Insetting for cleaner fuels
Producers of low-carbon fuel pay the green premium. The emissions reduction shows up in the reports of shipping lines, airlines and brands further down the chain. Insetting lets those buyers share the cost and receive the credits.
Why insetting fits low-carbon fuels
Projects stall until someone downstream commits to pay the premium.
The premium sits upstream
Low-carbon fuels often cost several times as much as the fossil fuels they replace.
The molecule rarely reaches the buyer
Scarce supply means most buyers will never receive the physical fuel. The reduction therefore travels separately from the fuel through book and claim, and a registry makes sure it is claimed only once.
Chain-of-custody rules already exist
Schemes such as ISCC and RSB Book & Claim already govern how fuel attributes move. Carbon3 builds on them and adds allocation between buyers, trading and safeguards against double counting.
Illustrative
The premium, shared
- Premium
- Shared by the funders
- Credits
- Split in the same proportions
- Claimed
- Through book and claim
Typical inset projects in fuels
- 01
Methanol and e-methanol
Bio-methanol from biomass or waste and e-methanol from green hydrogen and captured CO₂, supplied to methanol-capable ships. The reduction against fossil marine fuel is calculated from the certified carbon intensity and allocated to the cargo owners and lines that fund the premium.
- 02
Sustainable aviation fuel
Jet fuel from waste oils, residues or synthetic routes, supplied above the ReFuelEU mandate. Travel and cargo buyers fund the premium over fossil jet fuel and receive the verified reduction through book and claim.
- 03
Bio-methane and biofuel blends
Bio-methane from manure, food waste or wastewater, and advanced biofuels from residues, used in ships, trucks and industrial heat. Waste feedstocks also avoid methane that would otherwise escape, which is counted only where the methodology allows it.
- 04
Ammonia and hydrogen
Hydrogen from electrolysis on low-carbon power, or from gas with carbon capture, and the ammonia made from it, for fertilizer plants, refineries and future ship engines. The baseline is the gas-based hydrogen or ammonia it replaces.
- 05
Methane recovery
Capturing associated or landfill gas that would otherwise be vented or flared and turning it into fuel or power. It is measured with flow meters and gas analysis, and credited only where capture is not already required by law.
How a fuel inset works
The fuel’s existing certification carries the carbon intensity. Carbon3 adds the sharing between buyers.
- 1Producer and offtakers
Scoping and project definition
The producer defines the batch or contracted volume, the feedstock, the fuel’s certified life-cycle carbon intensity and the fossil fuel it replaces. Offtakers agree their shares of the premium.
- 2Independent verifier
Validation report
An independent verifier confirms the scope, the baseline fossil fuel, the chain-of-custody scheme (such as ISCC or RSB) and that the volume is above any mandate.
- 3Producer
Implementation
The fuel is produced and delivered into the market. Sustainability certificates and delivery records follow each consignment.
- 4Independent verifier
Verification report
The verifier checks delivered volumes and certificates and states the verified reduction against the fossil fuel.
- 5Project developer, on the Carbon3 registry
Issuance to the project developer
Realized credits, one per tonne in the verification report, are issued to the producer and recorded on the Carbon3 registry. Future credits can also be issued to it earlier, once the project is validated. They stay labeled Future, and buyers who take them carry the delivery risk.
- 6Producer
Allocation by book and claim
Credits go to the funders by share, not to whichever tank the fuel physically reached.
- 7Offtakers
Retirement or sale
Each funder retires its share for its Scope 3 report or sells surplus.
Sharing the green premium
The producer carries the cost difference, and the buyers who need the reduction share it.
Producer
Makes the low-carbon fuel
Fuel users
Shipping lines and airlines that burn the fuel
Brands
Companies whose goods or staff are transported
Low-carbon fuels often cost several times more than the fossil fuels they replace. The premium is shared, and the credits are split in the same proportions.
One bio-methanol contract, three funders
A bio-methanol producer supplies a container line for one year. The line and two retail brands whose goods it carries fund the premium.
