K2 has a net zero emission target for our scope 3 emissions within 2025 offering carbon offset program to compensate for all emissions not possible to mitigate or reduce within 2025. Our majority owner, Peak Group has set a target of having a fleet with zero emissions within 2050, and a net zero carbon emission target within 2030.
Our strategy is to focus on mitigation, reduction and offset of carbon emission, with main focus on mitigation and reduction of emissions.
In line with our strategy, K2 Project Forwarding together with our owners Peak Group and Deugro Group are highly committed to develop and offer future carbon efficient solutions to our customers, short- and long term. Together with Grieg Group / Grieg Maritime, we have during 2021 developed a new vessels concept with dual fuel MGO and Blue / Green Ammonia or Methanol. In order to commercialize this development as well create a driving force developing and offering zero emission vessels to the European short sea and project logistics market, we have established a joint 50/50 company called Skarv Shipping Solutions.
On the 22nd of December 2022, the European Council and Parliament agreed to include maritime shipping emissions within the scope of the EU ETS (EU Emission Trading System). They agreed on a gradual introduction of obligations for shipping companies to surrender allowances: 40% for verified emissions from 2024, 70% for 2025 and 100% for 2026.
Most large vessels will be included in the scope of the EU ETS from the start. Big offshore vessels of 5000 gross tonnage and above will be included in the 'MRV' on the monitoring, reporting and verification of CO2 emissions from maritime transport regulation from 2025 and in the EU ETS from 2027. General cargo vessels and offshore vessels between 400-5 000 gross tonnage will be included in the MRV regulation from 2025 and their inclusion in EU ETS will be reviewed in 2026. In other words, majority of module transports covered under this bid will be subject to the carbon pricing starting from 2024 and onwards.
It is also believed that large countries outside EU like US, Canada, China and others will implement similar regulations the next coming years.
From the moment international transport is part of the carbon trading system, it is believed that there will be a gradual increase in investments into new vessels, trucks and other means of transport using new propulsion / engine technologies and carbon neutral fuel such as electricity, green / blue Ammonia / Hydrogen / Methanol or similar. With current market price of carbon, EU´s proposal will add a cost of EUR 180 per ton of fuel in carbon tax for Marine Gas Oil and VLSFO (Each ton of MGO / VLFSO is equal to 3,2 metric tons of Co2), reducing the cost gap between Ammonia / Methanol as fuel versus the MGO or VLSFO used today by the global fleet. However, the carbon tax is expected to increase with the introduction of Maritime Transport into the trading system.
In order to eliminate scope 3 emissions for our clients we will have to utilize ships, trucks and other means of transport using Electricity (Short haul), Liquified BioGas, Green / Blue Ammonia, -Methanol or -Hydrogen. With exception of electric trucks / vehicles for local transport, these new technologies will gradually be available from 2024 and onwards in line with implementation of carbon pricing giving increased incentives to invest into new / green technologies.
In order to reduce scope 3 carbon emissions for our clients the next 2 – 3 years we have below outlined the following short term solutions and methods:
The use of Biofuel from biomass are considered as a renewable alternative to conventional fossil fuel by EU and should be therefore considered as one of the key measures that can be taken in order to reduce carbon emissions. Biofuel will also be counted as carbon neutral in the EU Emission Trading System starting 2024, and therefore also exempted from carbon pricing.
Biofuel has for a long time been used as blend together with MGO or VLSFO for several vessels and in particular within the container segment. During the last few years, there has also been several trials using 100% biofuel provided by GoodFuels in the Netherlands. Using 100% biodiesel on a voyage will per definition give the project 90% carbon reduction using such fuel. To enable direct use of Biofuel detailed planning must be done together with a selected carrier, since this will demand technical planning and preparations from the owner to be part of such voyage including verification of biofuel from the engine manufacturer as well potential procurement of additional fuel filters for the vessel engine.
As an alternative to procurement and use of biodiesel on dedicatedvoyages, a more smooth and less time consuming method in respect of planning isinsetting of actual of emissions. In these cases we will calculate the actualfuel consumption and CO2 emissions and procure biofuel / biodiesel from theGoodShipping Program in order to compensate for the emissions. The biodieselwill then be consumed on vessels already approved for use of Biofuel.Certificates will be issued when actual fuel is consumed and will also beverified by Ernst & Young on a quarterly basis.
As an alternative to use of biofuel either directly or via insetting, the most common way of obtaining carbon neutrality for the scope 1 and 3 emissions coming from transportation of goods and people is carbon offsetting. A carbon offset is a contribution to sustainable development and climate cooling projects that companies purchase in the form of “credits” to offset their carbon footprint.
K2 / Deugro are today offering carbon footprint offset program through selected partners like Atomsfair and Climate Partner. Through the program, our customers do have the opportunity to offset their transportation footprint by donating carbon credits directly through K2 / Deugro to selected projects.
The offset programs are rigorously verified by third parties in accordance with recognized carbon standards. However, we also recognize that some cargo owners do not consider a carbon offset program as a relevant measure towards reduced carbon emissions and will only accept actual reductions in carbon emissions as part of their carbon footprint reduction.