An alternative way to finance the decarbonisation of maritime transport that really works
We are happy to see that “insertion” is slowly but surely being recognized as an alternative to compensation. By focusing on projects that reduce GHG emissions in maritime transport, insetting supports the green transition in the sector. It also allows all supply chain actors to work together to reduce the overall carbon footprint of ocean freight. ZeroLab by Klaveness is convinced that insetting will be an important tool to accelerate decarbonization and is happy to announce its first collaboration in this area.
Earlier this month, it was announced that MIT and the Smart Freight Center are developing GHG accounting guidelines for the use of sustainable aviation fuel (SAF). This will facilitate the use of insetting in aviation and help finance the development of sustainable fuels. ZeroLab by Klaveness is encouraged to see that insetting is emerging as an innovative way to finance the decarbonization of hard-to-reduce sectors like shipping and aviation.
Regular offsets blur the real cost of decarbonizing shipments
“Insetting refers to the purchase of emission reduction credits within a company’s relevant value chain. It differs from offsetting in that it drives funding towards the technology that we need to develop for shipping to decarbonize by 2050, ”says Martin Prokosch, vice president and director of ZeroLab by Klaveness.
He adds: “Regular compensation blurs the real cost of decarbonising transport and does not at all contribute to making zero-emission transport a reality”
Maritime transport is a difficult sector to reduce and the reduction cost per tonne of CO2 equivalent reduced or avoided is significantly higher than for many other industries. It is likely to be around $ 100 per tonne of CO2e or more, even in the medium to long term. This corresponds to the estimated cost of decarbonization of the shipping industry of USD 1 to 2 trillion. IMO’s target of reducing absolute emissions from maritime transport by 50% by 2050 compared to 2008 implies a reduction in GHG emissions from maritime transport of around 15 billion tonnes over the period of 2021 to 2050 compared to the status quo scenario. If about 20% of the 15 billion tonnes of CO2e are achieved through insertion, the total market turnover for these credits would be USD 300 billion in total over the next 30 years (using USD 100 per tonne CO2e), i.e. on average 10 billion USD per year.
“To achieve a similar impact on CO2e through regular offsets, for example through carbon sequestration, 50 billion tree seedlings would have to be planted and each grown for 10 years. It’s not a bad word about tree seedlings, but as a shipping company we need to focus on accelerating the transition in shipping. Maritime transport cannot wait until all other sectors are carbon free; we need to tackle our own emissions immediately, ”says Martin Prokosch, manager of ZeroLab by Klaveness.
Inserts will encourage real emissions reduction initiatives
As with regular offsets, inserts allow emissions reductions to occur anywhere in the world, and not just within the physical supply chain of the charterer who wishes to contribute. “This mechanism will enable profitable emission reduction initiatives to be carried out, regardless of their location, and thereby reduce the overall cost of decarbonising the shipping sector,” said Martin Prokosch, manager of ZeroLab by Klaveness.
Thanks to a partnership with the Dutch company GoodShipping, Klaveness plans to offer all charterers the possibility of offsetting their emissions linked to maritime transport through insetting.
“Freight owners have an important role to play in increasing the demand for climate-friendly shipping, and we are confident that our new offering will be well received by the pioneers,” says Ingrid Kylstad, Sustainability Manager at ZeroLab by Klaveness . “No chain is stronger than its weakest link. This also applies to supply chains: all actors must unite to demand, deliver, finance and support decarbonization, ”she adds.
Several insert options from which charterers can choose
Partnering with GoodShipping is a first step towards offering a full suite of integrated options based on the different ways to decarbonize shipments.
“Biofuels decarbonize maritime supply chains cost-effectively. Our solution is based on the principle of mass balance, which means that we facilitate a fuel change, and the volume of sustainable biofuel that reduces charterer emissions will be fed into a preselected vessel that would normally have run on fossil fuel, ”says Janne Erxleben, Director of Business Development at GoodShipping.
“Today’s announcement is another important step in accelerating the energy transition in maritime transport,” adds Janne. “We congratulate Klaveness for its commitment to sustainable shipping and for our initiative, which demonstrates to the industry that together we can reduce the impact of shipping on the world.”
“This solution ticks all the right boxes and is available today. Our ambition is to store biofuel on board ships owned or operated by Klaveness. Focusing on projects that support real emissions reductions in the maritime sector is essential to accelerate the transition the industry must go through, ”says Martin Prokosch, Director of ZeroLab at Klaveness.
Prokosch adds: “Klaveness Combination Carriers ASA has already transported biofuels on the CLEANBU MV Baru. We look forward to expanding the use to other vessels owned and operated by Klaveness. “
Decarbonizing sea freight requires collaboration between all stakeholders in the chain. It is now up to the charterers to take advantage of this opportunity.
“The transition to zero emission shipping is underway right now, and we are seeing our customers are curious to explore how they can be a partner in the transition. We are delighted to launch the cooperation with GoodShipping as it fits well with our ambition to be a resilient, profitable and carbon-free ocean freight supplier, ”said Michael Jørgensen, senior vice president, responsible for Dry Bulk. “We are pleased to be able to now offer all our customers the possibility of significantly reducing their Scope 3 emissions,” he adds.