Carbon insetting: driving marine decarbonisation

Carbon insetting allows for the easy movement of capital dedicated to decarbonisation, with purchases directly supporting the uptake of alternative fuels in the maritime sector.

Greenstar Capital supports ship owners, charterers and their customers alike with finding inset buyers and sellers, to ensure good liquidity and certainty on pricing.

For sellers - compensate for use of alternative fuels by tapping into a market that allows you to sell the sustainability rights to your alternative fuels. Insets can be useful where own customers do not wish to pay a premium for the sustainable fuel, and in CSR and shareholder reporting on the company's efforts in sustainability. Sellers can sell those rights to companies who's customers are looking to make their shipping related scope 3 emissions sustainable.
For buyers - with little or no up-front investment and no technological barrier or bunkering limitations, make your voyages green on behalf of your customers.

Carbon insetting refers to carbon emissions improvements within a supply chain, as opposed to offsetting, which refers to buying credits generated by green projects anywhere in the world. Inset credits are associated directly with environmental improvements in a company's supply chain. In the shipping sector, insetting has the potential to increase uptake in alternative fuels and technologies and allow shippers and their customers to legitimately claim green credentials, even where due to cost or lacking infrastructure, use of physical alternative fuels may as yet be difficult.

Case study: a shipping company wishes to offer a green option to its customers, but due to lack of bunkering infrastructure, biofuels are not available for this voyage. The solution: the shipping company buys insets related to the use of biofuels elsewhere - perhaps by a shipping company who's charterer did not wish to pay for the alternative fuels. The biofuels displaced fossil fuel use when they were burnt, so the positive benefits still apply no matter where the fuels were burnt - and by buying the inset, the shipping company's charterers get to legitimately claim and market their green credentials for the voyage - removing a barrier to decarbonisation ambitions.

Inset prices

Inset prices should be derived from the cost of going green vs. business as usual. This implies that the value of an inset can fluctuate according to fuel and carbon costs. The above chart shows costs of bio alternative fuels compared to VLSFO at varying carbon prices. Each inset should correspond to a tonne of CO2, so additional costs are divided by carbon intensity of fuel. As yet there is a lack of clarity about the treatment of marine biofuels under the EU ETS. Companies that inset may not yet be able to claim emissions reductions in the ETS for the biofuels - pending clarification from the European Commission and national member state governments..

Verification:

Greenstar Capital works with verifiers who will certify the quality of the insets as to carbon content of the fuels, quality of the fuels, and how they relate to your vessel's specifications.