Carbon insetting: replacing old freight with new

Logistics and Supply Chain News

While offset projects for transport exist, they make up only 0.2% of the US$269 million voluntary carbon offset  marketplace. Funds spent outside the transport sector, such as on forestry projects, are meaningful, but won’t advance the decarbonization of the global freight transportation network itself.

Suzanne Greene, Smart Freight Centre’s (SFC) Expert Advisor, scientist at the MIT Center for Transportation and Logistics and co-author of SFC’s Global Logistics Emissions Council Framework, says a possible option is a rapid change of logistics equipment. In a whitepaper Greene recently wrote for Smart Freight Centre in cooperation with global logistics provider DHL, she argues that carbon offsets could easily be applied to the freight network – not by adding new technologies, but by buying back the oldest and most polluting freight equipment. 

In this way, a freight carbon offset could operate like a “kickstarter” for old equipment. It could provide funding to get the most polluting equipment off our roads and out of our ports now. Existing mechanisms like fleet renewal programs and carbon offsets for cookstoves and renewable energy provide a template that can be used today in the freight sector. A freight carbon offset could also be used to advance low or zero carbon freight equipment, like electric trucks or hydrogen ships, or to support infrastructure like renewable charging stations.

Send  Green

The climate-friendly shipping program Skicka Grönt (Swedish for “Send  Green”) was initiated by DHL Freight in Sweden as far back as 2002  and relaunched with its current name in 2019. Customers using the  program pay a fixed surcharge for every parcel or pallet shipped. The concept is simple. DHL signs  agreements with carriers in their  domestic network in Sweden who  want to invest in more expensive  clean technologies and helps them  to pay for these extra expenses from  the Skicka Grönt fund.  Technologies implemented so far  include biogas, bio-ethanol, bioDME  and renewable electricity. Skicka  Grönt contributes to an accelerated  technological shift in the Swedish  transport system and reduces the  additional costs and risks for carriers  when investing into climate-smart  technology.  

Realising potential

The shared nature of global freight networks illuminates an opportunity  for transport  operators and users  to band together to jointly invest in  green transport. Carbon offsets that  decarbonize transportation do exist  but are an under-represented sector in the global offset marketplace. In  2018, they represented only 0.2% of  the nearly US$269 million voluntary  carbon offset market. Spending money on non-related offsetting  projects creates a repetitive cash-out without  any correlation to the business. Aligning carbon offset  investments with supply chain climate impacts  – a practice referred to as carbon insetting –  would unlock vital funds that could be used to Paris Agreement targets and corporate  climate goals, but would also result in  structural improvements to logistics assets and  infrastructure.

While there is vast potential to apply carbon  insets to freight transportation, there is a need for  an industry-wide initiative to further develop and  advance the concept.  With a carbon insetting approach,  companies can invest in projects  anywhere in the sector, whether  they ship their goods using these  vehicles, vessels and other logistics  assets or not. A robust market for insetting solutions in the freight and logistics sector  yet has to be developed. Its success is dependent on carbon inset  projects being acknowledged by carbon accounting standards and  climate target-setting initiatives. However, some lighthouse projects and  small-scale insetting solutions already exist and provide a roadmap for  how these ideas can be enacted and scaled. 

Working together

In order to deliver freight decarbonization at scale, new ideas are needed to  accelerate the uptake of sustainable fuels and transport equipment. Carbon  insets provide a promising mechanism for the shared funding of these  investments. However, agreement is needed between industry and stakeholders on how  these projects can be accounted for and included in supply chain emissions  reduction strategies. We must define how carbon insets could evolve within the  freight sector. 

Carbon offset projects must ensure  that leakage does not occur –  meaning that ncreases in carbon  emissions outside the offset project’s  boundaries must be tracked and  avoided.12 An example in the freight  industry might be if an offset project  decommissions a truck, but that leads  a company to buy a more efficient  diesel truck that they use much more  heavily, the project might lead to a  net increase in emissions.  

A robust market for insetting solutions in the freight and logistics sector  yet has to be developed. Its success is dependent on carbon inset  projects being acknowledged by carbon accounting standards and  climate target-setting initiatives. However, some lighthouse projects and  small-scale insetting solutions already exist and provide a roadmap for  how these ideas can be enacted and scaled. 

The rule of thumb in carbon offsets  is that a ton of avoided or reduced  carbon can only be registered,  purchased, and retired one time.  Double counting is viewed as a risk to  the credibility of carbon offsets, which  is why the carbon offset marketplace  is backed up with a robust set of  verification and certification schemes.

Carbon insets should abide by  the same standards of rigor and  transparency that govern carbon  offsets. Assurance is needed to  prevent an inset to be unwittingly, or  intentionally, sold twice. A neutrally governed marketplace could provide  this structure, either through the  existing offset marketplace or another  similar mechanism.

In summary, there are five actions we believe are needed  to advance freight carbon insets: 

1   New methods and guidelines for carbon inset accounting  and reporting, based on the GLEC Framework and other  existing and emerging standards. This should take into  consideration accounting issues such as additionality,  double counting, leakage and co-benefits.

2   Acceptance of carbon inset investments as a viable means  for scope 3 emissions reduction. 

3 A communications strategy that showcases the climate  impacts and co-benefits of freight decarbonization projects. 

4   A pledge for investment in freight-related carbon insets by  shippers and logistics service providers. 

5  A suite of diverse and meaningful freight decarbonization  projects in the marketplace. 

Through a carbon inset strategy, companies can jointly  invest in a more sustainable transport network while meeting  their individual company climate targets. We invite you to  join us on this journey to explore how carbon insets can be  used to reduce the climate impact of our shared  transportation network.

You can download the full report HERE!

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