Insetting Can Speed Up Shipping Decarbonisation But Needs Strong Guardrails

A new analysis by the UCL Energy Institute, supported by UMAS, reveals that voluntary insetting schemes could play a crucial role in decarbonising the maritime sector ahead of regulation.

These schemes, if designed with strong safeguards, offer an opportunity to stimulate early investment in sustainable shipping fuels and practices during the energy transition’s critical “emergence” phase.

Insetting: Early Signals for Market and Investment

The report defines insetting as investments that reduce emissions within the value chain, distinguishing them from offsetting. Maritime insetting mechanisms—particularly book and claim models—can encourage value chain awareness and mobilize early private investment into low- and zero-emission technologies before regulatory requirements fully take effect.

Professor Tristan Smith emphasized that while the IMO’s Net Zero Framework (NZF) now offers greater clarity on the role of regulation, voluntary action still has a critical role. Insetting schemes can help close the gap by aligning early emissions reduction efforts with future IMO carbon accounting systems.

Risks and Guardrails: Avoiding Lock-in and Ensuring Credibility

The report also identifies key risks and offers recommendations for making insetting credible and impactful:

• Boundary clarity: Many current schemes fail to define the “value chain” properly. The report advises using GHG Protocol and Smart Freight Centre guidelines to ensure emissions reductions occur within—not adjacent to—the maritime chain.

• Third-party verification: A lack of standardized verification has raised concerns over transparency and accountability. The authors recommend mandatory independent third-party audits and open reporting to prevent schemes from self-validating results.

• Focus on long-term fuels: Current insetting practices rely heavily on biofuels, which are easier to adopt but have limited scalability. There’s a danger of technological lock-in, potentially delaying investment in Scalable Zero-Emissions Fuels (SZEFs) like green hydrogen and ammonia. The report urges setting guardrails that prioritize long-term decarbonisation over short-term convenience.

Dr Nishatabbas Rehmatulla stressed that “The emergence phase of shipping’s energy transition requires ambitious voluntary action, and insetting schemes offer one mechanism to deliver this. To realise this potential, schemes must be grounded in the latest available science, governed by reliable third parties, and designed to promote scalable, long-term decarbonisation solutions.”

The UCL-UMAS report positions insetting as a promising voluntary mechanism to fast-track maritime decarbonisation—but only if it’s implemented with integrity and long-term vision. Success will not be measured by carbon credits alone, but by how effectively these schemes push the industry toward a truly zero-emissions future.