Carbon Markets Explained: Carbon reduction and removal credits
What is the difference between a carbon reduction and a carbon removal credit?
What is a carbon credit?
A carbon credit represents climate action projects that reduce, remove, or avoid greenhouse gas emissions into the atmosphere. It is a unit of measurement that is verifiable and certified to offset one tonne of emitted carbon dioxide or other greenhouse gases. It is a way of putting a price on carbon emissions and creating a financial incentive for individuals, sustainable companies, and governments to reduce their greenhouse gas emissions.
The goal of carbon credits is to create a market-based mechanism for reducing greenhouse gas emissions and mitigating climate change. By creating a financial incentive to reduce carbon emissions, carbon credits can help to drive investment into climate solutions.
What is a carbon reduction credit?
A carbon reduction credit represents the avoided release of one tonne of CO2 that would have been emitted without the efforts of the project producing the credit. This includes projects which protect an endangered forest or make a switch from fossil fuel to renewable energy. Carbon reduction credits make up the vast majority of the traditional voluntary carbon market (VCM).
Carbon reduction credits are a market-based tool used to incentivize and support efforts to reduce greenhouse gas emissions and mitigate climate change. Projects maintaining rigorous scientific standards and proving carbon reduction outcomes earn these credits for their work. Credits can then be sold or traded to other parties, such as sustainable companies or governments, who need to offset their own greenhouse gas emissions.
Carbon reduction credits on Regen Marketplace
In addition to Regen Registry credits, on Regen Marketplace, City Forest Credits are urban forestry projects in the United States, protecting forests at the urban core from the threat of urban expansion. Urban forests create more climate-resilient cities, sequester carbon, protect wildlife habitat and open space, and enhance the aesthetic appeal of cities. City Forest Credits are the US national standard for greenhouse gas emission reduction for urban forestry protection.
In a crisis, you deploy all tools. Carbon removals are clearly valuable. But projects that preserve mature forests in and around cities from development not only reduce the emissions from tree removal, they prevent all the emissions from the human activities in developing that site and occupying it for hundreds of years to come. Only the carbon in the trees is credited in those projects, but the avoided emissions are multiples of the carbon in the trees saved from removal. Technically, those are avoided emissions, but they deliver a huge carbon and climate benefit while also opening up the forest to public access to “nearby nature,” with all the equity and human health impacts.
-Mark McPherson, Executive Director at City Forest Credits
Learn more about City Forest Credits →
What is a carbon removal credit?
A carbon removal credit represents the removal of one tonne of carbon that has already been emitted into the atmosphere. Carbon removal strategies include reforestation, soil carbon sequestration, and wetland restoration.
Like carbon reduction credits, carbon removal credits serve as a financial incentive. Projects maintaining rigorous scientific standards and proving carbon removal outcomes earn these credits for their work. Funds raised from the sale of the credits can be used to mitigate operational costs.
Carbon removal credits have seen a growing rise in popularity in recent history. This is explained in part by an increase in demand for high quality credits. Carbon removal credits often have inherent co-benefits that increase their impact and value.
Carbon removal credits created through Regen Registry
Created via Regen Registry, Monte Dinero produces carbon removal credits in Argentina, representing soil carbon sequestered through holistic sheep grazing. The farm, owned and operated since 1880, specializes in sheep production and is renowned for its exceptional wool. Situated in a bunchgrass prairie, it was the first farm in South America to apply holistic planned grazing, a livestock management practice that helps ensure land regeneration, which is monitored via the Grasslands Regeneration & Sustainability Standard.
Learn more about Ruuts credits→
How are carbon reduction (offset) and carbon removal credits used?
Carbon reduction and removal credits can be bought and sold on carbon markets, allowing sustainable companies that emit carbon to purchase the credits and offset their carbon emissions. After a corporate sustainability department purchases a carbon credit, the credit is permanently retired, so it cannot be reused.
Both carbon reduction credits and carbon removal credits are required for the larger goal of global carbon neutrality or net-zero emissions to combat climate change. Carbon removal credits are often seen as the preferred strategy, but carbon reduction efforts are critical for achieving global goals in a timely manner. The existing carbon removal market cannot meet the needs of current carbon emissions alone.
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Explore our pipeline of Regen Registry credits spanning carbon removal, emissions reductions, and biodiversity. Check out our 2023 credits look book →
