Under the most expansive version of the mitigation hierarchy – such as SBTi’s approach – carbon credits are not allowed to substitute for reductions that an actor is obliged to achieve in its allocated inventory emissions. However, SBTi and other initiatives have acknowledged that even the most aggressive scenarios for limiting global warming to 1.5⁰C allow for some ongoing emissions – in “hard to abate” sectors, for example – which at a global level will need to be “netted out” by efforts to remove CO2 from the atmosphere. Under SBTi’s “net zero” standard, therefore, an explicit provision is made for offsetting (or “neutralizing”) residual emissions with enhanced removals – which could in principle be achieved using removal-based carbon credits. In this case, carbon credits would not substitute for targeted inventory reductions, but would instead be an additional requirement needed to achieve net zero emissions.[1]
One consequence of SBTi and other “net zero” initiatives[2] has been a growing perception that removal-based carbon credits are a more valid – or defensible – form of carbon credit. That is, the idea is that “responsible use” of carbon credits means emphasizing removal-based credits over credits for avoided emissions, or perhaps excluding the use of avoided emission credits altogether. The underlying logic goes something like:
- Globally, countries must reduce GHG emissions to “net zero” by around the middle of the century, with any residual emissions balanced by CO2 removals.
- Organizations setting “science-based” targets should follow a path for reducing their own emissions that mirrors what must occur globally.
- This means organizations should aggressively reduce their own allocated emissions towards zero emissions and – if they have residual emissions that cannot practically be eliminated – they should balance them out by funding efforts to enhance removals.
This logic follows a formalistic interpretation of what individual companies should do to address climate change. One critique, for example, is that this approach based on a “fallacy of division,” which assumes that because net zero must be achieved globally, therefore all sub-global actors must themselves achieve net zero emissions using removals.[3] However, the notion has gained sufficient adherents that demand for removal-based carbon credits has grown substantially in recent years, leading (at the time of this writing in 2024) to scarcity and higher prices.[4]
A preference for removal credits might make sense if one accepts the premises listed above. A more questionable related development, however, has been a growing perception that removal-based credits are higher quality (as a class) than avoided emission credits. A common argument, for example, is that because removals can be directly observed (i.e., it is possible to directly measure either the flow of carbon into a reservoir, or the increase in carbon stocks in a reservoir), they are therefore more “reliable” than an avoided emission (which must be inferred by comparing actual emissions to a baseline). This argument is sometimes framed as a “math problem” – i.e., subtracting CO2 from the atmosphere lowers atmospheric concentrations, whereas not adding CO2 does not.
This misperception stems from a basic misunderstanding about GHG accounting for carbon credits. In short, regardless of the type of mitigation involved, carbon credits are always issued for mitigation achieved relative to a counterfactual baseline. In the case of removals, this means that a project must result in more (i.e., enhanced) removals than would have occurred in the project’s baseline scenario. As anyone who has tried to evaluate the additionality of a tree plantation can attest, the baseline for a removal activity can be just as uncertain as for an avoided emission project. What distinguishes high quality projects from low quality is the degree of confidence one has in a project’s baseline scenario – regardless of whether enhanced removals or avoided emissions are involved.[5]
[1] Other “net zero” standards and initiatives have adopted this same convention. The Oxford Principles for Net Zero Aligned Carbon Offsetting, for example, call for companies to first reduce emissions from within their own value chain “as much as possible,” and then offset remaining emissions using a portfolio of credits that – over time – increasingly emphasizes removals over avoided emissions, and removals with “durable” storage over shorter-duration removals (e.g., direct-air capture and storage in geologic reservoirs over tree planting).
[2] Other initiatives and standards endorsing some version of this approach include, for example, the UN Race to Zero campaign, the VCMI, and ISO.
[3] For elaboration of this critique, see here and here.
[4] See Figure 2 here, for example.
[5] For a full explanation of proper GHG accounting for removals and avoided emissions, see Möllersten, K., Dufour, M., Ahonen, H.-M. and Spalding-Fecher, R. (2024). Demystifying carbon removals in the context of offsetting for sub-global net-zero targets. Carbon Management, 15(1). 2390840. DOI:10.1080/17583004.2024.2390840.