Carbon removals and reductions: What’s the difference and why does it matter?

When discussing decarbonization strategies, there’s a dizzying array of terms and options. Many of which, including the use of carbon removals and carbon reduction credits – can be hard to understand and navigate.

First, it’s important to note carbon removals and carbon reduction credits should not be used as a replacement for direct emission reduction efforts within an organisation’s supply chain, rather, they are complementary tools in decarbonization efforts.

What are carbon removals and carbon reductions credits?

Carbon removals actively remove CO2 from the atmosphere

Carbon removals refer to natural, engineered or hybrid solutions that remove CO₂ from the atmosphere and durably store it.

Nature-based solutions include techniques such as afforestation and reforestation. Engineered solutions include methods such as Direct Air Capture (DAC) and Bioenergy with Carbon Capture and Storage (BECCS). Carbon Removals by Drax uses BECCS technology to generate renewable electricity while permanently removing CO2 from the atmosphere.

Carbon reductions reduce the amount of CO2 released into the atmosphere

Carbon reductions refer to a decrease in direct emissions. Carbon reductions work by reducing the amount of carbon dioxide entering the atmosphere.

Wherever possible, organizations should reduce the CO(or greenhouse gas equivalent) they emit into the atmosphere. Recognizing that some decarbonisation efforts take time, carbon reduction credits have a role to play in enabling companies to contribute to climate action and reduce hard-to-abate or residual emissions, provided this does not come at the cost of direct emission reductions. Reduction projects include protecting existing carbon sinks, such as forests and wetlands, or efficient cookstoves.

Carbon removal and reduction projects underpin carbon credits markets

Governments and organizations are working to rapidly reduce direct emissions. They aim to meet climate goals and limit global warming to 1.5°C above pre-industrial levels. It’s impossible to achieve net zero without substantial emissions reductions. Experts also stress the importance of removing gigatons of carbon annually by 2050 to counterbalance residual emissions.

“CDR is a key element in scenarios that likely limit warming to 2 degrees C or 1.5 degrees by 2100.” IPCC 2022

Carbon markets and carbon pricing mechanisms play a key role in financing, incentivizing, and scaling carbon removal and reduction projects. A carbon credit is equivalent to the reduction or removal of one metric tonne of CO2 or carbon dioxide emissions (CO2e).

Organizations can buy carbon credits to offset hard-to-abate emissions or emissions beyond their control. In doing so, they must ensure the credits remove emissions. This is the only way they can use the credits to truly balance their carbon footprint and climate impact.  However, assessing the impact of carbon credits depends on where and how these credits are generated, along with the different methodologies behind them. These factors determine the extent to which carbon credits can effectively mitigate greenhouse gas emissions and achieve climate targets.

Carbon credits aren’t all equal

The projects behind carbon credits span engineered-technologies, nature-based projects, and hybrid solutions. All can have real climate benefits. But only carbon dioxide removals (CDRs) remove existing CO2 from the atmosphere. Among CDRs, removal methods with long-term and permanent storage reduce the risk that carbon removed will re-enter the atmosphere.

The world needs all these solutions – there’s no silver bullet.

Human activity is adding emissions faster than natural processes can remove them. Scaling up engineered, hybrid and natural solutions will be crucial to secure the planet’s future.

Credits that reduce the amount of carbon in the atmosphere are effective. They should play a role in your organization’s decarbonization strategy. However, guidance from the Oxford Offsetting Principles and Science Based Targets initiative (SBTi) points towards having a portion of removal credits in your portfolio today and prioritising increasing the number of them in the coming years.

Innovative and forward-thinking organizations can secure carbon removal credits now, before demand exceeds supply and prices rise. As well as benefitting the planet and your bottom line, acting today will help accelerate the growth of the market to the scale required for net zero.

Get in touch with our experts to discuss how carbon removals can support your organization’s decarbonization journey.