Carbon Removal Credits (CRC): Driving Net-Zero Futures

Abstract

As global efforts to mitigate climate change intensify, achieving carbon neutrality has become a central objective for governments, corporations, and financial institutions. While emissions reduction remains the primary pathway, it is increasingly recognized that emission abatement alone is insufficient to meet mid-century net-zero targets. Carbon Removal Credits (CRC), which represent the verified removal of carbon dioxide from the atmosphere, have emerged as a critical complementary mechanism. This research report examines the concept, mechanisms, market development, and policy relevance of Carbon Removal Credits, analyzing their role in supporting carbon neutrality and fostering the transition toward a green economy. The report also evaluates key challenges and future prospects, offering insights into how CRC can be effectively integrated into climate strategies.

1. Introduction

Climate change poses one of the most profound systemic risks to global economic stability and ecological sustainability. According to the Intergovernmental Panel on Climate Change (IPCC), limiting global temperature rise to 1.5°C above pre-industrial levels requires rapid and deep reductions in greenhouse gas (GHG) emissions, alongside the large-scale removal of carbon dioxide (CO₂) from the atmosphere. In this context, carbon neutrality—defined as achieving net-zero carbon emissions—has become a widely adopted policy and corporate goal.

Carbon markets have long served as a key instrument for cost-effective emissions mitigation. Traditional carbon credits, however, are primarily based on emissions avoidance or reduction, such as renewable energy projects or energy efficiency improvements. In contrast, Carbon Removal Credits (CRC) represent a newer class of climate instruments that focus explicitly on removing existing CO₂ from the atmosphere and storing it durably. As residual emissions from hard-to-abate sectors persist, CRCs are increasingly viewed as indispensable for achieving true net-zero outcomes.

2. Concept and Definition of Carbon Removal Credits

Carbon Removal Credits are tradable units that certify the verified removal of one metric ton of CO₂ (or its equivalent) from the atmosphere, coupled with long-term or permanent storage. Unlike conventional offset credits, CRCs are outcome-based and require demonstrable net-negative emissions.

Carbon removal can be broadly categorized into two types:

• Nature-based solutions (NbS): These include afforestation, reforestation, soil carbon sequestration, mangrove restoration, and biochar applications.
• Technological or engineered solutions: These include Direct Air Capture with Carbon Storage (DACCS), Bioenergy with Carbon Capture and Storage (BECCS), enhanced weathering, and ocean-based removal technologies.

A critical characteristic of CRCs is durability, referring to the length of time carbon remains sequestered. High-quality CRCs typically emphasize storage horizons ranging from decades to centuries, or even millennia in the case of geological storage.

3. The Role of CRC in Achieving Carbon Neutrality

3.1 Addressing Residual Emissions

Even under ambitious decarbonization pathways, certain sectors—such as aviation, cement, steel, agriculture, and shipping—are expected to retain residual emissions due to technological and economic constraints. CRCs provide a mechanism to neutralize these unavoidable emissions, thereby enabling organizations and countries to meet net-zero commitments.

3.2 Enhancing Climate Integrity

Carbon neutrality claims based solely on emissions reductions may suffer from credibility issues if reductions are overstated or double-counted. CRCs, when governed by rigorous monitoring, reporting, and verification (MRV) frameworks, enhance the environmental integrity of net-zero strategies by delivering measurable and additional climate benefits.

3.3 Supporting Long-Term Climate Targets

The IPCC emphasizes that global net-negative emissions will be required in the second half of the 21st century to stabilize the climate. CRCs lay the foundation for scaling carbon removal infrastructure and investment today, reducing future climate mitigation costs and risks.

4. CRC and the Green Economy Transition

4.1 Economic Opportunities and Green Growth

The development of CRC markets stimulates innovation, investment, and job creation across multiple sectors. Carbon removal technologies, in particular, require advanced engineering, digital monitoring systems, and high-skilled labor, contributing to the growth of green industries.

Nature-based CRC projects also generate co-benefits, including biodiversity conservation, improved soil fertility, water regulation, and rural development. These outcomes align closely with the broader objectives of a green economy, which seeks to decouple economic growth from environmental degradation.

4.2 Mobilizing Private Capital

CRC markets offer a mechanism to channel private capital into climate-positive activities at scale. Corporations seeking to meet voluntary net-zero commitments increasingly invest in high-quality CRCs, creating demand signals that accelerate technology deployment and cost reductions through learning effects.

Furthermore, CRCs are increasingly integrated into sustainable finance instruments, such as green bonds, climate funds, and impact investment portfolios, strengthening the linkage between climate action and financial markets.

5. Market Development and Governance Frameworks

5.1 Voluntary Carbon Markets (VCM)

Currently, most CRC transactions occur within voluntary carbon markets. Leading standards organizations—such as Verra, Gold Standard, Puro.earth, and the American Carbon Registry—are developing dedicated methodologies for carbon removal projects. These standards emphasize additionality, permanence, leakage prevention, and robust MRV processes.

5.2 Emerging Compliance Pathways

While CRCs are predominantly voluntary, there is growing interest in their integration into compliance carbon markets. Policymakers in regions such as the European Union and North America are exploring regulatory frameworks that recognize carbon removals as part of national climate strategies, particularly under Article 6 of the Paris Agreement.

5.3 Measurement, Reporting, and Verification (MRV)

MRV remains a central challenge for CRC credibility. Technological removals often offer higher measurement accuracy but face cost and scalability barriers. Nature-based removals, while more scalable in the near term, are subject to uncertainties related to permanence and climate resilience. Advancements in remote sensing, digital MRV platforms, and lifecycle assessment methodologies are critical to addressing these challenges.

6. Key Challenges and Risks

6.1 Cost and Scalability

Many engineered carbon removal technologies remain expensive, with costs ranging from USD 100 to over USD 600 per ton of CO₂ removed. Achieving cost reductions requires sustained policy support, demand certainty, and technological learning.

6.2 Risk of Mitigation Deterrence

A frequently cited concern is that reliance on CRCs may delay emissions reduction efforts, a phenomenon known as mitigation deterrence. To address this risk, best-practice frameworks emphasize the use of CRCs only for residual emissions, after aggressive abatement measures have been implemented.

6.3 Equity and Environmental Justice

CRC projects, particularly nature-based ones, must ensure respect for land rights, community participation, and fair benefit sharing. Failure to address social dimensions may undermine project legitimacy and long-term success.

7. Future Outlook and Policy Implications

The future of Carbon Removal Credits will be shaped by policy alignment, market maturation, and technological innovation. Governments can play a catalytic role by:

• Establishing clear definitions and quality criteria for CRCs
• Providing incentives and public funding for early-stage carbon removal technologies
• Integrating carbon removal into national net-zero roadmaps
• Supporting international cooperation and harmonized standards

As carbon neutrality commitments expand globally, demand for high-integrity CRCs is expected to grow significantly. Over time, CRCs may evolve from niche instruments into a core pillar of climate and green economic policy.

8. Conclusion

Carbon Removal Credits represent a vital and evolving tool in the global response to climate change. By enabling the neutralization of residual emissions and supporting net-negative pathways, CRCs complement emissions reduction efforts and enhance the credibility of carbon neutrality claims. Beyond their climate mitigation role, CRCs contribute to the development of a green economy by fostering innovation, mobilizing capital, and delivering environmental and social co-benefits.

However, realizing the full potential of CRCs requires robust governance, transparent MRV systems, and a clear prioritization of emissions reduction. When applied responsibly and strategically, Carbon Removal Credits can play a decisive role in advancing both carbon neutrality and sustainable economic transformation.