The hidden costs of offsetting decarbonization
For many cargo owners, shipping emissions are one of the most difficult parts of their climate footprint to address. They usually sit in Scope 3, outside direct operational control, yet they represent a meaningful share of total emissions.
Faced with limited access to low‑emission shipping, many companies have turned to carbon offsetting. Offsetting is familiar, widely accepted, and easy to deploy. But while it can reduce emissions on paper, it comes with a hidden cost — especially for companies with long‑term Scope 3 targets.
The question is not whether offsetting can fund climate action.
The question is whether it helps fix the system that is causing the emissions in the first place.
Offsetting vs Insetting
Before going any further, it helps to clarify two terms that are often mixed up.
Offsetting means compensating emissions by funding emission reductions or removals outside your value chain — for example, forestry or renewable energy projects in another sector.
Insetting means compensating emissions by investing in emission reductions inside your value chain — in this case, by supporting the use of low‑emission fuels and technologies within shipping itself.
Both approaches can reduce emissions somewhere in the world.
Only one helps transform the system that produces your shipping emissions.
Patching the pipe instead of fixing it
In maritime transport, offsetting typically works by compensating shipping emissions through emission reductions or removals generated outside the shipping sector — for example, forestry or energy projects. The financial contribution flows to a different industry, while the shipping system itself remains largely unchanged.
This creates a structural mismatch:
Shipping emissions are generated inside the maritime value chain.
The mitigation impact of offsets is generated outside it.
As a result, offsetting does not directly increase the use of low‑emission fuels, accelerate fleet upgrades, or improve access to cleaner shipping services.
A simple analogy helps explain the problem.
Imagine a pipe is leaking. Instead of replacing the broken section, we keep adding patches. The leak may look contained, but the pipe itself is still broken — and each patch delays the real fix.
Offsetting works in a similar way.
A company could, for example, spend USD XX million on emission‑saving credits and “neutralize” XX tonnes of CO₂ from shipping. On paper, the emissions are gone.
But does that mean the shipping system is now decarbonized?
Does it mean ships burn less fossil fuel?
Does it mean low‑emission fuels are cheaper or more available next year?
The answer is no.
The money solved an accounting problem — not the underlying one.
Why this matters for Scope 3 targets
Scope 3 accounting exists precisely because companies want to take responsibility for emissions they do not directly control — but are still linked to their value chains. Freight emissions are a textbook example of this challenge.
For companies relying primarily on offsetting carries three hidden costs:
1. A delayed transition in shipping
Shipping decarbonization faces a well‑known chicken‑and‑egg problem. Low‑emission fuels are more expensive and available only in limited locations. Carriers hesitate to scale their use without demand certainty, while fuel producers hesitate to invest without long‑term buyers.
When climate spending flows mainly into offsets outside shipping, that demand signal never reaches the maritime sector. The result is:
No cost reduction over time
The premium for low‑emission fuels stays high because demand is not scaled.Higher future compliance costs
When regulations tighten, companies still face the full cost of switching fuels or services — because offsetting did not help reduce them.No learning curve
Shipping does not get cleaner or more efficient as more offsets are purchased.
2. Growing integrity and claims risk
Carbon markets are evolving rapidly. New guidance from independent bodies has highlighted the need for stronger integrity around additionality, permanence, robust quantification, and avoidance of double counting.
Revised academic and policy guidance has also warned that many current offsetting approaches are not aligned with long‑term net‑zero pathways.
For companies, this creates increasing exposure. Claims that rely heavily on offsets may face tougher scrutiny from auditors, regulators, customers, and civil society - especially if they are framed as “decarbonized shipping” rather than contributions beyond the value chain.
The result is:
Limited Scope 3 credibility
Offsets address emissions elsewhere, not in the value chain companies are reporting on.Risk of greenwashing
Despite the nobile intentions, companies relying solely on offsetting solutions which are not 100% backed by independent and strict verifiactions mechanism might risk boomerang effects.
3. Missed capability building
As standards tighten, companies will need stronger internal capabilities to manage Scope 3 emissions: supplier engagement, credible documentation, traceable claims, and auditable data. Offsetting does little to build these muscles.
Mechanisms that operate inside the value chain, by contrast, force organisations to engage with the realities of freight decarbonization — and prepare them for what comes next.
What insetting changes
Insetting approaches — including mechanisms like EACs and Book & Claim — work differently.
Instead of sending money outside the sector, they direct capital into shipping itself, by supporting the use of low‑emission fuels within maritime transport.
This changes the dynamics:
Real demand signals
Cargo owners create demand for low‑emission shipping, even when it’s not available on their exact route.Faster scaling of sustainable fuels
More demand → more supply → better availability.Lower long‑term costs
As volumes increase, the premium for biofuels and other low‑emission fuels comes down.Cheaper compliance later
When regulation tightens, companies that helped scale solutions face lower transition costs.
Simply put: insetting helps reduce future costs; offsetting does not.
What Book & Claim solves in plain language
One of the biggest frustrations for cargo owners is simple:
“I want low‑emission shipping, but it’s not available on my route.”
Book & Claim addresses this mismatch.
It separates where fuel is used from who pays for and claims the benefit. Shipping companies can use sustainable fuel wherever it is available, while cargo owners can buy and claim the emissions benefit regardless of route or vessel.
Most importantly:
Every claim is linked to real fuel used in shipping
Every transaction sends capital into maritime decarbonization
Every purchase helps scale the solutions the sector actually needs
This is why Book & Claim is considered in‑sector decarbonization, not offsetting.
Offsets still have a role - just not this one
Offsetting can still play a role as beyond‑value‑chain contribution. Supporting climate action outside your supply chain can be positive.
But offsets should not be confused with decarbonizing shipping itself.
If shipping emissions sit in your Scope 3, then long‑term progress depends on whether shipping becomes cleaner — not on whether emissions are compensated somewhere else.