20 Jan 21

How carbon offsetting can help fleets become carbon neutral

Large fleets of vehicles pose a particular problem for businesses that are determined to become carbon neutral as soon as possible. Double and even triple digit growth in the sale of electric vehicles cannot hide the fact that these zero emission company cars and vans still represent only a minority of fleet sales. A combination of factors, including fleet replacement cycles, the higher cost of switching to battery power, and the fact that many classes of vehicle, especially large vans that drive high mileages, do not have viable electric alternatives, means diesel is likely to remain the fuel of choice for the foreseeable future.

Faced with this uncomfortable truth, businesses that have committed to a deadline to reach carbon neutral status must find an alternative to EVs to offset their exhaust emissions. Every litre of diesel burned creates 2.7kg of carbon dioxide, and every litre of petrol creates 2.4kg of CO2. The question is what to put in the other side of the balance to ‘cancel’ this carbon and level the scales.

Carbon offset schemes

A growing number of charities and non-profits have developed carbon offsetting solutions, investing in projects that either sequester carbon, such as tree planting; or reduce emissions, such as windfarms that replace coal-fired power stations. Many of these schemes are in developing countries; with climate change a global issue, it doesn’t matter where in the world the carbon emissions are reduced.

Strict United Nations guidelines and rigorous verification procedures ensure that the best carbon offsetting projects deliver on their promises, and that the ‘credits’ they generate genuinely represent a reduction in carbon emissions.

Robert Stevens, ClimateCare’s director of partnerships, said: “To earn carbon credits, the project developer must first demonstrate that emissions reductions created would not have happened without their project. Carbon reductions are then regularly measured to an agreed methodology, independently verified and only then are carbon credits issued. When you offset your carbon emissions these carbon credits are retired on a public registry, and cannot be used again – ensuring that your payment directly funds a known and verified carbon reduction.”

Price of carbon credits

Carbon offset prices vary widely, depending on the project. Building a windfarm, for example, has both a different cost and a different level of carbon reduction to the restoration of forests. According to Energy Sage, carbon offset prices range from US$0.10 per tonne of CO2 to US$44.80 per tonne. The emissions calculator of German company Atmosfair, which allows air travellers to offset the impact of their flights, uses a figure of €23 per tonne of CO2.

The good news for finance directors is that in most EU countries, donations to carbon offsetting schemes is tax deductible; while marketing and CSR directors will appreciate that achieving carbon neutral status is a positive statement for a brand.

“Going climate neutral can deliver a range of business benefits  – from demonstrating environmental credentials and building customer confidence in your brand, to improving staff engagement with your broader sustainability programmes,” said Stevens.

Fleet-specific offset programmes

Before undertaking a fleet carbon offset programme it’s vital to know the total weight of carbon dioxide produced by all of a business’s vehicles. This is relatively straightforward for fleets with fuel cards, because invoices will itemise the number of litres of petrol and diesel bought. It is then simply a question of multiplying these totals by 2.7 for diesel and 2.4 for petrol to calculate total CO2 emissions in kg.

Shell, BP and Aral have made it easy to offset these emissions by introducing carbon offsetting as an option with their fuel cards. These automatically calculate a fleet’s CO2 emissions and then offset them by financially supporting nature-based solutions. Logistics firm Nedcargo, which distributes about 20% of products on the shelves of supermarkets in the Netherlands, is using the Shell scheme to offset the impact of the 10,000 litres of diesel burned by its trucks every day.

Alternatively, approximate calculations can be made from fleet business mileages, based on typical fuel consumption figures per kilometre. This is a way to add up the impact of all business miles, including those driven by employees using their own cars for work journeys. Last October, telematics company Webfleet Solutions launched a new tool, Green Your Fleet, that enables its clients to estimate their annual CO2 emissions, based on their fleet size, vehicle types and mileages. Webfleet then works out how much this total would cost to offset via a scheme to regreen dry lands in Tanzania, run by the non-profit Justdiggit.

Offsetting - an excuse to do nothing?

Early carbon offset programmes were criticised by some evironmentalists as a way for large corporates to bribe their way out of environmental guilt. However, experience has shown that most businesses with a commitment to achieve carbon neutrality undertake comprehensive steps to minimise their emissions before deciding to offset the emissions they cannot avoid.

Fleet initiatives are not perfect – most measures of carbon emissions only cover the climate change impact of diesel and petrol once it is in the tank of the car, van or truck, rather than right through the process from well to refinery to filling station to fleet. Shell estimates that tank-to-wheel accounts for about 80% of CO2 emissions generated by the combustion of fuel.

Green fleets must also acknowledge that CO2 is not the only exhaust emission that damages the environment – NOx and particulates are also serious, and theses are not balanced by carbon offsetting.

Offsetting EV kilometres

And finally, even switching to electric vehicles is no guarantee of a cure for global warming. Zero emission kilometres depend on electricity being generated by zero emission power plants, such as solar and wind. Fleets that buy electricity generated by coal or gas have merely relocated the CO2 impact from tailpipe to chimney, and will still have to develop carbon offset policies to become truly carbon neutral.

Image: Shutterstock

Authored by: Jonathan Manning