Responsibility

How we can decarbonize freight shipping

While carbon offsetting has a positive impact on the environment, it doesn’t reduce the transport sector’s carbon footprint. Carbon “insetting” opens a new and very promising pathway to decarbonizing the global freight transportation network.

Carbon insets for the logistics sector

Innovating carbon offset practices to accelerate freight decarbonization

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A paradigm shift to reduce transport emissions

Global freight transportation is currently responsible for 8% of global carbon emissions, rising to 11% if emissions from logistics sites are included. If business continues as usual, emissions will double by 2050 because demand for freight shipping is expected to grow threefold in this period.

In 2018, only 0.2% of the US$269 million in voluntary carbon offset investments went to transportation. The vast majority of these funds were invested in forestry, renewable energy, and other offsetting projects. These projects are certainly beneficial, but they don’t reduce greenhouse gases emitted by the transport sector itself, nor co-pollutants like black carbon, ozone, and nitrogen oxides.

What’s more, offsetting outside the sector reduces the incentive to innovate and advance carbon-neutral freight and other green logistics solutions. It’s time for a paradigm shift – an innovative approach to drive higher investment into greener technologies and strategies in the logistics industry. Carbon “insetting” offers a promising new pathway to decarbonize freight and minimize the transportation carbon footprint.

What is carbon insetting?

While a carbon offset compensates for climate impacts by funding a carbon reduction project outside the sector of impact, a carbon inset funds projects aimed at reducing carbon emissions in the sector where they are emitted.

Offsetting vs. Insetting

Insetting makes sense - you invest money in your subcontractors and/or the freight transportation industry as a whole and help to drive the decarbonization of the sector.

Carbon offset

Compensating for climate impacts by funding a carbon reduction project outside the sector of impact.

Carbon inset

funding decarbonization measures within the sector where the emissions originated.

Carbon insetting offers a vast reservoir of untapped potential. If done right and industry-wide, it could result in a significant shift towards greener logistics technologies that could sharply reduce the size of the industry’s climate footprint.

Why do we know this? There are ample solutions out there just waiting to be taken to the next level. Alternative sustainable fuels like hydrogen and biofuels are two examples as is electricity generated from renewable sources. To scale up the development and use of these fuels will not only require new fleets of vehicles and vessels, but also new infrastructure for fuel production and distribution. That’s going to take an enormous capital investment that no one country – let alone company – can manage alone.

Fleet renewal, engine retrofitting, and increased efficiency are further solutions that, when applied at scale, would lead to long-term structural improvements up and down the logistics supply chain and sharply reduce the freight transportation industry’s carbon footprint.

11%

OF GLOBAL CARBON EMISSIONS STEM FROM FREIGHT TRANSPORT

2050

EMISSIONS FORECASTED TO DOUBLE IN 20 YEARS AS DEMAND GROWS THREEFOLD

0.2%

OF US$268 MILLION IN CARBON OFFSETS WENT TO TRANSPORTATION

What needs to be done?

The first thing we need to do is move beyond business as usual. That’s the only way we can truly combat climate change. Carbon insets embrace this spirit, adding a new twist to the carbon offsetting trend by injecting funds directly into logistics networks where they have the potential to make meaningful change.

In order to shift to insetting, both the industry and consumers need to see the value of an offset applied within the logistics sector, looking beyond optics and marketing to actions that address the impacts of one’s own company. The widespread adoption of insets is hampered by the traditional rules of carbon offsets and their acceptance within carbon accounting and climate goal-setting programs. Reconsidering the status quo and reinventing business as usual is something worth taking on as we reach towards the world‘s goal to limit climate change.

The first concrete step we can take is to develop methods and guidelines for carbon inset accounting and reporting, based on the GLEC Framework, that covers logistics emissions more broadly, and test them within companies. This will help convince others that insetting is a viable means of reducing scope 3 emissions in freight transport and lead to further acceptance. Then these mechanisms will need to be acknowledged by existing and future reporting and accounting standards.

Five actions we believe will advance freight carbon insets

Develop methods and guidelines for carbon inset accounting and reporting, based on the GLEC Framework and other existing and emerging standards.
Win acceptance of carbon inset investments as a viable means for scope 3 emissions reduction.
Communicate the positive impact and co-benefits of freight decarbonization projects.
Shippers and logistics service providers pledge to invest in freight-related carbon insets.
Put together a diverse, effective suite of freight decarbonization projects.

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Working together for green freight logistics

To promote and advocate for carbon insets, the entire industry – carriers, forwarders, and shippers alike – will need to work together. That’s why Deutsche Post DHL Group has joined forces with Smart Freight Centre, a non-profit organization dedicated to sustainable freight. In our joint white paper, “Carbon Insets for the Logistics Sector”, we introduce the concept of carbon insetting, highlight specific examples that provide a blueprint for insets, and encourage the development of international accounting methods and guidelines.

The white paper demonstrates the huge potential of carbon insets to reduce transport emissions in the logistics sector. But to really drive meaningful change, we need to see collaboration across the entire industry – an industry-wide initiative to further develop, advance, and standardize a carbon insetting process.

With a carbon inset strategy in place, companies can jointly invest in more sustainable transport network while meeting their individual company climate targets. This would give the industry the opportunity to unlock a vital resource and create a significant lever to shift the focus on new technologies and other innovations that lead to greener logistics.

Now it’s your turn!

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.

We can only stop climate change together

From offsetting to insetting: true decarbonization of the transport sector makes a paradigm shift necessary.

Article by Tim Scharwath

Become a Smart Freight Leader

The Smart Freight Centre brings together the global logistics community to work towards efficient and zero-emissions global freight.