How do carbon offsetting and carbon insetting reduce environmental impact?

August 10, 2022
4 minutes
reading time

Sustainability and environmental impact have become top priorities for companies of all sizes, all over the world. This is because today’s consumers—and investors—demand a clean sustainability record from the companies they choose to do business with.

If your company relies on international freight shipping, then it’s important to do all you can to reduce carbon emissions throughout your supply chain. Air freight now accounts for around 2% of total carbon emissions released  worldwide each year. Container shipping accounts for 4%, but it emits far less carbon per ton of freight transported, which means it is the most environmentally friendly transport option. 

Although emissions are a necessary by-product of transport under current conditions, you can still achieve a significant reduction in emissions with options like carbon offsetting and insetting.

But how do carbon offsetting and insetting work? What are the differences between them? Are they effective? And which option is best for your company? In this article, we’ve got the answers to all these questions and more.

GoodShipping BioFuel

What is carbon offsetting?

Let’s start with carbon offsetting, because you’ve probably heard about this method in the past. The principle behind carbon offsetting is that for every ton of carbon emissions you generate, you purchase a credit that supports an activity outside the industry to capture carbon emissions from the atmosphere.

The goal is to create a net climate benefit. Because carbon emissions concentrate in the atmosphere and impact the world on a global scale, the carbon offset can take place anywhere and still have a positive impact. This is why at Shypple we offer the option to support ForestNation, an organization that offsets carbon emissions through reforestation projects. Trees capture greenhouse gases such as carbon dioxide from the atmosphere, which helps slow the impact of global warming and climate change.

It’s a simple principle: Your container shipment generates carbon emissions along its route from China to Rotterdam. To offset all of those emissions, you support ForestNation, who plant trees in Tanzania. When you purchase carbon offsets, you reduce your company’s net emissions (as well as global net emissions)—better for your company and better for the planet.

What is carbon insetting?

Carbon insetting is a technique that reduces carbon emissions right at the source. It involves developing new technologies, such as cleaner fuels and engines. These technologies reduce the amount of carbon emissions created by your supply chain in the first place.

At Shypple, we encourage carbon insetting through our partnership with GoodShipping. This Dutch-based organisation helps develop viable, cost-effective solutions to lower emissions. These include initiatives like biofuels.

When you sponsor an organisation like GoodShipping, you contribute to the use of biofuels or green energy sources in the shipping industry. Your contribution might not mean that the container ship that carries your cargo uses biofuel. But it does mean that biofuel is used elsewhere in the shipping industry, which, in turn, lowers net emissions.

What is the difference between carbon offsetting and carbon insetting?

Both carbon offsetting and carbon insetting seek to reduce net emissions. But there are some important differences:

Carbon Offset
  • Carbon reduction takes place outside your value chain (not at the same place as emissions occur)
  • Carbon emissions are not prevented, but are compensated for by environmentally friendly activity
  • Often involve traditional environmentally friendly activities, like reforestation and agriculture initiatives (although some offset activities also promote new, green energy projects, for example)
Carbon Inset
  • Carbon reduction takes place, within your value chain, right where emissions occur
  • Carbon emissions are prevented before they even occur
  • Focus on new technologies, like green energy and alternative fuels

Do carbon offsetting and insetting work?

According to Science, tree-planting is one of the most effective carbon offset measures. However, some studies have found that carbon offset in general is less effective than once thought. This raises hope that carbon insetting will become more available, to fill any gaps that cannot be handled by carbon offsetting alone.

One thing is clear: Carbon offsetting is still better for the environment than doing nothing to reduce emissions at all. This is why we believe at Shypple that it's important to offer carbon offsetting. Along with the rest of the world, we're on a journey to discover how we can help reduce the stress on our climate. There's no single solution. It will take a combination of measures to reach net zero emissions.

As with any business choice, it’s important to work with the right partners. This is true, even when it comes to lowering your carbon footprint. That’s why Shypple works with sustainability partners like ForestNation and GoodShipping, which are affiliated with international environmental protection bodies.

If your company chooses to support tree-planting to offset carbon emissions, look for a partner like ForestNation that registers its trees with the United Nation Environment Programme. This ensures transparency, so you know that your contribution makes a real impact.

When it comes to carbon insetting, transparency is also essential. Be sure to work with a reputable partner like GoodShipping, which has worked with some of the world’s largest companies to reduce their carbon emissions. GoodShipping also releases annual reports which audit their environmental impact.

Which method is right for my company?

If you work in an industry, such as transport or manufacturing, which releases large amounts of emissions, then carbon inset can help to reduce those emissions. For retail companies that generate emissions above all through their supply chain, both carbon reduction options are an effective choice.

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