Vitol Bunkers offers carbon offsets ahead of new EU climate legislation

Vitol Bunkers, the recently formed marine arm of commodities trader Vitol, is offering carbon offsets to its customers as the pace of international climate legislation picks up.

"Vitol Bunkers said June 9 that "customers will be offered the opportunity to cancel emissions associated with any given cargo through the overlay of Verified Emissions Reductions".

The VERs will be "sourced from Vitol's existing portfolio and the wider market and emissions will be calculated using [International Maritime Organization] and [European Union] guidelines".

S&P Global Platts assessed CORSIA-eligible carbon (CEC) credits at $2.46/mt on June 8, up from 80 cents/mt in January when the daily assessment was launched.

CEC credits are eligible under the UN Carbon Offsetting and Reduction Scheme for International Aviation, which requires airlines to surrender offsets to match any CO2 emissions above a 2019 baseline.

The European Commission is expected to propose a raft of climate and energy policies July 14, which will mean aligning the carbon cap under the EU Emissions Trading Scheme with the bloc's new 55% emissions reduction target for 2030.

The EC has yet to quantify how much of the reduction it intends to place on the EU ETS -- which covers just over 40% of EU economy-wide emissions -- compared with the non-traded sectors. Shipping is not currently included in the EU ETS but the July 14 proposal is expected include shipping in the scheme.

Two important and related legislative proposals -- extending the scope of the EU ETS to shipping and potentially other sectors, and a Carbon Border Adjustment Mechanism -- could be light on detail and require more work, French bank Societe Generale said in a note June 8.

The CBAM was expected to place a charge on the carbon content of goods imported into the EU including electricity, metals, cement and fertilizer. It will also be linked to the carbon price under the EU ETS, according to a draft proposal leaked June 4.

A CBAM may affect shipping as importers of goods to the EU would potentially have to factor in emissions involved in transporting their goods in their overall carbon calculations, as well as emissions from the goods' actual production, sources said.