Carbon Credits: Offsets vs Removals
The carbon markets have been in the news for all the wrong reasons, with doubts over their effectiveness and widespread confusion. That could be a disaster, given that both the voluntary and compliance markets are critical for cooling the climate crisis. A major source of this confusion has been overcomplicated and misleading terminology. So in this essential guide, we will explain the types of carbon credits and how they are used – and crucially why we need to stop talking about carbon offsets, and start talking about carbon removals.
This is a unit that can be bought on the voluntary carbon market. A carbon credit represents one tonne of carbon dioxide that a carbon project has either prevented from entering the air, or removed from the air. (If the project deals with other greenhouse gases, such as methane, one credit represents a quantity of gas that would have the same warming effect as one tonne of CO2.)
There are three types of carbon credit: removal, reduction and protection.
Removal projects physically take carbon dioxide out of the atmosphere and store it, at least for decades, and ideally for thousands of years. For example, there are projects that plant new forests, spread charcoal on fields (biochar), and capture CO2 directly from the air and pump it into deep (direct air capture), stable geological formations.
Reduction projects cut existing greenhouse gas emissions. Some instal clean sources of electricity, such as wind turbines and solar panels. Others push energy efficiency, for example by distributing modern cookstoves that need less wood. Capturing methane from waste plants, and making bricks out of fly ash instead of clay, are among a host of other reduction technologies.
Protection projects guard natural carbon sinks, such as forests and peatlands, so they do not release their stores of carbon.
The two concepts of reduction and protection are often bundled together under the umbrella term “avoidance”. We prefer to avoid this term, as it conflates two different types of activity, with different climate outcomes.
This is not a well-defined term. Offsetting means buying and retiring a carbon credit in order to balance another source of emission, usually from fossil fuels. As a verb, that makes some sense. The problem is that people now use “offset” to refer to carbon credits in general – putting different kinds of credits in the same big bucket.
Reduction and protection credits dominate the market. One challenge is that some of these credits have been of questionable quality, not reducing or protecting as much as they claim. But even the high quality ones have a different function and outcome from removals. Protection credits are very important for stopping carbon from natural sinks from entering the atmosphere. Reduction credits do the same for fossil emissions. But neither can serve to neutralise emissions as part of a net zero target. Only removals credits can do that.
If not offsets, what?
The IPCC has given three reasons why removals are now “unavoidable”.
- We need billions of tonnes of cumulative removals just to get down to net zero quickly enough.
- When we get to net zero, there will still be residual emissions to the tune of many more billion tonnes that we will have to balance out.
- Removals can take us beyond net zero to a world with net negative emissions, healing climate damage
Removals credits go beyond traditional offsetting to offer a direct path to neutralising emissions and achieving all three of these goals.