Carbon insetting refers to the financing of climate protection projects within a company’s own value chain. It reduces or sequesters emissions, thereby achieving a positive impact on communities, landscapes, and ecosystems associated with this value chain. The money from insetting tokens then flows back into the shipping sector to finance decarbonisation projects.

Most of the of the big retailers (such as IKEA or Amazon) would like to sell their products as low carbon or carbon neutral. They would like to state that their products are also zero carbon shipped, which means they need to tackle emissions reductions in the supply chains of the products they sell – scope three emissions.

In shipping, purchased carbon insets prove that low or zero carbon fuel was used by the carrier, and then emissions reduction benefits can be attached to the products. Insets are immutable and transferable tokens, which companies can manage using a blockchain wallet and transfer to customers. An inset also allows the transfer of environmental benefits, decoupling carbon reduction from specific transport activity, and enabling the greening of overall transport activity.

The money is then used to ensure continuing promotion and uptake of this clean fuel, building supply and reducing costs so that the industry can transition sooner. As a result, insetting is an effective means of expediting the energy transition in shipping, which is currently blocked by price levels; fossil fuels remain cheaper than renewable fuels. Insetting helps to close this price gap.