In the global fight against climate change, the concept of ‘net zero’ has emerged as a seemingly noble goal embraced by governments, corporations, and environmental activists alike. Promising to balance the emissions we produce with equivalent removals from the atmosphere, net zero pledges appear to offer a path towards sustainability. However, beneath the surface lies a dangerous deception—a scam that threatens to undermine genuine efforts to address the climate crisis.

Before we deep dive into the debate, which it will indeed become, let’s just understand the context and focus on some key challenges first.

The context: The historical origin of the term ‘net zero’ can be traced back to accounting and finance, where it was initially used to describe a state where assets and liabilities balance out to zero. In this context, ‘net zero’ signifies a condition where gains and losses, credits and debits, or inputs and outputs cancel each other out, resulting in a net neutral outcome.

The evolution of ‘net zero’ for environmental sustainability: This ‘net neutral outcome’ or the concept of ‘net zero’ when later adopted within the context of environmental sustainability and climate change mitigation refers to achieving a balance between the amount of greenhouse gases emitted into the atmosphere and the amount removed from it.

This whole concept of ‘removal’ (vs actual reduction) is what caught the world’s attention as it does not necessarily mean reducing emissions as much as possible at the source but the ‘net zero’ could also be achieved through a combination of efforts to offset any remaining emissions through various business and profit generating means such as carbon capture and storage, investments in renewable energy projects. investing in carbon removal technologies or practices such as afforestation and purchasing carbon offsets credits.

When the solution becomes the problem: Now this is where the solution starts to become a problem because the only sustainability the corporate world, business world, and the financial world knows, understands, and advocates for is ‘sustainable profits’. So, they all decided to put their thinking caps on for this whirlwind and highly sustainable (as in ‘continuous’) business opportunity of ‘net zero’.

And what has followed over the years since the global adoption of ‘net zero’ in 2015 is the illusion of offsetting, diversion tactics, greenwashing, masking true emissions, techno-fix fantasies, innovation fetishism and commodification of nature. In fact, the last nine years, (since the adoption of net zero) have been the hottest on record.

The mathematical advantage of ‘net zero’:

The mathematical or the accounting advantage or the escape door from accountability provided by the concept of ‘net zero’ is the most loved part of it by all and sundry. And here is how it works.

So, let’s assume that you have an annual revenue of USD 200 but have a net loss (or generate emission) of USD 250 against the revenue thereby giving you a net loss of USD 50. Now there are two ways to fix this net loss to a ‘net zero’ equation.

1. Reduce the net loss by a minimum of USD 50 to minimise the impact on the balance sheet (environment in this case) and achieve a ‘net zero’ position.

2. Grow the profit side to USD 250 (up from current USD 200) to achieve a ‘net zero’ position.

The second approach while achieving ‘net zero’ position does not require you to reduce any of your efforts contributing to the losses. And the growth of the profits (or net zero) could be achieved in several ways.

• By shifting excess profits from another associated profit-making company to your loss-making company (offsetting emissions). The profit-making company remains net plus and helps your company become net zero by you literally doing nothing.

• By increasing your business activities, improve efficiencies by way of increasing production (thereby increasing emissions) to generate higher profits to mitigate your loss and become ‘net zero’.

• By finding cheaper ways to produce offshore thereby reducing your cost (or shifting emissions directly attributed to you) to become ‘net zero’.

What the ‘net zero’ concept has helped define is an enormous amount of very clever and new business opportunities of all kinds which may directly or indirectly be increasing emission yet giving us a false sense of comfort of being on the right track by achieving ‘net zero’. The biggest being the carbon credits trading business.

Furthermore, the birth of the ‘carbon credits offset’ market has given birth to a highly profitable ‘carbon credit market’ valued at USD 103.8 billion in 2023 and is set to grow at a CAGR of 14.8% from 2024 to 2032. Why would anyone complain about ‘net zero’?

Let’s look at the challenges or delusions that the ‘net zero’ solutions pose.

• The ‘net zero’ concept relies on the notion of offsetting emissions vs reducing them. It involves investing in projects that claim to remove or prevent an equivalent amount of greenhouse gases from entering the atmosphere. While offsetting schemes may include initiatives like tree planting, renewable energy projects, or carbon capture technology, their effectiveness is highly dubious.

• Many offset projects are merely a smokescreen (greenwashing) for corporations and governments to continue business as usual while projecting an image of remaining environmentally responsible. By purchasing offsets, they can claim to be carbon neutral without making any substantial changes to their polluting practices.

• ‘Net zero’ can also obscure the true extent of emissions by focusing solely on those that can be easily quantified and offset, while neglecting or completely ignoring other sources such as embodied emissions in products or the carbon footprint of supply chains. This selective accounting undermines efforts to accurately measure and reduce our overall impact on the climate.

• ‘Net zero’ advocates place a lot of undue faith in tech solutions to solve the climate crisis. From carbon capture and storage to geo-engineering schemes, these techno-fixes promise to offset emissions without requiring systemic changes to our consumption patterns or economic structures. Some of these solutions are unproven and could be causing much more damage in the long run.

• The obsession with tech innovation has led to a neglect of simpler, low-tech solutions that could deliver more immediate and tangible benefits. Instead of investing in renewable energy, energy efficiency, and sustainable land management, resources are funnelled into speculative ventures with uncertain outcomes. The simple centrifugal technology using rubber bands to spin the vials of blood test results in rural parts of India where there is no electricity is a great example of reducing ‘innovation fetishism’ yet finding better and more environmentally sustainable solutions.

• The ‘net zero’ concept has fuelled the commodification of nature globally by turning essential ecosystem services into tradable commodities that can be bought, sold, and most importantly profited from. This has led to a booming market for carbon offsets, biodiversity offsets, and ecosystem services, where the value of nature is reduced to its capacity to absorb or mitigate human-generated emissions.

• The offset market lacks both robust regulation and transparency. This allows for the proliferation of dubious projects that fail to deliver the promised emissions reductions. Without rigorous monitoring and verification mechanisms, no guarantee that offset investments are contributing to climate mitigation.

• ‘Net zero’ allows governments and corporations to continue pursuing economic growth at the expense of the environment and marginalised communities. Rather than challenging the extractive logic of capitalism or rethinking their dependence and exploitation of natural resources, ‘net zero’ provides a convenient excuse for business as usual.

• The ‘net zero’ approach allows for continued emissions in the present with the promise of offsetting them in the future. The delay in taking decisive action serves to compound the climate crisis, pushing us closer to irreversible tipping points. Instead of aiming for distant targets, we must prioritise immediate emissions reductions and invest in proven solutions.

• Perhaps the most insidious aspect of the ‘net zero’ scam is its ability to divert attention away from the systemic changes needed to truly address the root causes of climate change. By focusing on individual actions, carbon markets, and technological gimmicks, the ‘net zero’ narrative ignores the structural inequalities and unsustainable practices embedded within our economic and social systems.

Addressing the root causes of climate change demands transformative changes to our economic systems, including the transition to renewable energy, the promotion of sustainable agriculture, and the redistribution of wealth and resources. We cannot continue with business as usual while offsetting our emissions through gimmicks and carbon offsets etc, ‘net zero’ undermines genuine efforts to achieve sustainability. It’s time to see through the smoke and mirrors of the scam and demand real solutions that address the root causes of climate change.

Samir Dixit is global head-growth and consulting, Acorn Management Consulting. 

This article was published in two parts in the May and June issues of Manifest. Subscribe to Manifest here.