Here are the right reasons to buy carbon removal credits

The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.

Many companies are confused about whether they should purchase only removal credits. These are credits that pull carbon dioxide out of the atmosphere —  from planting trees to novel technologies, such as machines that pull CO₂ from the air. By contrast, other credit types reduce emissions at the source, by destroying methane emissions from a landfill, reducing deforestation or other methods.

Which type should your company buy? The guidance is mixed: The Science Based Targets initiative’s (SBTi’s) Corporate Net-Zero Standard historically defined a role only for removals, driving many companies to focus solely on this credit type. Meanwhile, the Oxford Offsetting Principles suggest a dynamic portfolio mix, consisting of a higher percentage of reduction credits today and transitioning over time to removals. 

Recently, the two have converged. SBTi revised its guidance and now recognizes reduction credits as a way for companies to manage responsibility for ongoing emissions in the near term (before their “net-zero” target deadline). Here’s how things stand now:

Wrong reasons to buy removals

Removals are ‘more beneficial to the atmosphere’

A classic analogy is that emissions fill the bathtub (the atmosphere), while removals are a drain removing water from the tub. But today, the bath is being filled more than 20 times faster than it is being drained. And the drain — which today consists almost entirely of forest-based removals — is about 2 billion metric tons of CO₂ per year, while the tap, mostly fossil fuel emissions, is 42 billion a year. In short: We desperately need to turn off the tap. Whether we stop a ton of CO₂ from being emitted or remove a ton, the impact on the level of water in the bathtub is the same.  

Removal credits have ‘higher greenhouse gas integrity’

There is no intrinsic quality difference between removal-based credits versus reduction credits. Calyx Global has generated more than 1,000 carbon credit ratings and finds a wide quality range within both categories. In short: Removal is not a proxy for integrity. Some removal projects are excellent, some are hollow, and the same is true of reductions. Removals and reductions are nearly equally distributed across the rating scale.

Planting trees, for example, is the top generator of removal credits. But many reforestation credits available today are from monoculture plantations designed for harvesting and selling the timber, not carbon removal. At the same time, reduction credits can be high quality. For example, reducing powerful greenhouse gases from old refrigerant equipment, particularly in countries that do not have facilities to destroy the material, is among the highest quality credit sources in the market today.

Right reasons to buy removals

We need to rapidly scale carbon removal capacity 

Although it is critical to “turn off the tap,” there are good reasons to support removals by investing in such credits. The goal, after all, is to reach global net-zero, and removals will be critical to offset residual emissions. Furthermore, the world is on a pathway that is likely to exceed safe climate change. To pull temperatures back down after this “climate overshoot,” the drain must get much bigger. Scientists estimate that the world will need to remove around 10 billion metric tons of CO₂ per year by mid-century to align with Paris Agreement goals. Building that capacity will take concerted effort for decades.

Right now the cost of novel removal technologies is prohibitively high. They need support to bring down their cost — what Bill Gates calls ‘paying down the Green Premium.’ According to Gates, “Unless we can bring these green premiums down by about 95 percent through innovation, I don’t think we’ll hit the goal of zero by 2050.” Purchasing novel removals credits contributes to reducing green premiums for technologies we will absolutely need.

Nature-based removals are good for people and the planet

Nature is responsible for more than 99 percent of carbon removal today. Managing and restoring ecosystems are time-tested and affordable carbon removal solutions. Furthermore, these solutions can have numerous benefits beyond carbon removal. Intact ecosystems protect water, buffer against floods and hold most of the planet’s terrestrial biodiversity. Tropical forests generate much of their own rainfall and seed rain far downwind, so losing them puts agriculture across whole regions at risk. For hundreds of millions of people, forests directly supply food, fuel and income.

However, often the best thing we can do for a forest is to protect it from destruction. Again, label isn’t a proxy for impact: A reduction credit that stops irrecoverable carbon loss often has a greater impact than a removal credit from planting trees. Restoration earns its place where deforestation pressure is low or restoration opportunity dwarfs what’s left to protect.

The way forward: How to decide on removals or reductions

This is not an either/or question: We need both types of credits. The more salient question is what is the right portfolio mix? Removals are more expensive, especially novel removals. Credits that reduce emissions, such as reducing methane from manure or destroying refrigerant gas, tend to be less expensive, but are often less charismatic and harder to explain.

So what should companies purchase? Our guidance is simple:

Spend what you can

The phrase “common but differentiated responsibility” is often used within international climate negotiations. It means every country should reduce emissions, but wealthier nations are expected to do more. This applies to companies as well: A more profitable company might have a higher percentage of removals in their portfolio, while a less profitable company could focus on relatively cheaper reduction credits. Find the portfolio mix that fits your budget. 

Focus on quality 

High-quality credits exist across both removals and reductions for those who work to find them. For example, super-pollutant credits (such as landfill gas) often sell for $5 to $10 a metric ton and can be very high quality.

Neither type of credit is superior; there’s no such thing as  “second class” climate action. The only useful differentiation is between the quality of the credits themselves — and between the companies who do something and those who do nothing.