Professional Reference. Page updated September 2025. This overview targets corporate buyers and project sponsors who need a practical map of credit types and the tradeoffs behind them.
What Are the Different Types of Carbon Credits?
Credits fall into two master buckets: reductions/avoidance and removals. From there, they split by activity, methodology, and registry program. Price and risk hinge on additionality, permanence, leakage, data quality, and who the end buyer is.
Master Types
Reductions/Avoidance | Removals
Channels
Voluntary, CORSIA, Article 6 paths
Signals
Methodology, audits, labels
Outcome
Eligibility, realized $/t, claim strength
Two Master Categories
Reductions & Avoidance
Projects that prevent emissions compared with a credible baseline. Think methane capture at landfills, improved forest management that avoids additional harvest, or efficient cookstoves that cut fuel use. These credits lower the rate of emissions entering the atmosphere.
Removals
Projects that pull CO₂ from the air and store it. Examples include reforestation, soil carbon, biochar, and direct air capture with storage. Buyers often pay more for durable removals, but lead times and costs can be higher.
A third dimension is program context: voluntary credits in major registries, aviation eligibility under CORSIA, and units with Article 6 authorization for specific uses. Those contexts affect demand and claims, even when the underlying activity is the same.
Nature-Based Credits
Afforestation, Reforestation, Revegetation (ARR) — Removal
- Planting or restoring tree cover and ecosystems that absorb CO₂.
- Key issues: survival rates, growth curves, permanence, community agreements.
- Timeline: typically 12–24 months to first issuance; multi-year programs thereafter.
Improved Forest Management (IFM) — Reduction/Removal mix
- Changes to management that increase carbon stocks and/or avoid emissions.
- Key issues: baselines, leakage outside the project area, buffers for reversal risk.
- Often used by large private and community forest holders.
REDD+ (Avoided Deforestation/Degradation) — Reduction
- Prevents loss of forests that would emit CO₂ if cleared or degraded.
- Project-level and jurisdictional flavors; nested designs are common.
- Scrutiny: baselines, leakage, permanence, and social safeguards.
Blue Carbon (Mangroves, Seagrass, Saltmarsh) — Removal/Reduction
- Restoration or protection of coastal systems with high carbon density.
- Key issues: hydrology works, tenure and fisheries, sediment carbon accounting.
- Long lead times, but strong co-benefits when done right.
Soil Carbon — Removal
Practice changes (e.g., cover crops, reduced tillage) that increase soil organic carbon. Data demands are high: sampling design, permanence claims, and farmer engagement all need proof. Price depends on method, region, and buyer comfort with measurement.
Methane & Industrial Abatement Credits
Landfill Gas & Wastewater Biogas — Reduction
- Capture and destroy methane via flares or energy use.
- Strong climate impact due to methane’s high warming potential.
- Key issues: metering QA/QC, uptime, permits, grid or energy offtake.
Agriculture Methane (Manure, Rice) — Reduction
- Digesters, covered lagoons, and practice changes that cut methane.
- Watch data collection and maintenance; service models matter.
Industrial Gases (N₂O, HFCs) — Reduction
- Process upgrades or destruction of potent gases.
- Some programs limit these due to policy overlap and additionality tests.
- Check current eligibility before you plan a purchase.
Fuel Switching & Energy Efficiency — Reduction
- Projects that reduce fossil use or improve energy performance.
- Additionality and baseline treatment can be tough in certain regions.
Household & Energy Access Credits
Clean Cookstoves — Reduction
- Efficient or alternative stoves that reduce fuel use and emissions.
- Data hinges on distribution, usage, and sampling protocols.
- Often fast to first issuance when operations are tight.
Water Purification — Reduction
- Devices or systems that avoid boiling water with biomass.
- Requires strong monitoring of use and performance over time.
Distributed Renewable & Microgrids — Reduction
Small-scale energy access projects can qualify where grid baselines and policy allow. Evidence of additionality and proper baselines is non-negotiable.
Engineered Removal Credits
Biochar — Removal
- Thermochemical conversion of biomass to stable carbon.
- Key issues: feedstock proof, lab testing, permanence claims.
- Often faster to issue than large forestry, with careful QA.
Direct Air Capture with Storage (DACCS) — Removal
- Captures CO₂ from ambient air and stores it (e.g., geologic).
- High cost, strong buyer interest for durable removals.
- Metering, energy source claims, and storage monitoring are central.
BECCS — Removal
- Bioenergy with carbon capture and storage.
- Watch lifecycle accounting, land use interactions, and storage permanence.
