Glossary entry

Net Negative

Disclaimer - please read

The definitions on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The definitions have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The definitions on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the definitions will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The definitions are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these definitions, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these definitions or any other person. Users should use their own professional judgement in the application of these definitions to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the definitions are based on the laws of England and Wales. We encourage the conversion of these precedent definitions for use in other jurisdictions.

Definitions

Option 1 (Organisation)

Net Negative is a state where Scope 1, 2 and 3 Greenhouse Gases [sequestered] [removed from the atmosphere] [absorbed by the [processes] [activities]] [of [name of party]] are greater than the Scope 1,2 and 3 Greenhouse Gases emitted [by [name of party]].

Option 2 (Product)

Net Negative is a state where there is a net [sequestration] [removal] [absorption] effect from either production or total lifecycle impact of a product leading to negative Scope 1, 2 and 3 Greenhouse Gas Emissions.

Option 3

Net Negative means that the aggregate of [a party’s] [the Company’s] actions to reduce its GHG Emissions and remove them from the atmosphere exceeds its unabated GHG Emissions.

Option 4 (Activity/ Technology)

Net Negative is a state where the [activity/ technology] absorbs more Scope 1, 2 and 3 Greenhouse Gases from the atmosphere than it emits.

For All Options

The amount of Scope 1, 2 and 3 Greenhouse Gases [sequestered] [removed from the atmosphere] [absorbed by the [processes] [activities]] must be measured using a standardized method of measuring and quantification to be agreed between the parties.

Net Negative Amount

Net Negative Amount means the amount to be paid by the [party/ies] where Net Negative is achieved by [date].

Drafting notes

Several drafting options are included as the term “Carbon Negative” or “Net Negative” is currently not widely used. The term “Net Negative” is used to ensure that all greenhouse gases, and not just carbon dioxide, are covered in the definition. 

There is not yet an agreed methodology for calculating if a product or activity is Net Negative in the same way as there is for Carbon Neutral. Which definition to use will depend on the subject and purpose of the clause being drafted. Issues to consider include:

  • Are you requiring an entity to be Net Negative?
  • Is an entity committing to be Net Negative?
  • Do you require an entity to only use Net Negative technology or to produce a Net Negative product? 

On a global scale, removals of Greenhouse Gases should be consistent with the mitigation pathways that would limit global warming to 1.5°C, with little to no overshoot. See IPCC Special Report on Global Warming of 1.5 ºC, Summary for Policymakers, Part C Emission Pathways and System Transitions Consistent with 1.5°C Global Warming.

The technology or activity used to remove Greenhouse Gases from the atmosphere must have a degree of permanence. Protocols or rules relevant to the area and project also need to be developed and documented to ensure the quality of removals. Reliable and independent auditors should validate and verify the measurements.

Note that the term “Carbon Positive” is used by some organisations instead of Carbon Negative to avoid the use of the word negative when describing their work to reduce their GHG emissions.

Application

Supply chain clauses, national climate laws, green leases (where the premises being leased are to be carbon negative), project finance documents (e.g. loan, guarantee and recourse agreements, engineering, procurement and construction contracts), policy documents.

Net Negative is used in the following TCLP clauses:

[Alexandros’ Clause] Net Zero Sponsor Activation Clause;

[Cassie’s Clause] Insurance: Disclosure and Mitigation of Pending Climate Change Litigation;

[Dottie’s Clause] Climate Purchase Agreement and Underwriting Sponsor Warranties; 

[Elliot’s Handbook] Net Zero Culture Employment Handbook;

[Emma’s Clause] Green Residential Lease Clauses;

[Estelle’s Clause] Climate Standard of Care (Construction);

[Felix’s Clause] (Carbon Negative Amount) Net Zero Completion Adjustment Clause; 

[Owen’s Clause] Net Zero Target Supply Chain Cascade Clauses;

[Pasfield’s Clause] Paris Aligned Company Articles; 

[Sebastian’s Clause] Entire Business Net Zero Objectives; and 

[Teddy’s Clause] Supplier Environmental Threshold Obligations.