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How Should the Term Net-Zero be Defined?

Everlution Newsletter

For Tuesday 17 November 2020 provided by (#letsfindsolutions)

News for green investors and organisations, stock watch & grant opportunities

How Should the Term Net-Zero be Defined?

Unlike other terms, such as carbon neutral, there is no commonly agreed definition of what constitutes net zero emissions. However, this may be about to change. In September, the SBTi published a discussion paper ‘Towards a science-based approach to climate neutrality in the corporate sector’, containing a working definition of net zero to inform corporate net zero targets. The SBTi intends to incorporate feedback from stakeholders in the next iteration of the definition, principles and draft guidelines that it expects to publish at COP25 in Madrid next month.

The paper describes net zero for a company as ‘achieving a state in which the activities within the value chain of a company result in no net impact on the climate from greenhouse gas emissions. This is achieved by reducing value chain greenhouse gas emissions, in line with 1.5°C pathways, and by balancing the impact of any remaining greenhouse gas emissions with an appropriate amount of carbon removals’.

While it is positive to see efforts to define this widely used term, it is vital that the final definition, principles and guidelines are as robust as possible if net zero targets are going to deliver on their promise.

This may require a more prescriptive approach, clearly stating which methods of greenhouse gas removal (GGR) would be permitted in achieving net zero and when these would be legitimate to use. The following considerations would therefore be essential for net zero targets to be meaningful and credible:

Key definition distinctions: Among the plethora of related terms, which also include zero carbon and net positive, the most useful distinctions can be made between net zero and carbon neutral, which itself is defined by the PAS 2060 Standard:

  1. PAS 2060 allows offsets, while net zero only allows certain forms of GGR in certain instances.

  2. PAS 2060 requires a carbon reduction plan (though no specific level of ambition is prescribed), while net zero requires a reduction target aligned to a 1.5ᵒC science-based target.

Ratio of reductions to removals: Emissions should be reduced to the greatest possible extent before any residual emissions can be compensated using GGR – this has alwaysbeen a key tenet of responsible offsetting. Some sectors, such as aviation, will inevitably find it harder to reduce their emissions and so will require a higher proportion of removals. These truly ‘hard-to-decarbonise’ emissions need to be defined.

GGR methods: Any compensation of emissions should be restricted to only certified methods of GGR – in order to be confident that the carbon is permanently sequestered. Some GGRs are seen as more reliable than others. The 2018 Royal Society report on greenhouse gas removal discusses GGR options including large-scale forestation, biochar, BECCS (bioenergy with carbon capture and storage), DACCS (direct air capture and carbon storage) and enhanced weathering. However, the IPCC’s special report on Global Warming of 1.5ᵒC emphasised that geological storage is generally longer lasting than biogenic storage. Such factors should be considered when determining which GGR options are appropriate for compensating emissions.

Physical boundaries: While it might make sense for a country to generate removals within its own borders (as Costa Rica has proposed as part of its net zero target), it is impractical to expect the vast majority of companies to effect removals within their own value chains. Instead, possibly companies should able to purchase GGR certificates in the future, in the same way that they can currently purchase Renewable Energy Certificates for electricity.

Business model pathway: It is essential to move towards an appropriate future business model to mitigate transition risks. As an example, finding a way of producing net zero internal combustion engine transport with GGR should not be considered a solution when society is moving towards low-emissions transport via electrification and other means.

Accounting boundaries: It might become necessary to treat scope 1 and 2 emissions differently from scope 3 in this context: for example, an international GGR certificate scheme could apply to scope 3 emissions, but it might be more appropriate for scope 1 and 2 residual emissions to be dealt with locally.

Standardisation: There is a need to adopt widely accepted accounting standards and an agreed system for verifying and certifying GGRs.

Based on these points and the author’s article in the Everlution Newsletter of the 3 November 2020 (in which the notion of limiting global warming to 1.5°C was considered impossible), the following definition is proposed for a net zero company:

A net zero company will set and pursue an ambitious 2°C aligned science-based target for its full value-chain emissions. Any remaining hard-to-decarbonise emissions can be compensated using certified greenhouse gas removal.

Grants/Subsidies/Funding – Bushfire Local Economic Recovery Fund applications now open.

Jointly funded by the Australian and NSW Governments, this package will support social and economic recovery in regional communities most affected by the 2019 -2020 bushfires. The NSW Government has already provided more than $2.3 billion for a temporary accommodation program, property clean-up and mental health services in regional communities impacted by bushfire.

The Bushfire Local Economic Recovery Fund will provide $250 million of further funding to support the social and economic recovery of communities affected by bushfire in 47 regional NSW Local Government Areas. It will support projects that retain and create new jobs in regional areas, build resilience and increase preparedness for future bushfire seasons.

Funding is available in the following three categories:

  1. Infrastructure projects, such as roads to support increased industrial development.

  2. Environmental projects, such as regeneration activities.

  3. Programs including social, business and environmental education initiatives.

The grant funding for individual projects is dependent on the project type:

  1. Infrastructure projects must seek a minimum of $400,000 with a maximum available grant of $20 million.

  2. Environmental projects including rehabilitation, remediation and resilience improvements must seek a minimum of $200,000 with a maximum available grant of $4 million.

