While all carbon credits are an important factor in the effort to decarbonize and achieve climate action, not all carbon credits are the same. There are two main types of carbon credits: removal and reduction credits. When choosing what types of carbon projects you want to invest in, it is important to note the differences between these different types of offsets and their overall impact.

As the name suggests, removal credits are generated exclusively through projects and technologies that directly remove carbon dioxide from the atmosphere. This can range from modern technologies like direct carbon capture all the way to reforestation projects. Some solutions, like planting trees, are nature-based and harness the natural systems and processes of the earth.

On the other hand, reduction credits refer to projects that avoid the emission of carbon dioxide. This means that these projects prevent greenhouse gases from being emitted in the first place, such as building wind farms to create energy while avoiding emissions from fossil fuel combustion. These are measured by comparing emissions against a baseline scenario.

Generally speaking, removal credits are considered to be the top standard of carbon credits, as they are responsible for directly sequestering carbon dioxide directly from the atmosphere. Think of carbon removal credits as reversing the damage we’ve done and carbon avoidance credits as compensating for the damage we’re currently doing (as well as working to prevent it).

However, it can be difficult to create a cohesive and standardized framework by which to compare these various projects (i.e. comparing reforestation projects to technological solutions like direct carbon capture). As such, it is important to thoroughly research exactly what type of carbon projects you are investing in, as these differences can make the biggest impact.

These offsets, when combined with intensive and extensive decarbonization, are potent tools to address the climate crisis and to mitigate the amount of greenhouse gases in the atmosphere. While they are not an all-encompassing solution to the climate crisis, carbon offsets of both types are a vital instrument in helping companies meet climate commitments and work towards a more sustainable and greener future.