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Carbon reduction vs carbon offsetting: Choosing the right route for freight decarbonisation

By Serge Schamschula, Head of Ecosystem at Transporeon

In light of the  European Commission’s recent ambitious proposals to enhance the sustainability and efficiency of freight transport across Europe, the need to decarbonise has reached a critical juncture.  This urgency is fueled by the growing concerns of the British public regarding the climate crisis. Consequently, all stakeholders in the UK’s freight industry must be prepared to elucidate the steps they are taking to combat climate change.

To embark on this journey, companies first need to understand precisely how much carbon they’re responsible for emitting, which is no small feat, especially when you consider that any enterprises are yet to adopt a system that effectively measures their scope one emissions (arising from their own production) and scope two emissions (from purchased energy), let alone indirect emissions falling under scope three.

The consequences of all this is that  the accuracy of emissions calculations in the logistics transportation industry is mixed at best. While some companies endeavour to calculate  their own emissions, others rely on generic industry  averages, resulting in discrepancies of up to 55% even within the context of similar full truckloads.

The ascendance of offsetting – a simple solution for decarbonising logistics?

In response to the growing complexity of the situation, there’s now an appetite for ‘quick fix’ solutions. And carbon offsetting – the practice of investing in an activity that compensates for greenhouse gas emissions – has emerged as the lead contender.

Nowadays, companies offer a plethora of offsetting opportunities. Popular choices among them include planting trees or purchasing areas of rainforest to protect them from deforestation. So far, so good. But is planting a tree that will take 20 years to grow really enough to offset carbon emissions created today?

In a word, no. While the need for action is immediate, it takes an average of twenty years for a tree to absorb a surplus of CO2 compared to what it releases. This leaves a significant gap in addressing the urgency of the climate crisis.

In addition to being easy to implement, offsetting is also very affordable, and in some cases, alarmingly so..  Currently, carbon offsetting starts at just £2 per tonne. To put this in perspective, consider the expense of emitting one tonne of carbon through the European Union’s official Emissions Trading Scheme. In this scheme, companies can purchase permits to exceed a predetermined emission cap. Over the past year, the cost has fluctuated between £65 and £105 per tonne, making it up to 50 times more costly than offsetting.

The logical alternative – tangible carbon reduction measures

While carbon offsetting certainly mitigates  unavoidable carbon emissions, it falls short in providing an all encompassing solution for freight decarbonisation. A more robust approach is warranted and shippers, carriers and LSPs are better advised to implement tangible carbon reduction measures.

This starts with measuring emissions as accurately as possible. Only through gaining an understanding of where emissions are coming from, can companies  set effective long-term decarbonisation goals as part of a broader strategy that includes a prioritised list of measures and science-based annual reduction targets encompassing scope one, two and three emissions. Additionally, companies should continually assess their progress against these targets and take corrective measures when necessary.

Decarbonisation isn’t just about investing in expensive, cutting-edge technologies. Considerable strides can be made through incremental improvements that enhance operational efficiency. And  digitalisation plays a crucial role here. Digital tools are easily deployable and require minimal capital expenditure. They empower companies to curtail carbon emissions by facilitating enhanced data sharing and increasing visibility.Armed with the right data, companies can reduce empty mileage, tackle unnecessary dwell times, educate drivers on sustainable driving practices and combine transport modes intelligently to minimise emissions.

However, digitalisation alone isn’t enough. Today, the ‘secret sauce’ for decarbonisation lies in implementing digital tools within a collaborative network. For example,  the industry can drastically reduce empty mileage when different stakeholders work together in a “platform approach” rather than operating in silos.

Looking to the future, the advent of cutting-edge technologies like electric and hydrogen-powered trucks (and even aeroplanes!) will transform the transportation industry and enable freight decarbonisation. Yet, these innovations remain several years away from practical scalability and demand substantial capital investments for their implementation.So, as companies invest in pilot renewable energy projects, it’s also advisable to prioritise the impactful ‘quick wins’ outlined above.

Decarbonising logistics won’t  happen overnight and whilst  offsetting may appear to be a ‘fast-track’ route to sustainability, the reality is far more nuanced. What is truly required  is a multipronged approach that combines short-term efficiency gains, long-term renewable energy projects and some carbon offsetting for unavoidable emissions. This comprehensive strategy paves the way for the industry to embark on a genuinely sustainable path.

Photo by Sam LaRussa on Unsplash

CILT warns of freight concerns over Brexit preparations

The Chartered Institute of Logistics & Transport has responded to The Transport Select Committee’s inquiry into the effects of Brexit on UK freight operations.

The Institute’s response has been led through its Freight and Logistics Policy Group, with a detailed submission that will contribute to Parliamentary understanding of the fundamental role freight and logistics will play in supporting the UK economy in a post-Brexit world.

The submission highlighted the work of CILT on Brexit, supported by a series of roundtable discussions with officials from the Department for Transport, HMRC and DExEU. CILT has stressed to Government the need to promote the preparatory steps operators, their customers and the Government should take ahead of the UK’s exit from the European Union.

This work with Government has made it clear that the impact of Brexit on freight is dependent on the detailed conditions relating to border management processes and employment.

CILT has stressed to the committee that its terms of reference, which specifically exclude border or customs arrangements, were limiting. The Institute divided its comments between post-Brexit international supply chains and domestic operators, and presented evidence that nearly 40 per cent (400 million tonnes) of the goods moved within the UK are either imported or exported. If these import and export chains are disrupted then shippers will look for alternative routings and sources based on economic or service conditions.

Under the worst scenario of a hard Brexit, CILT observed that there would be:

  • An increase in unaccompanied trailer movements between the UK and Europe
  • An increase in deep sea port activity
  • Increases in stock and warehouse requirements
  • A reduction in foreign vehicles operating in the UK

CILT’s Freight and Logistics Policy Group believes that all of these changes require capacity that may not exist in the market today, and will constrain highly agile operators from responding economically; in turn, threatening consumer and industrial prices.

The Institute understands that 60 per cent of tonnes that move solely within the UK will not be as challenged in a post-Brexit world. That activity is represented by more than 400,000 HGVs and another one million vans. However, the biggest threat to these movements is the availability of staff for the vehicles, the warehouses and distribution centres. A consequence of the pressure put on the workforce will be the need to invest in automation. CILT is clear that the Government should promote and incentivise such investment.

Finally, the Institute underlines the need for the UK to remain strongly aligned with EU regulations on vehicle and equipment standards to facilitate inter-operability. But this should not be a slavish adherence where alternative regulation could encourage innovation and productivity within the UK.

Daniel Parker-Klein, Head of Policy at CILT, said: “Preparing for Brexit is key to the success of the UK’s freight sector. We have worked extensively to engage with Government officials to understand the threats and opportunities that will arise after Brexit. The Institute is clear that companies and government must plan and rehearse for a variety of scenarios in order not to risk economic damage during transition.”