What Are Market-Based Measures (MBM) and How Do They Apply to My Business?

Introduction
Freight transportation accounts for 10% of global greenhouse gas (GHG) emissions. Without intervention, these emissions could rise by 42% by 2050, making decarbonization a critical priority. However, addressing emissions in freight transport is challenging due to high abatement costs and complex supply chains, where shippers, logistics service providers (LSPs), and carriers all play different roles. To help businesses accelerate decarbonization, a market-based approach can incentivize and provide a structured way to procure low emission transportation and account for and allocate the associated emission profiles to corporate GHG inventories. For instance, the Smart Freight Centre’s (SFC) Market Based Measures Framework enables businesses to follow as close as possible to physical transportation accounting rules but allows for more-flexible chain of custody approaches. Traceability to the low emission fuel or service is still high, and accounting practices can be too. Even without direct connection to low emission alternatives, organizations can procure and report through the application of a book-and-claim chain of custody model.

What Are Market-Based Measures?
MBMs can enable businesses to financially support freight decarbonization through verified low emission profile attributes, which can be allocated using different chain-of-custody models:

Model

Physical Separation


Mass Balance




Book and Claim

How It Works

Freight is transported exclusively via low-emission transport.

Low-emission solutions and conventional solutions are blended, and the corresponding emissions allocated disproportionately to select customers.

Businesses purchase low emission profile attributes without using low-emission transport directly.

Example 

A retailer contracts 100% of cargo from biofuel-powered trucks (Page 14).

A shipping company blends 10% sustainable fuel across its fleet (Page 15).



A carrier buys sustainable aviation fuel attributes when it only has access to standard jet fuel (Page 16).
Rigor in model application ensures transparent and credible emissions reporting (Page 17).

How Does MBM Apply to Your Business
  • Shippers (Companies Requiring Freight Transport)
    - Address Scope 3 emissions without switching transport providers.
    - Meet sustainability targets and enhance ESG reporting.
    - Have access to low emission transportation solutions regardless of geographic limitations.
    Example: A shipper purchases low-emission transportation service attributes while using conventional logistics, allowing them to report the lower emissions profile (Page 26).
  • Logistics Service Providers (LSPs)
    - Offer low-carbon transport services to customers, satisfying customer needs.
    - Support their carrier network in decarbonizing their fleet.
    - Ensure robust data and tracking as the competent mid-chain stakeholder.
    Example: An LSP works with electric truck operators, allowing cargo owners to claim verified emission claims (Page 26).
  • Carriers (Transport Operators: Trucking, Shipping, Aviation, Rail)
    - Recover higher costs of low-emission transport via MBM offerings.
    - Meet own corporate and regulatory sustainability goals.
    - Assist corporate customers decarbonizing their own supply chains.
    Example: A shipping company using low-emission marine fuel offers the attributes of low emission cargo services to businesses seeking these services that have no other physical access (Page 23).
Implementing MBMs in Your Business
  • Assess Your Logistics Carbon Footprint – Use GLEC Framework & ISO 14083 (Page 9).
  • Choose an MBM Approach – Physical separation, mass balance, or book & claim (Page 16).
  • Engage with Green Service Providers – Work with LSPs/carriers offering LETS (Page 26).
  • Ensure Transparency – Book, track, trace, and claim low emission profile attributes through registries (Page 27).
  • Report and Communicate – Integrate MBM emission profile data into ESG reports (Page 55).
Ensuring Transparency & Avoiding Double Counting
To maintain credibility, the SFC MBM Framework ensures:
  • Attributes are similar in nature – Integrity measures on similarity of transportation activity, mode, and decarbonization ensure high quality claims (Page 35).
  • Additionality Rules – Ensuring low emission claims exceed regulatory requirements (Page 30).
  • Vintage Constraints – actions around LETS and Solution profiles must occur within specific temporal boundaries (Page 38).
Conclusion
MBMs offer a scalable, cost-effective solution for businesses to cut freight emissions and help jumpstart transportation decarbonization. By leveraging verified chain-of-custody models, businesses can:
  • Support real low-carbon freight transport decarbonization irrespective of geographic location.
  • Meet YoY emission reduction and sustainability targets.
  • Address Scope 3 emissions in partnership.
Do you want to learn more? Enroll in our courses below to explore MBM solutions for your supply chain!

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