VLCC pool player Tankers International (TI) is diving into carbon offsetting in partnership with a Hartree Partners company, becoming one of the first large tanker players to offer its charterers a chance to offset the emissions on their voyages.
Under its “Climate Compensation Voyage Programme”, companies chartering any of TI’s 61 VLCCs will be able mitigate their Scope 3 emissions under an initiative delivered by Hartree’s carbon offsetting arm Vertree Partners.
Customers can choose from a range of verified nature-based offsets offered by Vertree on the basis of their price, geographies and impact targets. TI said these range from afforestation projects in Uruguay and those aiming to avoid deforestation and degradation in Cambodia.
The partners will also be able to offer a so-called "climate neutral" voyage by going further with the certification.
Tailor-made
TI senior vice president of commercial and operations Matthew Smith said the compensation package would be tailored to each voyage and charterer’s needs but ultimately could be scaled up to fit any term or contracts of affreightment.
He said the pool can offer flexibility around pricing, credit terms, delayed payments or incorporate these with freight.
When TI first priced its offset programme six months ago, it calculated that this would add a lump sum of $20,000 to the laden leg of a voyage from the Persian Gulf to China.
But Smith said carbon pricing is proving "quite volatile" and today that cost has more than tripled so the figure would be nearer $70,000 on the same voyage.
Little aside from some single cargo offsetting has been done on the large tanker sector and TI believes it is a first mover on offering voyage offsets for VLCCs.
Charterers hang fire
Smith said TI has been working on the project for slightly over 12 months.
He said the pool can see from Vertree's data that there is growing demand for both buying nature-based carbon credits and now retiring them to claim the offset.
TI has yet to conclude a first piece of business under its new programme but expects uptake this year.
Smith said parties are keen to talk but "reluctant to pull the trigger". However, they are asking to be kept informed and are likely waiting for more guidance on regulations.
He said TI has been looking at where it can fit into the drive to decarbonise shipping.
The pool has already moved on using data and software to improve its operational efficiencies through voyage optimisation tools.
"Our agreement with Tankers International allows us to support organisations that charter cargo and catalyse environmental action that’s increasingly demanded by their customers. Although within value chain emissions abatement should remain the priority, nature-based compensation is among the most scalable and effective way to reduce emissions, protect and restore biodiversity and support the United Nations’ Sustainable Development Goals.”
"We saw the space for carbon compensation schemes," Smith said.
"We appreciate it is not the wonder pill that is going to solve the decarbonisation problem," but he said TI believes carbon compensation and nature-based solutions do have an impact in "steadying the ship a little" and keeping a cap on emissions before the uptake of carbon-neutral fuels.
TI chief operating officer Charlie Grey said TI, which recently relaunched its VLCC app, is positioning itself for an upturn in the VLCC market and is now in a “very strong position”.
He said TI, which boasts seven shipowners, is looking to grow and is “delighted” to be aligning itself with a pool partner that has access to this specialist service.
