The Carbon Mirage: Why Corporate Net-Zero Pledges Are Economically Impossible

By Alice Zhang Feb. 10, 2025

Every Fortune 500 sustainability page now declares the same promise: “We will achieve net-zero emissions by 2050.” The pledge has become the most common moral currency of capitalism. Yet behind the glossy infographics and carbon dashboards lies a contradiction too vast for accounting to solve: the global economy cannot reach net zero while continuing to grow at its current rate.

According to the International Energy Agency (IEA Global Emissions Outlook, 2025), even if every net-zero commitment announced by corporations were honored, global carbon output would still exceed the safe threshold for 1.5°C warming by 22 gigatons by mid-century. The math simply doesn’t work—not because of bad faith, but because the planet’s carbon budget is finite, and capitalism is not.

The Economics of Infinite Promises

Corporate decarbonization pledges rest on a dangerous arithmetic: future offsets will neutralize present emissions. The OECD Corporate Transition Finance Review (2025) finds that over 68 percent of current net-zero plans rely primarily on offsets rather than actual emission cuts.

Offsets are not mitigation—they are temporal debt. Companies emit today and pay later, assuming that someone else, somewhere, will absorb the carbon on their behalf. The global market for such credits is already worth US$905 billion, yet only 14 percent of traded offsets correspond to verified carbon removals (World Bank Voluntary Carbon Market Integrity Report, 2025).

Net zero, in practice, means not zero—just deferred accountability.

The Mirage of Negative Emissions

Many pledges hinge on unproven technologies such as Direct Air Capture (DAC) and Bioenergy with Carbon Capture and Storage (BECCS). The Intergovernmental Panel on Climate Change (IPCC Technology Feasibility Brief, 2025) warns that scaling BECCS to meet global targets would require land equivalent to one-third of global cropland.

The promise of negative emissions thus collides with the realities of food security and land competition. Worse, the majority of DAC projects are powered by fossil fuels—the very energy they claim to reverse.

Technology has become an alibi for delay.

The Green Financial Complex

A new ecosystem of “sustainability finance” now monetizes virtue. Carbon accounting consultancies, ESG auditors, and green bond issuers have formed what the London School of Economics Environmental Finance Study (2025) calls a “carbon compliance economy” worth US$1.2 trillion annually.

Yet the majority of this money circulates in services that measure carbon rather than reduce it. A Columbia Center for Sustainable Capitalism report (2025) found that for every dollar companies spend on emission reduction, they spend $1.40 on compliance and reporting.

Carbon neutrality has become a business model—profitable precisely because neutrality itself is never achieved.

The Outsourcing of Guilt

Multinational corporations often tout reductions achieved by divesting high-emission operations. But divestment does not eliminate emissions—it relocates them. The World Trade Organization Carbon Relocation Index (2025) estimates that 22 percent of global industrial emissions have been offshored since 2010, primarily to countries without strict environmental regulation.

The illusion of decarbonization thus depends on geographic laundering: emissions exported to the Global South vanish from corporate balance sheets but not from the atmosphere.

The world is cleaner only on paper.

The Carbon Colonialism of Offsets

Forests in the Global South have become the collateral of Western carbon neutrality. The United Nations Development Programme (UNDP Carbon Equity Assessment, 2025) reports that 74 percent of offset projects are located in Africa, Southeast Asia, and Latin America. Local communities rarely share in the profits; many are displaced from ancestral lands to make way for carbon capture forests.

This is not decarbonization—it is a new form of resource extraction, where the North purchases absolution and the South bears the ecological cost.

The postcolonial plantation has gone digital.

The Energy Rebound Effect

Even genuine efficiency gains can paradoxically worsen emissions. The IEA Efficiency Paradox Study (2025) found that as renewable energy costs fall, overall energy demand rises faster than carbon intensity declines—a dynamic known as the rebound effect.

In 2024, global renewable capacity grew 21 percent, yet total energy-related CO₂ emissions also increased 0.8 percent. When green energy lowers prices, consumption expands, erasing gains. Efficiency without restraint is simply acceleration.

The problem is not technology—it is appetite.

The Political Convenience of Net Zero

Governments have embraced net-zero rhetoric precisely because it postpones action. By projecting accountability into 2050, policymakers avoid immediate sacrifice. A Harvard Kennedy School Policy Simulation (2025) shows that fewer than 10 percent of national net-zero pledges have interim targets aligned with Paris Agreement pathways.

Net zero has become a bureaucratic sedative—comforting, quantitative, and perpetually deferred.

The Economics of Sufficiency

A growing movement of post-growth economists argues that the only viable path to real decarbonization is absolute reduction, not relative efficiency. The University of Cambridge Centre for Sustainable Economies (2025) projects that stabilizing global temperatures at 1.5°C would require a 40 percent reduction in global energy consumption by 2050, even accounting for renewable expansion.

This implies not smarter consumption, but less of it—a politically unpalatable truth in growth-obsessed economies.

Yet without redefining prosperity beyond GDP, every green investment remains a form of acceleration in disguise.

The Path Beyond Accounting

To survive, the net-zero framework must evolve from promise to principle. Economists propose three corrective measures:

1. Carbon Honesty Standards – Mandatory disclosure separating genuine reductions from offsets.

2. Global Carbon Floor Price – A universal tax on emissions to end arbitrage between jurisdictions.

3. Consumption-Based Accounting – Attribute emissions to end-users, not just producers, to reveal full lifecycle impacts.

The OECD Climate Accountability Framework (2025) estimates that adopting these reforms could close 75 percent of the current “emissions gap” created by corporate net-zero pledges.

Decarbonization must move from marketing to math.

The Future: After Net Zero

Net zero was meant to mark the end of emissions. Instead, it marks the beginning of a new era of creative accounting. The world does not need neutrality—it needs negation. The challenge is not to balance the carbon ledger, but to shrink it.

The illusion of infinite growth meeting finite ecology is collapsing. The question is whether capitalism can survive the arithmetic of its own promises.

Works Cited

“Global Emissions Outlook.” International Energy Agency (IEA), 2025.

 “Corporate Transition Finance Review.” Organisation for Economic Co-operation and Development (OECD), 2025.

 “Voluntary Carbon Market Integrity Report.” World Bank, 2025.

 “Technology Feasibility Brief.” Intergovernmental Panel on Climate Change (IPCC), 2025.

 “Environmental Finance Study.” London School of Economics (LSE), 2025.

 “Sustainable Capitalism Report.” Columbia Center for Sustainable Capitalism, 2025.

 “Carbon Relocation Index.” World Trade Organization (WTO), 2025.

 “Carbon Equity Assessment.” United Nations Development Programme (UNDP), 2025.

 “Efficiency Paradox Study.” International Energy Agency (IEA), 2025.

 “Climate Accountability Framework.” Organisation for Economic Co-operation and Development (OECD), 2025.