Mineralization & Enhanced Weathering — Removal
- Accelerates natural processes that lock CO₂ in minerals.
- Methods are growing; measurement and MRV are still maturing.
Program Context: Project, Programmatic, and Jurisdictional
Project-Level & Programmatic
Single projects or coordinated activities under one methodology. Good fit for household devices, methane, biochar, and many forest projects.
Jurisdictional REDD+
Larger-scale accounting at province or national level, often with nested project pathways. Offers policy integration and wider leakage control, but requires careful alignment on baselines and benefit sharing.
CORSIA-Eligible Credits
Credits meeting aviation program rules for specific phases. Useful for airlines and suppliers to that channel. Eligibility is program and vintage specific.
Article 6 Authorization
Some projects pursue host-country authorization for certain uses. When present, it affects claim language and buyer pools. Check the current policy and contract for transfer rights and “corresponding adjustment” handling.
Attributes That Drive Price and Risk
Core Attributes
- Registry & Methodology — the rulebook and audit trail.
- Vintage — monitoring period; buyers often prefer recent vintages.
- Permanence & Buffers — how long carbon stays stored and what happens if it reverses.
- Leakage — whether emissions shift outside the boundary.
- Data Quality — sampling design, calibration, and chain of custody.
Labels & Co-Benefits
- Integrity labels(e.g., CCP under ICVCM programs) that screen methods/programs.
- Co-benefit standards(e.g., biodiversity and community) that help justify premiums.
- Use Eligibility(e.g., CORSIA phase rules, Article 6 status) that opens specific demand.
Labels and eligibility do not fix a weak file. Buyers still test rights, baselines, safeguards, and delivery history.
Quick Comparison by Type
| Type | Category | Typical Time to First Credits | Price Tendencies | Key Risks |
|---|---|---|---|---|
| ARR (reforestation) | Removal | 12–24 months | Mid to high with co-benefits | Survival rates, permanence, land tenure |
| IFM | Reduction/Removal mix | 12–24 months | Mid; depends on baseline rigor | Leakage, measurement integrity |
| REDD+ | Reduction | 18–36 months (large) | Wide range; quality drives outcome | Baselines, buffers, safeguards |
| Blue carbon | Removal/Reduction | 18–36 months | Higher with strong science | Hydrology, tenure, monitoring complexity |
| Soil carbon | Removal | 12–24 months | Mid; data-dependent | Sampling design, permanence |
| Cookstoves | Reduction | 6–12 months | Mid; scales quickly | Usage data, device servicing |
| Landfill gas | Reduction | 9–18 months | Mid; stable once running | Permits, metering QA |
| Biochar | Removal | 6–12 months | Mid to high with solid QA | Feedstock proof, lab protocols |
| DACCS | Removal | 12–24 months | High; limited supply | Cost, energy source claims |
| Industrial gases | Reduction | 9–18 months | Variable; program limits apply | Policy overlap, additionality tests |
How to Pick the Right Mix
For Corporate Buyers
- Define claim language first, then select credit types that fit it.
- Balance removals and reductions by cost, supply, and timing.
- Check eligibility (e.g., aviation) and any Article 6 needs early.
- Ask for serial-level transparency and a real data room.
For Project Sponsors
- Pick a method you can prove with data, not hope.
- Build a file buyers can read without hand-holding.
- Line up financing that matches your issuance curve (streams, ERPAs, equity).
- Prepare for replacement terms if delivery slips.
Need Help Selecting Credit Types or Building Supply?
We guide buyers and sponsors on method selection, eligibility, and sale processes. Scope covers rights and baseline checks, MRV and safeguards, price benchmarking, and financing options including carbon streams and forward offtakes.
Start Your IntakeFAQ
Are removals “better” than reductions?
Different job, different tool. Many buyers want both: reductions to cut near-term emissions and removals to deal with residuals. Price and lead time differ. Model your needs and budget.
Why do older renewable energy credits price lower?
In many regions, new projects struggle with additionality against current policy and economics. Buyers lean toward credits with a stronger case for changing outcomes.
What labels should I look for?
Integrity screens (e.g., CCP-approved programs), co-benefit certifications, and any use-case eligibility (e.g., aviation, Article 6 authorization). Labels help, but they don’t replace a clean file.
How do jurisdictional credits interact with projects?
Nested systems set rules so project accounting fits jurisdictional totals. Check the nesting plan, baseline alignment, and benefit sharing before you buy or develop.
Disclaimer. This page is for professional audiences. It is not investment advice and it is not a solicitation. Eligibility rules, program decisions, and buyer policies change. Always confirm current standards and contract terms before you commit capital.
