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.
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.
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.
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.