Sustainability is now a top priority in the world of global trade. At Magellan Logistics, we’re exploring new ways to reduce our impact on the environment while meeting our clients’ needs, which is why we have introduced carbon offset shipping. Carbon offsetting is one way we can reduce the environmental impact of freight operations, moving us closer to net zero in logistics. Understanding carbon offset shipping is vital for shippers who want to help the planet while still getting their goods where they need to go.
We’re here to guide you through carbon offset shipping, explaining how it works and its suitability for freight companies. We’ll break down terms like ‘carbon offsetting’ and ‘carbon offset logistics’ and show you the benefits of low-carbon shipping. We’ll also share practical tips on utilising carbon offsetting in your business and making your operations more efficient.
What is Carbon Offset Shipping?
Definition and Explanation
Shipping is a hard-to-abate industry, and carbon offsetting has an ongoing role in supporting the sector’s sustainability efforts by addressing unavoidable emissions. It also supports implementing direct emission reduction activities as part of a broad decarbonisation journey.
Carbon offset shipping refers to companies or individuals acknowledging these unavoidable greenhouse gas (GHG) emissions produced by their shipping activities by supporting high-integrity carbon offset projects by purchasing carbon credits. Each carbon credit represents the avoidance or removal of one metric tonne of greenhouse gas emissions from the earth’s atmosphere. Carbon offsetting is not only about reducing, removing or avoiding emissions but also about channelling carbon finance to projects that benefit local communities in various ways, from economic to health benefits.
Carbon offsetting is about accurately calculating the carbon emissions of an activity and purchasing carbon credits that equal this calculation. For example, if an importer’s freight activities emit a certain amount of GHGs, it can calculate these emissions and purchase the equivalent amount of carbon credits. These credits are generated from projects that reduce, remove or avoid carbon emissions from the earth’s atmosphere; types of carbon projects include carbon capture technologies, clean energy, reforestation, fire management and forest conservation.
How Does Carbon Offset Shipping Work?
Emissions Calculation
We at Magellan Logistics understand that accurately calculating the emissions from freight activities is the first crucial step in carbon offset shipping. This is why we have partnered with Tasman Environmental Markets to develop our Carbon Offset Freight product. We utilise shipping data to determine freight emissions, including activity dates, port pairs, vessel name, IMO code and size, ensuring precise calculations.
Factors such as the weight of the shipment, the distance travelled, and the type of transportation—whether by air, sea, or road—are all integrated into the calculations. This meticulous approach ensures that we account for all emissions. Once we understand the emissions produced, we will produce an emissions report, which determines the carbon volume using Climate Active’s standard emission factors. The Climate Active standard is based on the UK Government’s DEFRA Standard, which is widely adopted worldwide for carbon emission calculations. The Climate Active/DEFRA method complements the Global Logistics Emissions Council Framework (GLEC).
Offsetting Emissions
This carbon volume calculation is then used to determine how many carbon credits are needed to offset your shipping emissions.
Magellan Logistics can offer a discounted rate to help you invest in high-quality, certified carbon offset projects and contribute to projects that reduce carbon emissions, like nature-based solutions, Indigenous, environmental planting, renewable energy, or community projects. These projects are independently verified to the highest international carbon standards and contribute positively to the world—socially, economically, and environmentally.
Benefits of Carbon Offset Shipping
Adopting carbon offset shipping offers significant advantages, particularly regarding environmental impact and supporting the global efforts on our path to net zero.
Environmental Impact
Carbon offset shipping is crucial in mitigating the environmental impacts of freight transportation. Companies can support their broader decarbonisation strategy by investing in projects that reduce, remove, or avoid emissions. These projects often lead to enhanced biodiversity, habitat protection, and improved local air and water quality. For instance, reforestation initiatives not only capture carbon dioxide but also support habitat for native species and improve soil health. Such environmental benefits are integral to fostering a sustainable planet and align with global efforts to combat climate change.
Regulatory Compliance
Businesses face increasing regulations to calculate and reduce greenhouse gas emissions. Notable regulations include the International Maritime Organization’s standards, which aim to significantly reduce carbon intensity by specific target years, and the European Union Emissions Trading System, which applies to maritime shipping. Compliance with these regulations helps minimise environmental impacts, avoids sanctions, and supports global efforts towards net zero. Carbon offset shipping offers a viable solution for companies to meet these regulatory requirements while continuing to operate efficiently.
Supporting the Path Towards Net Zero
Focusing on sustainability and forging a path towards net zero is imperative in today’s market. Demonstrating a commitment to climate change can support your business’s ESG goals and overall sustainability strategy, ensuring you are operating with integrity.