Who pays what
Shipping line
Brand A (retailer)
Brand B (retailer)
| Funder | Share | Pays | Credits, years 1 to 5 | Of which future credits (years 1 and 2) |
|---|---|---|---|---|
| Shipping line | 40% | €1,200,000 | 18,000 t | 6,000 t |
| Brand A (retailer) | 35% | €1,050,000 | 15,750 t | 5,250 t |
| Brand B (retailer) | 25% | €750,000 | 11,250 t | 3,750 t |
| Total | 100% | €3,000,000 | 45,000 t | 15,000 t |
Future and realized credits in this example
1At validation
The 15,000 tonnes planned in years 1 and 2 are bought as future credits, so the money funds the implementation and the holders carry the delivery risk.
2After each verification
The 30,000 tonnes verified in years 3 to 5 are issued as realized credits, one per tonne in the verification report.
Cost per verified tonne
Spread over 5 years of credits, the project cost comes to €67 per verified tonne, a figure to compare with the internal carbon price or with the CBAM certificate cost an importer faces. Real prices are not shown.
Assumptions
- Premium over fossil fuel of €3,000,000 in total.
- Full rate of 10,000 t a year from year 2.
- Year 1 at 50% while supply starts.
- Credits are split in line with what each funder paid.
- One credit equals one verified tonne of CO₂e.
- No real companies, prices or projects. Fees are not shown.
- Illustrative split: the credits for years 1 and 2 are bought as future credits at validation; later years are taken as realized credits after each verification. The real split is agreed project by project.
Five years of supply
Credits per year by funder.
Credits per year, in tonnes
- Shipping line (40%)
- Brand A (retailer) (35%)
- Brand B (retailer) (25%)
- Future credits, bought at validation
45,000 t in total over 5 years
Assumptions
- Same volume and shares each year.
- Carbon intensity stays as certified.
- Real results depend on supply and verification.
- Illustrative split: the credits for years 1 and 2 are bought as future credits at validation; later years are taken as realized credits after each verification. The real split is agreed project by project.
Fuel rules and claims
Mandates set a floor. Only fuel above it can back an inset.
FuelEU Maritime applies to ships at EU ports and ReFuelEU Aviation to fuel suppliers at EU airports. Brands report the reduction in Scope 3 under the GHG Protocol and set targets with the SBTi on their physical inventory. The Carbon3 registry gives each inset credit one serial number and one holder, so each tonne is counted once.
- Producermakes the low-carbon fuel
- Fuel usersshipping lines and airlines
- FuelEU MaritimeA limit on the greenhouse gas intensity of the energy used by ships at EU ports.
- ReFuelEU AviationA minimum SAF share for fuel suppliers at EU airports. Only SAF above it backs a credit.
- Brands’ reportcompanies whose goods or staff are transported
- GHG Protocol Scope 3A supplier’s reduction shows in Scope 3 when it is in the data the company uses, such as a supplier-specific factor.
- SBTiTargets are set on the physical inventory.
Counting each tonne once
Carbon3 registry: each inset credit has one serial number and one holder. A transfer moves it, retirement closes it.
SCHEMATIC, ILLUSTRATIVE. GENERAL INFORMATION AS OF OCTOBER 2026, NOT LEGAL ADVICE.
FuelEU Maritime
- What the standard is
- Since 1 January 2025, FuelEU Maritime limits the greenhouse gas intensity of the energy used on board ships above 5,000 gross tonnage calling at EU ports, measured over the fuel’s life cycle. The limit tightens from 2% below the 2020 average in 2025 to 6% in 2030, 14.5% in 2035 and 80% in 2050. Ships can pool their compliance, and container and passenger ships must use shore power at the main EU ports from 2030.
- A reduction in the company’s own supply chain
- The limit applies to each ship. A carrier on the company’s routes that does better than its limit can pool the surplus with other ships.
- One in its industry, outside its chain
- Pooling moves surplus compliance between ships, including ships outside the company’s chain. Surplus transferred through pooling cannot also back a credit.
- What an inset credit does
- Only performance beyond what a ship needs for its own FuelEU compliance, and not already sold to another ship through pooling, should back an inset credit. Validation checks the project against the ship’s FuelEU records.
ReFuelEU Aviation
- What the standard is
- ReFuelEU Aviation obliges fuel suppliers at EU airports to blend a minimum share of sustainable aviation fuel (SAF) into jet fuel. The share is 2% from 2025 and 6% from 2030, of which 1.2% must be synthetic fuel made from hydrogen, and it rises to 70% in 2050, with 35% synthetic.
- A reduction in the company’s own supply chain
- The blending obligation sits with fuel suppliers at EU airports, not with airlines or their customers. SAF up to the mandated share is part of the baseline.
