Understanding Carbon Credits: Nature-Based vs Tech-Based: And Where Greenwashing Lurks
- energyguardiansltd
- Oct 4
- 5 min read
Written by: Energy Guardians
Last Updated: October 4, 2025.
The carbon credit market has evolved rapidly, from a niche environmental finance concept to a multi-billion-dollar mechanism for climate action. Yet, beneath its noble purpose lies a growing concern: Green washing.
While some credits deliver measurable, permanent climate impact, others merely look good on paper. To navigate this landscape, it is crucial to understand the types of carbon credits, how they are generated, and which ones are more vulnerable to manipulation.
1. What Exactly Are Carbon Credits?
A carbon credit represents one metric tonne of carbon dioxide (CO₂) or its equivalent in other greenhouse gases that has been avoided, reduced, or removed from the atmosphere.
Organisations buy credits to offset their emissions, either voluntarily (for corporate net-zero commitments) or mandatorily (under compliance schemes like the EU Emissions Trading System or CORSIA for aviation).
But not all credits are created equal. The credibility of a credit depends on how the emission reduction or removal was achieved, which brings us to the two broad categories.
2. The Two Main Types of Carbon Credits
Nature-Based Credits (NbS)
These leverage the power of natural ecosystems to sequester or avoid emissions. They are commonly known as Nature-based Solutions (NbS) and often deliver co-benefits like biodiversity protection and community livelihoods.
Key Project Types:
1. Afforestation and Reforestation (A/R): Planting or restoring forests to capture CO₂.
2. REDD+ (Avoided Deforestation): Preventing deforestation in high-risk areas.
3. Improved Forest Management (IFM): Enhancing forest practices to store more carbon.
4. Soil Carbon Sequestration: Adopting regenerative agriculture or no-till farming.
5. Wetland and Peatland Restoration: Protecting carbon-dense ecosystems.
6. Blue Carbon: Conserving mangroves, salt marshes, and seagrasses that store carbon in sediments.
These projects are essential for large-scale climate and biodiversity outcomes, but their integrity depends heavily on measurement and permanence.
Technology-Based (Engineered) Credits
Tech-based credits rely on industrial or technological processes to cut emissions or capture and store CO₂.
Key Project Types:
Renewable Energy Projects: Replacing fossil-based generation with solar, wind, or hydro.
Energy Efficiency Initiatives: Reducing fuel or electricity consumption.
Methane Capture and Destruction: Capturing methane from landfills or livestock operations.
Carbon Capture and Storage (CCS): Trapping CO₂ from industrial flue gases and storing it underground.
Direct Air Capture (DACCS): Removing CO₂ directly from ambient air using chemical processes.
Bioenergy with Carbon Capture and Storage (BECCS): Generating power from biomass while capturing the resulting CO₂.
Biochar Production: Converting biomass into a stable form of carbon that can be added to soils.
These credits tend to be more measurable and permanent than nature-based ones, but also more expensive and energy-intensive.
3. Avoidance vs Removal: The Key Distinction
Regardless of whether a credit is nature-based or technological, it falls into one of two categories:
Avoidance / Reduction: This prevents new emissions from occurring, e.g. Renewable energy, REDD+, methane capture.
Removal / Sequestration: Draws down existing CO₂ from the atmosphere, e.g. Reforestation, soil carbon, DACCS, biochar
Today’s markets increasingly favour removal credits because they represent a permanent climate benefit, while avoidance credits are often temporary or uncertain.
4. The Greenwashing Problem
Here is the hard truth; not all carbon credits are credible.
Many are built on weak assumptions, outdated baselines, or unverifiable claims. Greenwashing occurs when companies or project developers overstate the impact of their credits, misleading buyers and undermining trust in the entire system.
The Most Vulnerable Credit Types are:
REDD+ (Avoided Deforestation):
Investigations have shown that many projects inflate their baselines, claiming they prevented deforestation that was never likely to happen. Some studies found that up to 90% of issued credits were ‘likely worthless.’
