Removal vs. Avoidance Credits: Asset or Promise?

Corporate buyers pay between 3 and more than 100 times more per tonne for carbon removal than for generic avoidance credits, which trade in a range of roughly $0.50 to $5 (Senken). In the first quarter of 2026 alone, buyers contracted 2.3 million tonnes of durable removal, the largest opening quarter on record, while only 145,000 tonnes were delivered (CDR.fyi). That spread is not a moral judgment about which tonnes matter more. It is the market pricing three underwriting questions, and the answers decide whether a credit belongs on a balance sheet as an asset or in a footnote as a promise.

The spread is an underwriting spread

An avoidance credit is a claim about a world that did not happen: a forest that was not cleared, a methane leak that was not vented, a cookstove that replaced an open fire. A removal credit is a claim about a mass of carbon that was physically taken out of the atmosphere and put somewhere it will stay. Underwriting a counterfactual is harder than underwriting a measured mass, and the price difference is the market's estimate of how much harder.

Three questions carry that estimate. Permanence: how long does the tonne stay out, and what happens if it comes back? Additionality: would the tonne have been avoided or removed anyway? Measurement: can a third party verify the quantity without trusting the project developer? Every credit, removal or avoidance, has an answer to each. What separates an asset from a promise is whether the answers rest on verifiable data or on assertion.

Permanence is the tenor of the instrument

Treat the durability horizon the way a credit analyst treats tenor. Geologic storage is rated in millennia. Biochar is rated in centuries. Forest and soil pathways are rated in decades, with reversal risk that runs the whole life of the credit, because a forest that was not cut in 2026 can be cut, or burn, in 2036.

The market's behaviour follows that rating. Biochar accounted for 93% of contracted durable-removal volume in the first quarter of 2026 and 73% of retirements, not because it is the most elegant pathway but because its durability is well characterised and its output is weighable (CDR.fyi). Direct air capture, by contrast, was under 1% of contracted volume in the same quarter.

For an avoidance credit, reversal is not a risk parameter on the asset. It is the asset. A buffer-pool contribution partially insures against it, and a registry that reports the buffer pool's size and draw-downs turns that insurance into something a holder can evaluate. A registry that does not leaves the holder trusting a promise. The vocabulary here matters: a credit with a stated durability horizon, a stated reversal mechanism and a stated buffer contribution has a tenor. One without them has a hope.

Additionality is the counterfactual an auditor cannot observe

Additionality is where avoidance credits have historically failed underwriting, and where the market has spent the last two years building a filter. The Integrity Council for the Voluntary Carbon Market had assessed 59 methodologies by March 2026 and approved 38, covering an estimated 108 million credits eligible for its Core Carbon Principles label, of which about 54 million remained unretired (ICVCM). Labelled credits command a premium over unlabelled credits from the same project type, which is the clearest market evidence that additionality has a price.

Note what the label does and does not do. It certifies that a methodology's baseline and additionality logic meet a threshold. It does not measure any individual tonne. So a labelled avoidance credit is a promise whose logic has been reviewed, which is a materially better promise, but the value still rests on a counterfactual nobody can go and weigh. An asset whose value depends on a counterfactual behaves like a contingent claim, and it should be marked like one.

Removal credits do not escape additionality entirely. A biochar plant that would have run for agricultural reasons anyway, or a mineralisation project that is really a mine-tailings disposal cost, raises the same question. But the question is about the project's economics, which can be audited, rather than about a hypothetical land-use decision, which cannot.

Measurement is what turns a claim into a record

This is the real-world-asset question, and it is the one that decides whether a credit can be marked, pledged, transferred or retired against a target with confidence. A credit is only an asset if its attributes can be read and verified by someone who is not the seller.

The minimum set of attributes is short. Registry and serial range. Vintage. Methodology and version. Verification body and date. Durability horizon. Buffer-pool contribution. Retirement status. A removal credit from a weighable pathway can populate every field from primary data. An avoidance credit populates the durability and buffer fields from a model and the additionality field from a baseline study, and a holder should know which fields are measured and which are modelled.

Delivery data makes the point sharply. Deliveries in the first quarter of 2026 represented about 6.3% of contracted volume (CDR.fyi). The bulk of what is described as the removal market is forward promises against future tonnes, which is fine for a procurement plan and wrong for a balance sheet. The logic is the same one that governs reserve verification for any tokenized asset, set out in what is proof of reserve for RWAs: a claim by the issuer and a fact verified by an independent party are different things, and only the second supports a mark. Why the carbon market still lacks the settlement and record layer that would make that verification routine is the subject of carbon market infrastructure: the missing rails.

The honest case for avoidance credits

None of this means avoidance credits are worthless, and a treasury that refuses them entirely is making a budgeting error dressed as a principle. Avoided deforestation under a jurisdictional baseline, methane destruction at a landfill, and the revised cookstove methodologies that survived the integrity review all describe real tonnes, and a labelled avoidance credit at a few dollars a tonne addresses emissions this year that a removal contract addresses in 2029. A corporate buyer with a fixed budget and a near-term target cannot fill it with removal alone, and durable-removal supply is not large enough to let it try.

The correct treatment is not exclusion. It is classification. A removal credit with measured mass, stated tenor and registry-verified retirement status is inventory. A labelled avoidance credit is a contingent asset whose value carries a discount for counterfactual risk. An unlabelled avoidance credit from a legacy methodology is a promise, and a forward contract for tonnes not yet delivered is a different promise again. Holding all four is reasonable. Holding all four on the same line, at the same mark, is not.

What a marketplace has to carry

For carbon credits to trade the way other real-world assets are starting to, with lower ticket sizes, settlement in hours rather than weeks, and a record every counterparty can read, the position has to carry its underwriting with it. That means the registry serial, vintage, methodology, verification, durability and buffer attributes travel with the unit, are fed from the registry rather than the seller, and update when the credit is retired. A marketplace that carries only a price and a project name is repackaging the promise, not verifying the asset. That is the standard Commertize builds toward for carbon on its marketplace, with independently fed data as the layer between a claim and a verifiable fact.

The spread between removal and avoidance will narrow where avoidance credits acquire measurable attributes and widen where they do not. Either way, the buyer who can read the three answers from the record, rather than from the seller's brochure, is the one holding an asset.

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