The Net Zero Emissions Lie
Cutting carbon emissions has become a central focus of countries and companies alike in the past decade. The oil majors are racing to ‘go green, Microsoft has pledged to go ‘carbon negative’, and over 20 nations have either committed to or achieved net-zero carbon targets. For public companies, the incentives to go green are clear, with a recent boom in ESG investing, the continued threat of activist divestment, and a growing body of government regulation. Meanwhile, for governments, the environment is becoming an increasingly important electoral issue and political parties are eager to be seen as being proactive on the issue. But just as the ESG investment boom has led to an increase in the phenomenon of ‘greenwashing’, countries who are eager to make grand statements about being carbon zero within a decade or two may be overselling exactly what it is that they are doing.
Climate change is, by its very nature, a global problem. With that in mind, it is possible for one country to reduce its carbon emissions to zero without any reduction in the level of carbon emitted worldwide. As long as that same country continues to trade and consume, the carbon-reliant products it needs will simply be imported from a nation without any limits on carbon emissions. To claim ‘real’ net-zero emissions, countries would have to go significantly further.
That isn’t to say that the net-zero initiatives are entirely without merit. Increasing renewable energy usage, building more energy-efficient homes, and electrifying transportation would all have a tangible effect on decreasing global carbon emissions. But, as economist Dieter Helm points out in his recent book, if an individual state wants to truly become a net-zero carbon emitter, then it would need to have a carbon tax at its border as well as reducing its production of carbon domestically.
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