Carbon credits are generated from project that pull greenhouse gasses out of the atmosphere or keep them out altogether.
If carbon credits in the USA sold at the EU’s proposed $75.00 each, then logistic supply chains whose projects verify that they have reduced, avoided, or destroyed one metric tonne of GHGs have in their hands a great financial opportunity.
What are carbon credits?
By definition, “carbon credits” are generated from projects around the world that pull greenhouse gasses (GHGs) out of the atmosphere or keep them out altogether. Each time a project verifies that they have reduced, avoided, or destroyed one metric tonne of GHGs, one carbon credit is created.
What is the Marco Polo II Programme?
It’s a European program that provided funding for projects which shifted freight from the road to sea, rail or inland waterways. This means fewer trucks on the road, thus less congestion (gridlock), less pollution, and more reliable and efficient transport of goods.
On a scale of 1-10 of fuel spend per tonne, 1 being the most efficient, trucks rate 7, railroads 3, and water transport 1.
Calculating carbon credits
In the “Transportation Space”, the universally accepted common denominator to calculate carbon emissions is “fuel spend per ton mile”. For instance, according to the U.S. Energy Information Administration, each gallon of gasoline without ethanol burned emits approximately 19.64 lbs. of carbon and one gallon of diesel fuel burned emits 22.83 lbs of carbon into the atmosphere. So 112.27 gallons of gasoline and 99.32 gallons of diesel fuel expended equals one tonne of carbon. If one ton of carbon emission is eliminated, one carbon credit has been created.
Therefore, eliminating fuel spent to move cargo eliminates carbon emissions. Incidentally, eliminating fuel spend also eliminates costs. One further factor to take into consideration is VMT, Vehicle Miles Traveled. Reducing VMT reduces road wear and tear, road repairs and maintenance.
What are Green Shipping Line’s (GSL) supply chain carbon credits (SC3s)?
SC3s are created by lowering the carbon emissions a cargo’s supply chain transit between specific Origin/Destination (O/D) pairs. By way of background, each cargo that moves from one point to another, has a specific and unique carbon footprint for said journey, i.e. the tons of carbon emitted into the atmosphere on that “move”.
How does Green Shipping Line reliably measure SC3s and VMT?
We use the same methodology as the Marco Polo calculator that has been vetted and accepted by 27 EU nations. GSL took the Marco Polo calculator and converted the input and output into U.S. metrics and named our calculator “Magellan”. The numeric values of the attributes for each of the Marco Polo and Magellan calculators’ metrics are published by our respective governments.
We use our Magellan calculator to compare a cargo moved by water, rail, and road between a specific O/D pair to find out which mode is the most economical, environmentally sensitive, and efficient. (See the attached). At GSL, we are agnostic: if the most efficient, economic, with the least carbon emissions move is by road then send it by truck, if by rail, rail the cargo and if by water then send it by water. We don’t believe in guesswork but base our analytics on numeric facts.
Looking towards the future
In the future, we believe strapped governments will seek new ways to raise money to pay for the enormous deficits resulting from the COVID-19 virus. Further there are increasing calls for more corporate climate responsible programs. If California’s AD 32 or the different cap and trade programs are vanguards of the future, expect new and higher taxes based on carbon emissions or cap and trade programs already in negotiations.
We believe if a company looks carefully at their transport logistic chains seeking the most efficient, economic and environmentally sensitive mode of transportation for a given leg, they will find different opportunities that will create carbon credits. SC3s can be used to lower the enterprise’s total carbon footprint to meet new stringent standards in the burgeoning cap and trade environment. And if those credits sold at the EU’s proposed $75.00 each, then there is gold waiting to be mined from logistic supply chains.
We hope that the old mantra of “that’s the way we have always done it” will finally be replace by “lets look at all our options”.