- One in its industry, outside its chain
- Mandated SAF supplied at other airports or to other airlines counts only towards the fuel supplier’s own obligation.
- What an inset credit does
- Only SAF supplied above the mandated share can back an inset credit. Volumes a fuel supplier counts towards its own mandate are excluded.
GHG Protocol: Scope 3 Standard
- What the standard is
- The Greenhouse Gas Protocol sets the accounting rules most companies use for their emissions. Its Corporate Value Chain (Scope 3) Standard, published in 2011, covers the emissions in a company’s value chain in 15 categories, from purchased goods and transport to the use of sold products. It has no market-based method for Scope 3, so purchased certificates or credits do not change the Scope 3 figure, unlike electricity in Scope 2.
- A reduction in the company’s own supply chain
- A reduction at a supplier the company buys from lowers its Scope 3 inventory when it shows up in the data the company uses, for example a supplier-specific emission factor for the goods it purchases. A spend-based average will not show it.
- One in its industry, outside its chain
- A reduction at a producer outside the company’s own supply chain is not part of its inventory under any method. It can be disclosed separately as an action, not as a lower Scope 3 figure.
- What an inset credit does
- When a supplier in the buyer’s own chain reduces emissions, the buyer’s Scope 3 goes down through lower supplier emissions data. The inset credit is the proof of that emissions reduction and who funded it, and it is not counted a second time. An emissions reduction outside the buyer’s own chain is reported separately, not as a lower Scope 3 figure. The GHG Protocol’s Actions and Market Instruments workstream is developing a market-based approach for Scope 3. A consolidated draft is expected for public consultation in the second quarter of 2027, and the revised standard in the fourth quarter of 2028. Each Carbon3 credit records the supplier, project, baseline and verification report, so it can be reported under the current rules and reassessed under the new ones.
Science Based Targets initiative (SBTi)
- What the standard is
- The SBTi validates whether a company’s emissions reduction targets are consistent with climate science. Its Corporate Net-Zero Standard V2.0 was published on 11 June 2026. Validations under it open on 1 February 2027, and it becomes mandatory for new target submissions from 1 February 2028. Targets already validated under the earlier version stay valid for their cycle. Target ambition is always set on the company’s physical inventory.
- A reduction in the company’s own supply chain
- Reductions that show up in the company’s inventory support emissions reduction claims. A project implemented by or on behalf of the company in its own value chain, with measured outcomes reported in proportion to its contribution, can support target implementation and an “alignment” claim.
- One in its industry, outside its chain
- Action in a shared system the company draws on, such as a supply shed or logistics network, or at sector level, counts only where direct action in its own chain is constrained. It supports a separate “system contribution” claim, reported apart from the inventory.
- What an inset credit does
- Projects must be measured, additional and verifiable. Their outcomes must be uniquely attributed, with serialized tracking to prevent double counting. Credits a company sells on cannot also count for that company. The SBTi plans interim guidance on reporting projects and market instruments for consultation in the fourth quarter of 2026, so how a received inset credit is assessed is not yet fully settled.
Counting each tonne once
- What the standard is
- Double counting happens when two companies claim the same tonne, when one tonne is sold twice, or when a reduction is credited by two programs. Standards such as the SBTi’s now require serialized tracking to prevent it.
- A reduction in the company’s own supply chain
- Several companies in one chain can fund the same project. Each receives its own serialized credits, so no tonne has two holders.
- One in its industry, outside its chain
- The same rule applies wherever the tonne sits: one serial number, one holder, and no credit for a reduction already credited by another program.
- What an inset credit does
- Each credit has a serial number and exactly one holder on the Carbon3 registry. A transfer moves it rather than copying it, and retirement closes it permanently. A reduction already credited elsewhere is excluded at validation.
General information as of October 2026, not legal, accounting or reporting advice. Standards and regulations change; check the current text.
Fuel questions
No. ISCC, RSB and similar schemes certify the fuel’s feedstock, carbon intensity and chain of custody, and Carbon3 relies on those certificates. Carbon3 adds the market layer, with several buyers sharing one batch, credits allocated by contribution, trading between members, and a registry that records one claim per tonne.
Talk to us about fuel volumes
Producers, blenders and traders can have an account prepared around a real batch, ready to review.