Some time ago, the team at Thallo asked ourselves the following question: what types of planet-saving projects should we make available for buyers to purchase on our platform?
There are many ways to organize the patchwork of projects that make up the voluntary carbon market. One framework for carbon credits that has gained significant attention in recent years is the distinction between carbon dioxide removals (CDR) versus reduced or avoided emissions.
So what’s the difference?
As explained in Thallo’s Buyer’s Guide, avoidance or reduction credits lower the amount of emissions that would be released into the atmosphere as compared to a baseline scenario (e.g. avoiding deforestation). These types of credits have faced significant controversy and are typically inexpensive.
Removal credits pull carbon out of the atmosphere, and can be natural (e.g. tree-planting) or engineered (e.g. direct air capture). These credits are typically more expensive (biochar on Thallo’s platform fetches upwards of $150 a tonne) and are difficult to source (removals currently make up for 3% of the market)
For the customer trying to maximize impact whilst meeting their net zero targets in a cost-effective way, which one is better, removals or avoidance?
This question can be paralyzing. In a world of scarce resources, especially considering the estimated $ 2.4 annual climate-financing gap, experts disagree on which types of projects to prioritize.
Some advocate for only carbon removals. Since the IPCC research shows humans will need to remove carbon – going beyond net zero – in order to reach the aims of the Paris Agreement. This is despite the fact that only purchasing removals is unlikely to be unaffordable for the vast majority of corporations wishing to off-set their carbon emissions.
Others champion avoidance and reduction credits, since they align with the mitigation hierarchy (essentially: minimizing negative impacts first, before compensating) and typically have significant co-benefits, such as the preservation of natural ecosystems and biodiversity.
To make things even more complicated, the vast majority of platforms and/or intermediaries will hold certain credits in inventory. That means that, no matter what is best for the off-taking client, they have an explicit incentive to “push” certain projects over others. This makes them biased.
So what did Thallo choose to do?
We chose to be a single access point to the entire market. Although we would advise our clients on the best-practice, such as the Oxford Principles and the VCMI Claims Code of Practice, Thallo would be project agnostic. By not choosing, we remain neutral and unbiased.
This means we remain laser focused on building out the best possible technology to make the market more transparent, efficient and fair. It also means giving our supply-side partners access, and our buy-side clients choice.
On our platform, buyers have access to avoided deforestation projects, engineered biochar projects, and everything in between. It also means our clients can:
- Build bespoke portfolios of carbon credits that hedge risk across project type, geography, and/or other desired metrics.
- Finance any type of project from across the market to reflect a particular ESG and/or CSR narrative, such as avoided deforestation in the Amazon.
- Invest in expensive removal projects, such as biochar, at an affordable weighted average cost – thereby making high-integrity net zero journeys affordable
For us at Thallo, this also means doubling down on our core strength, which is: making best-in-class software and technology to channel much-needed capital to climate-saving projects across the world.
Come join us on our journey. Book a meeting to learn more today.
