Differentiating the types of carbon credits

In a previous post, we distinguished the two types of carbon markets: the voluntary and the compliance markets. In this article, we will be differentiating the types of carbon credits, explaining what removal and avoidance mean, and how you can engage in the voluntary carbon market. 

What are the different types of carbon credits? Nature-based versus technology-based 

The two existing types of carbon credits are nature-based and technology-based. Nature-based projects contribute to protecting our planet’s resources and its’ greatest carbon sinks. There are currently six types of projects that are approved as carbon credits. Nature-based credits tend to be certified by Verra (Verified Carbon Standard). Some examples are REDD+, grasslands and regenerative farming projects. Technology-based projects protect the environment through technological developments. These focus less on nature protection and more on energy efficiency, as proven by the number of renewable energy projects and cookstove projects. Technology-based credits tend to be certified by the Gold Standard. 

Explaining the difference between Removal and Avoidance 

Removal credits are either nature-based projects such as afforestation, or technology based such as Direct Air Capture (DAC). These projects capture and remove carbon from the atmosphere. 

Avoidance credits are projects which avoid emissions. Above all, they have numerous co-benefits. Avoidance credits are important for funding sustainable development. They allow for a reduction of greenhouse gases being released into the atmosphere. They are essential en route to net zero and more affordable removal strategies in the long term. 

Another way to think of both these types of projects is by understanding that purchasing carbon credits means you are funding a project in the developing world that would otherwise not exist. An organisation in the UK can purchase carbon credits from a project developer in Malawi to compensate for their emissions in the UK. This is based on the principle that 1tCO2e emitted to the atmosphere is equally comparable to another tonne avoided or removed anywhere else in the world.

Example: One such project has helped improve cookstoves in Malawi: rather than using firewood and charcoal, the clay pots used are more fuel efficient and reduce cooking time. In addition, the reduction of smoke has lowered the risk of indoor air pollution which is one of the largest causes of premature death of children under five. This project meets the criteria for nine of the UN Sustainable Development Goals (UN SDGs).  

Hypothetically, if a given community was emitting 200tCO2e prior to the introduction of the more efficient cookstoves, they have now halved their emissions to 100tCO2e. Funding this project means you have avoided the emission of an additional 100tCO2e. This could be equivalent to your operational footprint in the UK.  

How to engage in the Voluntary Carbon Market 

You can engage on the voluntary carbon market as an organisation, or as an individual. Carbon credits can be purchased through brokers and retailers, such as Plannet Zero. In addition to having a carbon offset marketplace, Plannet Zero offers various solutions that cater to a range of needs. Currently, our One Two Zero programme is popular among SMEs. We also offer a Net Zero Carbon Support Programme for organisations of any size. 

If you would like to speak to one of our advisors, please contact us at info@plannetzero.org, or on +44 20 3637 0055.