oil giant Total to offset the emissions from a cargo of liquefied natural gas (LNG) it shipped from Australia to China. The offset project Total financed merely paid some volunteers in Zimbabwe to clear brush to reduce wildfire risk, which critics said would do almost nothing to offset the emissions from its LNG cargo. Total went on to market its LNG shipment as “carbon neutral.” 

In this way, polluters might make splashy claims about carbon offsets to justify doing little to change their core business model. 

At the same time, offsets can play an important role. “It’s hard to be 100 percent confident that by buying a carbon credit, you have truly enabled additional mitigation to happen. If you are buying carbon credits instead of directly reducing emissions, that can be a problem,” Derik Broekhoff, a senior scientist at the Stockholm Environment Institute, wrote to Sierra in an email. “But that does not mean that ‘offsets’ are not a legitimate source of emission reductions.”

He said offsets should be thought of as an additional way to cut emissions, not as something a company can do in lieu of making reductions. “The risk is that many may fail to appreciate what is involved in getting to net zero, and the degree to which they would (in a world truly aligned with limiting warming to 1.5°C) need to focus on the ‘zero’ part, not the ‘net,’” he said. 

He added that net zero is better thought of as a global goal, rather than one that should be pursued by individual actors. “The latter idea too often leads to the conclusion that all you really need to do is offset your emissions,” he said. 

Is “net zero” a delay tactic? 

Aside from the technical problems with measuring emissions or ensuring the integrity of offsets, there is still one major reason to be skeptical of net-zero claims: greenwashing. In a 2021 report, watchdog group Corporate Accountability called net-zero plans a “Big Con,” and amount to “Big Polluters’ reinvigorated attempt to preserve business as usual and keep profiting.”

Many companies are serious about achieving net-zero emissions, and “feel an urgency to address climate change, which is a good thing,” Broekhoff said. But corporations of all kinds are in the business of spiffing up their image, and with the effects of the climate emergency becoming impossible to ignore, net-zero targets have become a public relations requirement these days. 

While Coca-Cola or Walmart may elicit eye-rolling when they claim to be running climate-friendly businesses, some other companies’ promises strain the bounds of believability. 

Take JBS, the world’s largest meat processor, which rolled out a net-zero plan last year. JBS promised to invest $1 billion in an undefined “net zero” program, but suggested it would consist of offsets and carbon capture. The meat giant also said it would try to eliminate deforestation by 2035, which it later moved up to 2030. The nonbinding commitment means the company’s role in bulldozing the Amazon rainforest may continue for another decade at least.  

The oil and gas industry is probably the most infamous for this strategy of predatory delay. In its recent announcement, ExxonMobil promised to reduce its emissions by deploying “hydrogen, carbon capture and storage, and lower emission fuels”—three technologies that are costly, technically challenging, and not commercially viable today. 

“When they talk about a technology that doesn't exist, it's really hard to take that seriously,” said Lisa Benjamin, the professor from Lewis & Clark Law School.

“The time between now and 2030 is absolutely critical for reducing emissions on the order of 50 percent,” Kathy Mulvey, accountability campaign director at the Union of Concerned Scientists, told Sierra. But “they're just banking on a magic wand being waved some time past 2030 to really achieve the cuts that are necessary to get to net-zero. It's not a solid plan.”

Scope 3 emissions—the largest part of the emissions pie—could even grow from the oil and gas sector. Exxon and its peers are simply promising to drill in a slightly cleaner way. They aren’t promising to end drilling.  

Could "net zero" be a PR ploy to distract from business as usual?

In fact, not only is Exxon refusing to acknowledge responsibility for the consumption of fossil fuels, but it has also spent decades engaging in PR and lobbying to derail any attempt by governments to address the demand side of the fossil fuel equation. 

That campaign continues. Executives from BP, Shell, ExxonMobil, the American Petroleum Institute, and the US Chamber of Commerce appeared before a House Oversight Committee hearing last year, in which Congress was looking into the oil industry’s history of climate denial. When pressed by Representative Ro Khanna, a California Democrat, to end support for the American Petroleum Institute and other lobbying outfits that obstruct climate action, the titans of the oil industry demurred.  

At the same time, API and other corporate lobbying groups in which the oil industry is represented, such as the US Chamber of Commerce, spent millions of dollars over the past year on PR and lobbying to kill President Biden’s Build Back Better Act, which would have included roughly $550 billion in investments in renewable energy and electric vehicles. That legislation is indispensable to the United States meeting its climate goal of cutting emissions in half by 2030. 

Fighting to kill climate legislation while simultaneously announcing net-zero targets is not a coincidence. It’s an intentional strategy of delay. The oil industry has “co-opted” language such as “Paris-aligned” and are trying to do that with “net zero,” while continuing to drill for oil and gas, Mulvey said.  

“It's an effort to buy social license while locking in a business model that has worked for them. And they don't want to give it up,” she said. “It's a company that wants to keep its feet firmly in the 20th century.” 

What about country-level net-zero goals?

In the lead up to the international climate change negotiations in Glasgow, Scotland, last year, countries updated their climate plans, and many offered up their own commitments to reach net zero by 2050. In April 2021, President Biden announced a net-zero target by 2050.

Emerging economies have a bit longer to reach that goal. China said it would do so by 2060, and India by 2070. Even oil-producing countries have announced similar goals. Saudi Arabia, a country that is often considered to be synonymous with oil, said it would aim for net zero by 2060. 

Should we be just as skeptical that net-zero claims are a greenwashing exercise if they are made by a government? 

There are plenty of reasons why the public should question the ambition of any government policy. Too often, climate negotiations are long on rhetoric and short on action, and net-zero claims can easily fall in that category. Great Thunberg summed it up last year ahead of Glasgow. “Build back better. Blah, blah, blah. Green economy. Blah blah blah. Net zero by 2050. Blah, blah, blah,” she said in a speech that instantly became meme-worthy. 

But one big difference between a claim from an oil company and one from a government is that the country-level commitments by default include the Scope 3 emissions—the emissions stemming from the combustion of fossil fuels—at least within their borders. Scope 3 is baked into a country’s commitment, so while the ambition can be questioned, at a minimum there is a basic level of honest accounting.  

There is one wrinkle that complicates this, however. The emissions from the oil and gas that is exported shows up on another country’s ledger. So, Saudi oil burned in, say, China is not an emissions problem for Saudi Arabia; that oil consumption is calculated as Chinese emissions. Still, when all country commitments are added together, everything in theory should be accounted for. 

Moreover, countries have much stronger incentives to actually slash the use of fossil fuels, ranging from improved public health, reduced fiscal pressure, improved national security objectives, and leading the way on new technologies. The climate emergency will no doubt add political pressure on governments to make real progress.  

And that’s why, Mahdavi said, even net-zero claims from oil-producing countries like Saudi Arabia appear “far more believable” than those from ExxonMobil.