  3. Programs, including social, business and environmental education initiatives must seek a minimum of $200,000 with a maximum available grant of $4 million.

Funding will be prioritised to support applications from areas most impacted by bushfires.To be eligible projects must:

  1. Support the recovery of the local community’s economy, social well-being, environment or improve resilience to future natural disasters.

  2. Be able to commence within six months of the funding deed being executed by the Department and be completed by 30 June 2022.

  3. Align with one of the following categories:

  4. enabling infrastructure

  5. industry and business development

  6. social development

  7. natural environment and resource development

  8. built environment adaption.

Applications close 11 December 2020. Go to:

CTI launches Youth Suicide Awareness month

As climate change events increase in number and ferocity, so does climate change risk for businesses and organisations. To remove or control this risk, organisations need to be equipped with the right practical knowledge.

Carbon Training International (CTI) offers courses that give clear direction to understand how to deal with climate change risk.

CTI courses include Strategic Carbon Management, Carbon Accounting, Applied Energy Efficiency, Reducing Fleet Emissions and Carbon Offsetting.

For all courses commencing in November, CTI is donating 10% of total course fees received to Headspace – Youth Mental Health Foundation ( towards raising awareness of the worsening issue of youth suicide.

You can easily enrol in one of CTI’s online webinar courses at Just choose your preferred course and course start date. Extra course dates can be arranged.

The good news: carbon emissions and business costs are linked. The more an organisation reduces its carbon emissions the more it reduces its costs.

Eco-tip for the day – Your diet

Switching to an animal-free, vegan diet is a powerful way to help protect our environment, helps to ensure everyone has enough to eat and improves ones health. Okay, I am not prepared for a vegan diet, but I have significantly reduced my meat intake. I have also included it in our family carbon footprint to highlight its materiality.

The United Nations report Livestock’s Long Shadow–Environmental Issues and Options, which concludes that the livestock sector (primarily cows, chickens, and pigs) emerges as one of the top two or three most significant contributors to our most serious environmental problems, at every scale from local to global. It is one of the largest sources of greenhouse gases – responsible for 18% of the world’s greenhouse gas emissions as measured in CO2 equivalents. It produces 65% of human-related nitrous oxide (which has 298 times the climate change potential of CO2) and 37% of all human-induced methane (which is 28 times as warming as CO2). It also generates 64% of the ammonia, which contributes to acid rain and acidification of ecosystems.

In addition, the enormous amounts of grain required to feed livestock reduces the amount of food available for the world’s hungry. Buying organic, locally grown food also reduces climate change emissions and helps protect the environment.

Share watch – RareX (ASX: REE)

RareX will top up its cash reserves via a “strongly supported” $3 million placement, with proceeds to be used to advance its Western Australian rare earth element projects.

The company has received firm commitments from institutional, professional and sophisticated investors to raise the $3 million via the issue of 30 million shares at $0.10 each. RareX directors are also participating in the placement by collectively subscribing for $90,000-worth of shares.

RareX managing director Jeremy Robinson said the company was “delighted” by the “strong support” it had received for the capital raising, which will see the company well-placed to accelerate its REE exploration and development plans.

“Investors can look forward to a news-flow-rich period for RareX with the potential to deliver numerous catalysts that could well and truly re-rate the stock.”

The placement proceeds will be used to fund an upcoming drilling program at the Weld North rare earths project. The project will target a circular magnetic anomaly, which is 84km north of Lynas Corporation’s (ASX: LYC) Mt Weld carbonatite hosted REE deposit. The program will comprise aircore drilling to test below cover and gauge whether the anomaly is caused by a similar carbonatite intrusion to Mt Weld or a granitic intrusion.

Mr Robinson said this drilling will begin before the end of the year and provide the company with its “first real insight” into the source of the large-scale anomaly and its potential to host a “significant new discovery”.

Over at Cummins Range, RareX recently completed 6,143m of drilling, with assays pending from 38 holes and expected within the next three weeks. The project is 130km southwest of Halls Creek in the east Kimberly region.

RareX noted Cummins Range is one of two known REE deposits bearing carbonatites in Australia, with Mt Weld being the other one. Cummins Range has a resource of 13Mt at 1.13% total rare earth oxides with 22.1% neodymium-praseodymium.

Mr Robinson said capital raising funds will be used to deliver an updated resource for Cummins Range and begin scoping study work.

The share price for the last year is shown above.

Financial indicators

The VIX fear gauge down by 14.68 points since last Tuesday EST to 22.45.

The Dow Jones Industrial Average up since last Tuesday EST by 3,025.39 points or 11.24% to     29,950.44, the STOXX 600 up 42.08 points or 12.10% to 389.74 and the Shanghai Composite index up 62.77 points or 2.07% to 3,334.57.

Gold on 1,884.50. US 10-year Treasury Bonds on 0.911 and oil on 41.63. Cryptos Bitcoin up 3,242 points since last Tuesday or 24.15% to 16,669.

ASX 200 up 431.80 points or 7.12% since last Tuesday to 6,498.20. The Aussie dollar on 73.20US cents.

Eco Market Spot Prices

LGC $38.55

STC $37.75

ESC $27.00

VEEC $37.30

ACCU $16.50

Sources: RenewEconomy, demandmanager,  Reuters, SMH, Market Watch, Crikey

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