By choosing Magellan Logistics, shippers partner with a freight company that meets their logistical needs and shares their sustainability and corporate social responsibility values. This alignment can enhance customer loyalty and attract new clients.
By integrating carbon offset shipping into our suite of services, we offer our clients a way to mitigate the environmental impacts of their activities and enhance their competitiveness and appeal in a rapidly evolving business environment.
Navigating through the realm of carbon offset shipping reveals its substantial potential to transform the freight industry into a more sustainable and environmentally friendly sector. Understanding the mechanisms, benefits, and practical steps for implementation can support our global effort toward net zero.
Offset the Carbon Emissions Associated with your Shipping Today.
Through our partnership with Tasman Environmental Markets, Magellan offers our clients a way to measure and offset their carbon emissions from freight in three simple steps, choosing from a range of offset projects to suit their budgets and strategic considerations.
Get in touch with me via david@maglog.com.au or AUS 1800 595 463, or if you’re in NZ, contact Jeff Bozich via jeff.b@maglog.co.nz or NZ +64 9 974 4818
Carbon Offset Shipping FAQs
What is meant by carbon offset shipping?
Carbon offset shipping involves actions to balance out the unavoidable CO2 emissions caused by shipping activities. Shippers can achieve this by financing various carbon projects, such as environmental tree planting, forest conservation, hydroelectric power generation, renewable energy, and community projects, through purchasing carbon credits.
How can a company reduce its carbon footprint from shipping?
To minimise the carbon footprint from shipping, companies can adopt several strategies: alternative fuels, embracing technology to optimise efficiency and reduce freight movements, purchasing carbon credits, using eco-friendly packaging materials, opting for the smallest possible packaging, operational efficiencies such as slow steaming, optimised routing and idle reduction technologies and incorporating green energy throughout their supply chain.
What role do carbon offset providers play?
Carbon offset providers are organisations that develop, manage and/or source various carbon projects and ensure they are of high integrity and independently verified. They also offer tools like carbon emission calculators to help businesses and individuals estimate their carbon outputs.
What is the primary goal of carbon offsets?
Carbon offsetting involves purchasing independently verified carbon credits equal to an individual’s or organisation’s calculated carbon emissions.
Carbon offsetting allows individuals and businesses to invest in environmental projects worldwide to reduce their carbon footprint. Companies can fund climate action on the way to net zero using carbon credits to support verified projects that measurably cut global emissions while facilitating community development, protecting vulnerable ecosystems or installing efficient technology.
One carbon credit equals one metric tonne of carbon dioxide removed or avoided from the atmosphere. Carbon offsets aim to neutralise the unavoidable part of an entity’s carbon footprint through investing in high-integrity carbon projects.
What motivates companies to pursue carbon offset shipping?
Companies engage in carbon offset shipping as a feasible strategy to counteract their unavoidable greenhouse gas (GHG) emissions. Offsetting plays a critical role across all businesses as part of their broader decarbonisation goals. Additional benefits they can receive are manifold:
- Meeting customer, investor and staff expectations to address carbon pollution.
- Improved brand integrity.
- Increased customer loyalty and sales.
- Meeting other strategic business goals, like Reconciliation Action Plan targets and aligning with the Sustainable Development Goals.
- Establish industry leadership.
- Market and geographic synergies from project co-benefits.
- Delivering co-benefits beyond carbon reductions, including biodiversity, gender equality and Indigenous employment.
- Meet emission-reduction targets while working towards long-term sustainability goals
- Inspire your workforce to engage in in-house carbon reduction activities, reducing costs and supporting your goals.
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This information has been prepared by Magellan Logistics Pty Ltd (ABN 61 079 321 725) (‘Magellan Logistics’) as a corporate authorised representative (CAR 001309007) of TEM Financial Services Pty Limited (ABN 58 142 268 479) (AFSL 430036) (‘TEM Financial Services’). This material is for general information only and is not an offer for the purchase or sale of any financial product or service. This material has been prepared for investors who qualify as wholesale clients under section 761G of the Corporations Act or to any other person who is not required to be given a regulated disclosure document under the Corporations Act. This material is not intended to provide you with financial or tax advice and does not take into account your objectives, financial situation or needs. While we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which can’t be excluded. Before making an investment decision, you should first consider if the information is appropriate for your circumstances and seek professional financial advice. Please note that past performance is not indicative of future performance and that no guarantee of future performance, the return of capital or a particular rate of return is given by TEM Financial Services, Magellan Logistics or any other person. To the maximum extent possible, TEM Financial Services, Magellan Logistics or any other person do not accept any liability for any statement in this material.