Afforestation and Reforestation:
Trees may die, burn, or be cut down, but the credits remain sold. The issue is non-permanence as CO₂ is not truly ‘removed’ for good.
Soil Carbon Projects:
Soil carbon fluctuates with weather, tilling, and farm management. Measurement is difficult and claims often exceed what is scientifically verifiable.
Blue Carbon:
While promising, measurement remains complex, and ownership of coastal ecosystems can be murky, leading to exaggerated impact claims.
Old Renewable Energy Projects:
Many solar or wind projects would have been built anyway due to falling costs, meaning they are not additional and should not generate credits.
Cookstove and Efficiency Credits:
These often assume 100% adoption and usage, but in reality, stoves are underused or replaced, leading to overstated reductions.
5. Why Greenwashing Happens
• Baseline Manipulation: Overstating ‘what would have happened’ without the project.
• Lack of Permanence: Natural systems cannot guarantee storage over decades.
• Leakage: Preventing deforestation in one area just pushes it elsewhere.
• Poor Monitoring: Infrequent or opaque verification.
• Lack of Additionality: Projects would proceed even without carbon finance.
• Marketing Spin: ‘Saving the rainforest’ claims without transparent data.
6. The High-Integrity Side of the Market
Not all is doom and gloom. Certain credit types have strong, verifiable climate integrity.
Type Why they are trustworthy
These projects are often audited under stricter registries like Puro.earth, Verra’s updated methodologies, or the Gold Standard 3.0 framework; all aligned with the ICVCM Core Carbon Principles (CCPs) introduced in 2024.
7. Restoring Credibility: Where the Market Is Headed
Regulators and market bodies are cleaning up the space:
ICVCM (Integrity Council for the Voluntary Carbon Market): Establishing global quality benchmarks.
Verra’s new methodologies (2024–2025): Stricter baselines, more conservative assumptions.
Gold Standard 3.0: Reinforcing additionality and MRV (Measurement, Reporting, Verification).
CORSIA (Aviation): Only accepts vetted, high-integrity credits.
Expect a shift toward fewer but higher-quality projects, emphasizing removal, transparency, and permanence.
8. Practical Takeaway for Businesses and Practitioners
If your organisation or clients plan to use carbon credits, focus on:
Transparency: Demand clear project documentation, monitoring data, and third-party verification.
Permanence: Prioritise removal-based credits with long-term carbon storage.
Co-benefits with Proof: Support projects that truly uplift communities and biodiversity; not just on paper.
Alignment with ICVCM or CORSIA Standards: These frameworks filter out low-integrity projects.
Emission Reduction First: Use offsets after cutting internal emissions, not as a substitute.
9. In Summary
The carbon credit ecosystem is maturing; fast.
Nature-based solutions remain essential, but their credibility depends on sound science, local governance, and transparent monitoring. Meanwhile, technology-based removals, though costlier, promise permanent, measurable climate benefit.
The goal is not to reject carbon credits, but to redefine what a ‘high-integrity credit’ means.
For consultants, buyers, and policymakers, this understanding separates genuine climate action from glossy green PR.
At Energy Guardians, we help organisations navigate the complex and often confusing world of carbon offsetting with integrity and precision. Our approach goes beyond simply sourcing credits; we conduct rigorous due diligence to verify the authenticity, additionality, and permanence of each project. By leveraging global standards such as the ICVCM Core Carbon Principles, Verra, and Gold Standard frameworks, we ensure that every carbon credit our clients invest in represents a real, measurable, and verifiable climate impact. Whether through high-integrity nature-based removals like reforestation and soil carbon projects, or technology-based solutions such as biochar, methane capture, or direct air capture, Energy Guardians empowers businesses to offset responsibly. We combine strategic carbon management with transparent reporting, helping organisations meet their net-zero goals confidently and credibly, without falling into the traps of greenwashing or low-quality offsets.
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