Avoidance vs Removal Credits
Not all carbon credits are created equal. One of the most consequential distinctions in the voluntary carbon market is whether a credit represents the avoidance of an emission or the active removal of carbon from the atmosphere. This distinction has grown from an academic debate into a commercial and regulatory fault line that shapes pricing, buyer strategy, and the long-term credibility of net zero claims.
Defining the Two Categories
An avoidance credit (also called a reduction credit) represents a tonne of CO2 equivalent that was not emitted because of a project's intervention. The carbon was never released in the first place. Classic examples include protecting a forest that would otherwise be logged, avoiding methane from a landfill, or replacing a coal plant with solar generation.
A removal credit represents a tonne of CO2 equivalent that has been actively taken out of the atmosphere and stored somewhere stable - whether in trees, soil, geological formations, or durable materials. Afforestation projects, direct air capture, biochar, and enhanced weathering all generate removal credits.
Analogy: The Bathtub
Think of the atmosphere as an overflowing bathtub. Avoidance credits slow the tap - they reduce the rate at which water flows in. Removal credits scoop water out of the tub. Both help, but only removal actually reduces the total volume. When the tap is already off (i.e., when global emissions reach net zero), only removal can bring levels down further.
The Spectrum Between Avoidance and Removal
In practice, many projects sit somewhere along a spectrum rather than at either extreme. Consider an improved forest management (IFM) project: it keeps carbon locked in existing trees (closer to avoidance) while also allowing forests to grow and sequester new carbon (closer to removal). Similarly, a cookstove project avoids emissions from burning wood while potentially allowing forest regrowth on land that would have been cleared for fuel collection.
The ICVCM's Assessment Framework recognises this complexity by examining whether a methodology's emission reductions are primarily reductions in anthropogenic sources or enhancements in sinks. This distinction informs how stringently permanence requirements are applied.
| Attribute | Avoidance Credits | Removal Credits |
|---|---|---|
| Mechanism | Emissions not released | CO2 pulled from atmosphere |
| Examples | REDD+, landfill methane, RE | Afforestation, DACCS, biochar |
| Permanence risk | High (reversals possible) | Varies (biological to geological) |
| Typical price range | $3 to $25 per tonne | $50 to $1,000+ per tonne |
| Scale today | Dominant market share | Still nascent |
Why the Distinction Matters for Net Zero
Under the science of the Paris Agreement, achieving net zero requires bringing gross emissions as close to zero as possible and using removals to neutralise only the truly residual emissions that cannot be eliminated. This means avoidance credits, however valuable in the near term, cannot serve as a long-run substitute for actual decarbonisation.
The critical implication for buyers is this: a company claiming to "offset" its emissions with avoidance credits is not actually removing its historical or current emissions from the atmosphere. It is contributing to the collective effort of slowing emissions growth, which is valuable, but it should not be communicated as equivalence with direct decarbonisation.
The Oxford Principles Hierarchy (Revised 2024)
The Oxford Offsetting Principles, developed by the Smith School of Enterprise at the University of Oxford, provide a widely cited framework for thinking about credit quality over time. The four core elements call for: (1) cutting own emissions first and ensuring credit integrity, (2) transitioning toward carbon removal offsetting for residual emissions by the net zero target date, (3) shifting to removals with durable storage (low risk of reversal) to neutralise any residual emissions, and (4) supporting development of innovative integrated approaches. The hierarchy explicitly states that organisations should progressively shift their portfolios from avoidance toward durable removal as they approach their net zero target date.
Durability of Storage: The Third Dimension
Within the removal category, a further critical distinction exists between biologically stored carbon and geologically stored carbon. A forest can store carbon for decades, but it is vulnerable to fire, disease, drought, and land-use change. Carbon stored in geological formations or mineralised into rock carries negligible reversal risk over human timescales.
This durability dimension is why biochar (hundreds to thousands of years) and enhanced weathering (effectively permanent) command premiums over nature-based removals, even though nature-based solutions remain far cheaper and are available at greater scale today.
The ICVCM's Core Carbon Principles do not formally categorise credits as avoidance or removal, but the Assessment Framework's criteria for permanence and robust quantification apply with particular rigour to removal activities. For biological removals, programs must demonstrate buffer pools or insurance mechanisms capable of replacing reversed credits. For geological removals, the framework requires evidence of long-term monitoring plans. The ICVCM has signalled ongoing work to develop category-specific guidance that may eventually differentiate quality thresholds by project type.
Practical Implications for Buyers
For corporate buyers constructing a credit portfolio today, the avoidance-removal distinction should inform both near-term and long-term strategy. Near-term purchasing of high-quality avoidance credits can fund critical mitigation in forests and communities while the removal market scales. But a credible net zero strategy should also include a growing proportion of removal credits over time, particularly durable removals, as the company approaches its target date.
Example: Microsoft's Portfolio Shift
Microsoft has publicly committed to being carbon negative by 2030 and removing all historical emissions by 2050. To operationalise this, the company has progressively moved its credit portfolio away from cheap avoidance credits toward higher-cost removal credits including direct air capture, biochar, and enhanced weathering. In its 2024 sustainability report, Microsoft disclosed purchasing removal credits at costs exceeding $200 per tonne, reflecting the premium placed on durable, verifiable storage.
Key Takeaways
- 1Avoidance credits prevent emissions from being released; removal credits actively pull CO2 out of the atmosphere
- 2The Oxford Offsetting Principles call for organisations to progressively shift toward durable carbon removals as they approach their net zero target dates
- 3Within removals, durability of storage matters: geological storage is more permanent than biological storage
- 4High-quality avoidance credits remain valuable for near-term mitigation finance, but cannot substitute for genuine decarbonisation in a credible net zero strategy