Carbon removal and avoidance: a buyer’s guide

Illustration of bio-oil sequestration carbon removal, by Yukai Du

This is the make-or-break decade for climate action, and companies are leading the charge. But while there’s now wide consensus on the initial steps—measuring footprints, sourcing clean power, and decarbonizing supply chains—there’s still a lot of confusion about what comes after.

For companies with climate commitments like a net zero target, emissions cuts will not be enough: remaining output must be neutralized in some way, usually with carbon credits. These credits are also helpful to bridge the gap while a business is implementing its reduction plans, which can take time to scale. 

However, carbon credits fall along a confusing spectrum of impact and availability: some are empty greenwashing, and others are critical to the climate solution.

This guide is about the real-world impact of each credit type, and how to source them in a way that meets corporate goals while making a meaningful difference in the climate fight.

Carbon avoidance vs. carbon removal

Once a company cuts emissions as heavily as they can, what do they do about the remainder?

The difference may seem semantic, but it matters. To avoid the worst effects of climate change, we need to remove billions of tonnes of CO2e by the middle of the century. That will only happen if companies and governments fund carbon removal solutions today so that they can be deployed cost-effectively at scale tomorrow.

This doesn’t mean that avoidance projects can’t be part of the solution though, especially within a portfolio of carbon credits balanced between impact and cost. Avoidance projects can help protect existing carbon sinks (e.g., improved forest management) and accelerate investments in stemming greenhouse gasses (e.g., methane) typically underemphasized in climate programs. They also often don’t face the same supply constraints present with many high quality removal projects. Investments in avoidance projects buy us time to implement reduction plans and scale permanent carbon removal.

High quality avoidance projects vs. low quality avoidance projects

Take an example low-impact avoidance program: a sourcer identifies a forest either unappealing to loggers or already being preserved for other reasons, then offers the owners additional income to continue with their plan to not log. These credits are then sold for bargain prices (a few dollars per tonne) to companies willing to trade impact for cost savings. Critically, no additional deforestation or carbon release are prevented by the sale of these credits.

By contrast, high-impact avoidance programs have mechanisms to ensure:

While the most widely-known credits involve forests, some of the highest-impact programs involve other greenhouse gases.

Startups like Tradewater are working to safely eliminate refrigerants that have up to 11,000x the warming capacity of CO2. This is highly additional work that no one otherwise has an incentive to do, that’s done via permanent destruction where buyers don’t need to worry about project abandonment or long-term containment.

Carbon removal 101

Removal is about taking already-emitted carbon from the air and sequestering it. These projects come in two basic flavors:

Nature-based solutions are critical: we need to restore balance to the earth’s carbon sinks, and they offer immediate, lower-cost impact. But nature-based solutions won’t get us all the way: there’s only so much arable land. High quality projects are increasingly supply constrained, and if we’re going to limit global warming to 1.5 C or less, we need engineered solutions that can scale up to annual removals of at least 10% of current global emissions.

Some of the most promising projects include:

To date, Watershed customers have purchased carbon removal from more than 45 different nature-based and permanent carbon removal projects, from direct air capture and bio-oil sequestration to reforestation and biochar. We have also sponsored multiple new carbon removal projects with close CDR suppliers alongside our customers.

The Watershed Marketplace also offers a first-of-its-kind partnership with Frontier, an advance market commitment to accelerate permanent carbon removal. The partnership enables Watershed customers to buy in to the most promising permanent carbon removal pathways currently in development—paving the way for a thriving sector whose success is critical to hitting climate goals.

Putting it all together

In a nutshell:

When planning these purchases, there are a few things to consider:

These guidelines should help you choose the right mix of carbon avoidance and removal credits for your particular plan and budget.

Stay up to date

Get the latest from Watershed, from policy updates to in-depth climate guides.


collage with smokestack

SDR disclosures: a guide for UK asset managers

Two images side by side - box ready to ship and swirling water. Conveys climate risk for business and SEC and CSRD regulations. Text: Guide

Why companies need to understand their climate risks

collage: ocean wave with pollution

The CSRD: A guide for companies

Customer stories

coyuchi product

How Coyuchi gets product-level carbon insights from Watershed

houses next to solar panels

How Aon automated its carbon footprint measurement with Watershed

kroll and watershed and cdp logos

Kroll on using Watershed to save time reporting to CDP

Watershed HQ

vitalmetrics logo + watershed logo

Watershed acquires VitalMetrics

sun coming up over the ocean - ocean mineralization

How Watershed vets carbon removal suppliers in our Marketplace

Steve Davis, Head of Climate Science at Watershed

Welcoming Steve Davis to lead climate science


Illustration of coins in a field

Breaking down the SEC’s ESG fund-labeling proposals

headshot of mark carney text SEC proposal Q & A

FAQ on the SEC’s climate disclosures proposal

Two images side by side - box ready to ship and swirling water. Conveys climate risk for business and SEC and CSRD regulations. Text: Guide

Why companies need to understand their climate risks


watershed and latham and watkins law firm logos next to an image of the SEC

Betty M. Huber of Latham & Watkins on how to prepare for mandatory climate disclosure

ropes and grey logo with the California flag, watershed logo and text: Guide

Michael Littenberg of Ropes & Gray on California’s SB 253 and 261

EU Flag plus Covington logo

Covington weighs in on the EU’s Proposed Green Claims Directive