Types of Carbon Credits: Avoidance vs. Removal

Not All Types of Carbon Credits Are Created Equal

When building a sustainability strategy, many businesses start with a simple question: "Should we buy carbon credits?" But as the market matures, the more important question has become: "What types of carbon credits should we buy?".

Understanding the distinction between Avoidance and Removal is critical for any company looking to make authentic climate claims and reach true Net Zero.

Type 1: Avoidance & Reduction (Stopping Pollution at the Source)

Avoidance credits come from projects that prevent greenhouse gas emissions that would have otherwise entered our atmosphere. Think of these as a shield against future harm.

• How it works: These projects displace high-emission activities with cleaner alternatives or significantly improve energy efficiency.

• The Impact: Avoidance credits are essential for slowing the increase of $CO_2$ in the atmosphere.

• Examples: Investing in a wind farm to replace a coal plant or protecting a forest that was slated for deforestation.

  
  

Type 2: Removal & Sequestration (Cleaning Up Legacy Emissions)

Removal credits represent projects that actively capture $CO_2$ that is already present in the air and store it durably. If avoidance is a shield, removal is a vacuum.

• How it works: This can be done through natural processes (like planting new forests) or technological solutions (like Direct Air Capture) that pull $CO_2$ directly from the sky.

• The Impact: Removal credits actively decrease the total amount of $CO_2$ in our atmosphere.

• The Net Zero Connection: Achieving true Net Zero often requires removal credits to balance out the "residual emissions"—those final, stubborn emissions that a business simply cannot eliminate yet.

  
  

Which One Matters for Your Business?

The "right" choice depends entirely on your specific climate strategy and the story your brand wants to tell:

• Focus on the Future: If your goal is to prevent future environmental harm and support the transition to green energy, Avoidance credits are a powerful tool.

• Addressing the Past and Present: If you are aiming for "Carbon Neutrality" or "Net Zero" and want to take responsibility for your current footprint, Removal credits are increasingly preferred by buyers and regulators.

  
  

The Bottom Line

Not all credits do the same thing. While avoidance tackles future emissions, removal addresses the $CO_2$ already warming our planet. A robust strategy often involves a mix of both: avoiding what we can today and removing what we've already emitted.

Confused about which credits fit your ESG goals? At C², we help you navigate the complexities of project types to ensure your investments have the highest possible impact.

Let’s define your impact together.