In the face of the climate emergency and growing commitments toward global carbon neutrality, more and more companies are engaging in climate contribution initiatives through the Voluntary Carbon Market (VCM). In this context, not all carbon credits are created equal, and it becomes essential to understand how to compare them in order to make informed and responsible decisions.
The voluntary carbon market is based on specific methodologies tailored to each type of project, all governed by certification standards. Each project aims to reduce or sequester greenhouse gas (GHG) emissions. One carbon credit represents one metric ton of CO₂ (or equivalent) avoided or removed from the atmosphere. However, the quality, impact, and reliability of these credits can vary significantly. Therefore, being able to distinguish between different types of carbon credits is crucial.
Below are key elements to help you better understand the types of carbon credits available.
There are two main categories of carbon credits based on their climate action mechanism:
Avoidance provides an immediate impact but may be less permanent, while removal offers more stable, long-term benefits, albeit with a slower effect. Some initiatives, such as regenerative agriculture, can combine both approaches.
Beyond their climate impact, carbon credits are also classified based on the type of project that generates them:
Each project type comes with its own characteristics in terms of cost, permanence, risk, and co-benefits. The key is to adopt a balanced climate contribution strategy, building a diversified carbon credit portfolio with varying impacts—and above all, to ensure the quality of the selected credits.
A high-quality carbon credit is one where a ton of CO₂ is genuinely avoided or sequestered, and which meets the following criteria:
Some credits go beyond these minimum requirements by offering additional environmental or social co-benefits—such as biodiversity conservation, improved public health, increased local income—which often align with several United Nations Sustainable Development Goals (SDGs).
The highest-quality credits can receive the Core Carbon Principles (CCP) label, granted by the Integrity Council for the Voluntary Carbon Market (ICVCM), certifying that they meet the most rigorous international standards.
Created in 2003 by WWF and other NGOs, Gold Standard focuses on projects with strong social and environmental impact. It primarily covers: Nature-based projects (e.g., forest preservation, reforestation), Community-based initiatives (e.g., cookstoves, water access), Energy efficiency and renewable energy.
Gold Standard is known for its strict co-benefit requirements, offering highly traceable and transparent credits—often at a higher price point.
Managed by Verra, VCS is the most widely used standard globally, covering nearly all project types. Costs vary greatly depending on the project. Although some methodologies have faced controversy, it remains a market benchmark. To enhance social and environmental dimensions, Verra offers:
These additional labels and tags help buyers align their purchases with specific priorities: biodiversity, social impact, technological innovation, etc.
Other standards include: Plan Vivo: focused on small-scale, community-led projects, especially in agroforestry, ACR, and CAR: North American standards targeting specific regions or project types.
Puro, Isometric, and Rainbow: focused on technological and circular economy projects.
In the VCM, the price of a carbon credit is influenced by: Market supply and demand, Project type and implementation costs, Project location (labor, infrastructure), Certification standard, Presence of co-benefits, which can lead to premium pricing.
Between 2020 and 2024, prices fluctuated: rising steadily until 2022, then declining due to concerns about credit quality and transparency. Forecasts for 2025 anticipate a price rebound, particularly for premium-quality credits.
Comparing carbon credits makes it possible to distinguish their impact, nature, and cost. Avoidance credits reduce emissions quickly but with sometimes less durable effects, while sequestration credits provide more stable yet progressive action.
Nature-based projects generally generate large volumes of credits with numerous co-benefits, but they carry a high risk of non-permanence. In the ClimateSeed portfolio, their prices range from €4 to €100 for avoidance and from €15 to €100 for removal.
Households and Community-based credits, also issued in large volumes and rich in social and biodiversity co-benefits, are often ex-post and affordable, with low prices ranging from €5 to €15.
Technological projects such as renewable energy require high upfront investment but low maintenance costs; they deliver reliable credits with low non-permanence risk and are among the cheapest on the market (€2 to €10).
In contrast, hybrid or engineered removal projects generate smaller volumes of credits with fewer co-benefits but high permanence. Their prices, however, are significantly higher: from €100 to €600 for hybrids and from €100 to over €1,000 for engineered projects.
To summarize, the carbon credits available on the market are highly diversified. To maximize your climate impact while limiting risks, a portfolio approach is recommended.
The ideal approach is to ensure the quality of the credits selected, often through leading market players, to diversify the types of projects for a balanced impact, and to seek expert guidance in building a coherent, credible, and meaningful carbon contribution strategy.
At ClimateSeed, we support our clients in creating a portfolio of carbon projects tailored to their needs and challenges.
Please feel free to contact us to learn more about our approach.
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