This post is part of an ongoing “What Is” series from Energy Innovation that answers some of today’s most pressing climate policy questions.

What Is: Net-Zero

“Net-zero” became a global climate imperative in 2015 when the United Nations determined that to “avoid the most catastrophic outcomes of the climate crisis, emissions must be reduced by 45 percent by 2030 in order to reach net-zero in 2050.”

Since then, more than 140 countries have set a net-zero target while 9,000 companies, 1,000 cities, 1,000 educational institutions, and 600 financial institutions have pledged to halve emissions by 2030 to meet the Paris Agreement’s target.

But what is net-zero, exactly? And how can we reach that ambitious but necessary goal?

For climate change, net-zero is like balancing a scale with greenhouse gases (GHG) as the measurement – think of it as an accounting problem, or balancing a checkbook. Reaching net-zero means whatever amount of climate pollution is emitted into the atmosphere is balanced by an equivalent amount being removed from the atmosphere by carbon sinks or carbon removal technologies.

Emissions reductions are the key to reaching net-zero targets, because removing climate pollution from the atmosphere is harder than not polluting in the first place, and technologies to prevent new emissions (e.g., building solar power rather than coal power) are more mature and cheaper to deploy than technologies to remove that pollution from the atmosphere (e.g., direct air capture) after the fact.

Solely defining climate targets via net-zero goals without specific policy details or strict measurement systems also risks accounting tricks by governments or corporations that provide cover for unabated emissions.

The idea became mainstream after the Paris Agreement’s historic signing at the COP21 UN Climate Change Conference. The Paris Agreement quantified net-zero by establishing a goal to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.”

The world’s six largest GHG emitters –  China, the United States, India, the European Union, Russia, and Brazil – accounted for 61.6 percent of global GHG emissions in 2023. Their largest emitting economic sectors were industry, transportation, agriculture, electricity, and waste.  

Where do Net-Zero Targets Exist

U.S. net-zero targets run the gamut from the Biden administration’s goal of net-zero national emissions by 2050, to Princeton University’s goal of being a net-zero campus by 2040, to Pasadena Water and Power aiming to be net-zero by 2030.

Climate Watch’s net–zero tracker shows the ongoing progress of governmental net-zero targets worldwide. Nearly 100 countries, representing 80.7 percent of global GHG emissions, have shared their net-zero targets. And 149 countries have set goals to reduce their emissions with plans ranging from phasing out coal plants for renewable energy sources like wind and solar to electrifying transportation. Unfortunately, the UN reports these government commitments fall short of the Paris Agreement’s net-zero target.

In 2021, the Biden Administration announced its ambitious target for the U.S. to reduce emissions 50 percent from 2005 levels by 2030, reaching net-zero by 2050. The Inflation Reduction Act’s climate and clean energy provisions could cut national GHG emissions up to 41 percent by 2030, and additional policy ambition could reach the 50 percent emissions reduction target.

Many states have followed the administration’s lead by publishing their own emissions targets with notably ambitious plans coming out of Louisiana, Michigan, and Nevada. These plans reflect good state policy to cut emissions because in addition to their collective goal of reaching net-zero by 2050, they have intermediary goals to reduce emissions 28 percent by 2025, and Louisiana is aiming for a 40-50 percent reduction by 2030. California has some of the country’s most ambitious state-level net-zero goals, targeting 40 percent emissions reduction by 2030 and carbon neutrality by 2045.

Which Corporations Have Net-Zero Targets?

Anything we create or use on a large scale can be covered by a net-zero target and many companies are reducing their emissions using new technologies.

Industrial manufacturers can reduce emissions through clean energy technology. The U.S. Department of Energy’s Industrial Demonstrations Program has awarded $6 billion to 33 projects demonstrating the ability to reduce GHG from high emitting industrial sectors, and one awardee, Cleveland-Cliffs is using federal funds to replace their blast furnace steel mill with a ‘hydrogen-ready’ iron plant as part of their net-zero by 2050 plan. On a smaller scale, manufacturers like Colorado’s New Belgium Brewery are switching to industrial electric heat pumps to make steam needed for brewing beer instead of relying on gas.

These technologies also scale up. Google is targeting net-zero by 2030 and has begun cutting its emissions. The company’s ‘Accelerating Clean Energy’ program with Amazon, Duke Energy, Nucor,  and Microsoft aims to spur long-term clean energy investments and develop new electricity rate structures. Technology companies like Google are important to net-zero targets, as new data centers increase energy demand alongside the nascent U.S. manufacturing boom and increasing building and vehicle electrification. Fortunately clean energy can meet growing electricity demand without gas through strategies like building new renewables to meet new load or reusing heat produced in data centers.

Policy to Achieve Net-Zero Emissions

Smart climate policy can help reach government or private sector net-zero targets. Both states and countries around the world are working towards meeting their climate goals, including how they can best reach their net-zero targets. In China, India, and the U.S., switching from internal combustion engines that run on fossil fuels to electric vehicles and transitioning power grids to clean energy are helping cut emissions.

Industry – manufacturing everything we use from chemicals to cars – is a growing source of emissions and must be addressed to hit net-zero targets. 39 percent of global GHG emissions come from energy used for heating and cooling, one-third of which comes from the industrial sector. Industry is forecast to be the largest source of U.S. emissions within a decade, and manufacturing everything from chemicals to cars emits 77 percent of national industrial emissions. Government policy that enables industries worldwide to transition away from fossil fuels and reach zero-carbon industry can cut emissions, consumer costs, and public health impacts.

Government officials, corporations, and organizations with net-zero targets have many policy options available to reduce emissions. Several specific recommendations could make the largest

Policies that encourage faster renewable energy deployment and strengthen the grid:

Incentives for renewables
Permitting reform for clean energy
More efficient grid interconnection processes

Policies that supercharge electrification:

Electric vehicle charging infrastructure
New building standards covering electric heating and cooking
Robust domestic manufacturing for electrified technologies

Policies that halt further lock-in of fossil fuel infrastructure

Sunset clauses for existing infrastructure
Strict regulation for new infrastructure like pipelines or export terminals
Subsidy reallocations

Policies that remove carbon from the atmosphere

Forest preservation and better agricultural practices to act as carbon sinks
Carbon dioxide removal through technologies like carbon capture and sequestration, and direct air capture

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This post is part of an ongoing “What Is” series from Energy Innovation that answers some of today’s most pressing climate policy questions. What Is: Net-Zero “Net-zero” became a global climate imperative in 2015 when the United Nations determined that…
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