13 April 2021
Harnessing the power of carbon insetting, businesses around the world can achieve their climate goals and create sustainable, long term change in the transportation industry.
DHL and Smart Freight Center (SFC) recently published an insightful whitepaper explaining the key concepts and benefits of carbon insetting for the global transportation industry. At GoodShipping, we are proud to have been highlighted as leaders in this space, making shipping more sustainable by replacing fossil fuel with biofuel. Inspired by DHL and SFC, we have developed a quick and easy guide to carbon insetting for businesses looking to achieve their climate goals, using the whitepaper’s main points.
An Introduction to Carbon Insetting
The transportation industry runs on a global network of equipment such as ships, planes, trucks and vans, which are largely powered by fossil fuels. Carbon offsetting has emerged as a popular way for companies to achieve their climate goals while still using this traditional network, unaltered, in their supply chain.
Offsetting works by encouraging companies to invest in environmental projects that reduce the carbon that their freight activities produce. This includes building wind farms, planting trees, and improving insulation in buildings. While worthwhile, offsetting doesn’t directly reduce greenhouse gas emissions from the transport sector itself, nor its related co-pollutants, like black carbon, ozone, and nitrogen oxide.
Wouldn’t it be better to directly improve the transport sector’s sustainability by reducing emissions produced in the supply chain? This innovative approach is called “carbon insetting”. Carbon insetting empowers companies to transform their supply chains and reduce emissions directly at the source. This may involve using sustainable fuels, supporting equipment decommissioning, delivering engine retrofits and improving logistics efficiency. Carbon insetting ensures that climate protection money remains within the company’s value creation cycle and also fuels long-term change within the industry.
Along with DHL and Smart Freight Center, we at GoodShipping believe that carbon insetting is the most effective way to achieve a truly sustainable transport network, creating harmony between the industry and the ecosystem it relies upon. It simply requires a shift in consumer funding, funneling climate protection money into creating sustainable supply chains.
How Does Carbon Insetting Work For the Transport Sector?
Companies around the world have the potential to transform their supply chains with carbon insetting, enabling them to achieve their climate goals while also accelerating the energy transition in the industry.
Take a look at the top four ways that this could work:
1. Mass Balance or “Book and Claim” for Sustainable Fuels
The renewable energy sector gives us a prime example of how to apply carbon insetting to the transport sector. Energy producers register or “book” the amount of renewable energy they have created. Customers then purchase or “claim” their amount of green electricity. The customer understands that the green electricity is mixed with other electricity in the grid, so they may not receive this green electricity themselves, but their investment has increased the total ratio of green electricity in use.
A similar system can be used for sustainable fuels in the transport sector, enabling companies to “book” their portion of biofuel, whether they ultimately use it in their own transportation activities or not. This increases the ratio of sustainable fuels vs. fossil fuels in the system, and also increases demand for sustainable fuels, speeds up the production mid to long term, and accelerates the price of biofuel to breakeven point compared to fossil fuels.
2. Equipment Decommissioning
Transport networks across the world are burdened with old, inefficient equipment – especially in the developing world. Funding from carbon insetting can be used to remove high-emission motorbikes, vans, trucks, ships, or planes from the global freight transportation network.
3. Engine Retrofits
Engine retrofitting means adding an emission control device to the engines used in the transport sector. Diesel particulate filters, for example, are an option for reducing black carbon. Another option is to replace fossil fuel engines with ones that are powered by low carbon technologies like hydrogen. This can be less expensive than buying a new truck or ship and can preserve the body of the equipment to eliminate the need for expensive new machinery.
4. Logistics Efficiency
Improved logistics, driver training programs and route planning can all result in carbon reductions by reducing fuel consumption. This eliminates emissions that would have been made with business-as-usual operations.
Freight Carbon Insets in Practice Today
The good news is that a few robust carbon insetting solutions already exist for all freight modalities. These solutions provide a roadmap for scaling carbon insetting even further, and simply require more funding from businesses that want to go beyond carbon reduction and make a greater impact on the industry long-term.
Insetting for Sea Freight: GoodShipping
That’s us! We are proud to have been highlighted as carbon insetting frontrunners by SFC and DHL. We are the first sustainable shipping initiative in the world. We offer companies the opportunity to reduce their carbon footprint by switching their cargo shipping activities to biofuel.
Most climate models measure the emissions of the shipping industry as a whole. With this in mind, we work to increase the total balance of biofuels used by ships worldwide, and so customers can “book” biofuel shipments for their portion of the emissions. Within this system, customers do not have to change the current logistics operations of their business by ensuring that their goods are physically shipped on a low- emission vessel. However, their contribution directly improves the global marine fuel mix.
You can learn more about how this works by watching our explainer video.
Insetting for Road and Air Freight: Sustainable Fuels and Technology
A great example of carbon insetting for road freight is DHL’s Skicka Grönt initiative, which is Swedish for “Send Green”. This enables customers to pay a fixed surcharge for every parcel or pallet that they ship. The money is then used by DHL to invest in clean technologies within the Swedish transport network, including biogas, bio-ethanol, bioDME and renewable electricity.
Airlines across the world are also taking steps to increase their use of sustainable aviation fuels, in some cases jointly with their customers through green premium products. These efforts offer a roadmap for the advancement of sustainable aviation fuels though they are currently bound by limited amounts of fuel. Once again, the mass balance or ‘book and claim’ method can also be applied to sustainable aviation fuel.
The Future of Carbon Insetting in Global Freight Transport
Harnessing the power of carbon insetting will enable freight decarbonization to happen at scale, as increased investment is funneled into the transportation industry. Businesses can easily achieve their climate goals using the methods outlined in this blog, while also investing in new ideas and new ways to accelerate the global uptake of sustainable fuels and transport equipment.
The key takeaway? Carbon insetting embraces the spirit of innovation and creates meaningful change in the industry that carbon is emitted from. It is a vital step in working towards a carbon-neutral future.
If you are interested in reading the entire whitepaper by Smart Freight Center and DHL Group, please find the link to download it here.
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