Voluntary Carbon Insetting Schemes Pivotal to Decarbonization
New analysis by UCL Energy Institute, with the assistance of UMAS, analyzing voluntary carbon insetting schemes in the maritime sector suggests that they could play a vital role in catalyzing shipping's decarbonization during the critical period before regulation is the driving factor.
Carbon insetting is a strategy that focuses on reducing carbon emissions within a company's own operations and supply chain, rather than purchasing offsets from external projects.
The analysis highlights that maritime insetting schemes, such as book and claim, offer significant opportunities by stimulating value chain thinking and providing early market signals during the emergence phase of the energy transition. These schemes can mobilize private investment into low and zero-emission solutions before compliance-driven measures become dominant.
The study concludes that while insetting can be a valuable tool for creating a pathway to fully decarbonize shipping, its ultimate value will be measured not by the emissions credits generated, but by its ability to quickly accelerate the maritime industry's transition to a zero-emissions future.
Dr Nishatabbas Rehmatulla, UCL Energy Institute, said: “The emergence phase of shipping's energy transition requires ambitious voluntary action, and insetting schemes offer one mechanism to deliver this. To realize this potential, schemes must be grounded in the latest available science, governed by reliable third parties, and designed to promote scalable, long-term decarbonization solutions.”
A key risk discussed in the report relates to how GHG emission reduction efforts are recognized in both regulation and voluntary initiatives.
The report highlights several potential areas of risk and provides recommendations that can maximize the success and value of maritime’s use of voluntary insetting schemes:
Setting clear boundaries: Current schemes often lack clear guidance on defining value chain boundaries, and the study recommends using GHG Protocol guidance restricting insetting boundaries to "within the value chain, not adjacent to it" and Smart Freight Centre Book & Claim Methodology, which recommends transactions be restricted by mode.
Verification: Limited examples of transparent and universal standards have led to concerns about emissions accounting integrity and of schemes "marking their own homework" and the report recommends using recognized independent third-party verifiers and transparent reporting processes.
Promoting long-term solutions: Current insetting schemes predominantly rely on transitional fuel choices such as biofuels due to their immediate availability, relative ease of use as a drop-in fuel and cost-effectiveness but face scalability constraints due to limited supply and competing demand from other hard-to-abate sectors. This focus on transitional fuels creates significant risks of technological lock-in and diverting investment away from scalable zero-emissions fuels such as green hydrogen, ammonia, which are essential for long-term decarbonization. The study recommends maritime insetting schemes should have clear guardrails that promote the uptake of fuels that are scalable and zero/close to zero emissions.
