The goal of this article is to understand the difference between induced, avoided, and net emissions. We will also share best practices for computing these emissions and suggest effective ways to display and report these emissions responsibly.
Description and computation
Induced emissions are emissions that are caused by an action, activity, or intervention. For example, if a company builds a new factory, the induced emissions would be the emissions that are released during the construction of the factory, as well as the ones released during the operation of the factory. Calculating induced emissions involves assessing the consequences of a particular project or activity.
To compute induced emissions, you can use the following equation:
Induced Emissions = Activity data x Emission Factor
Where:
Activity data is the type of activity that is causing the emissions
Emission Factor is the amount of emissions that are released per unit of activity
Avoided emissions are emissions that are not released into the atmosphere through either the sales of products and services that decarbonize, or the financing of GHG avoidance offset projects outside the company's value chain.
For example, if a company's activity contributes to replacing a coal-fired power plant with a solar power plant at another firm, the avoided emissions would be the difference between the emissions that would have been released by the coal-fired power plant and the emissions that are released by the solar power plant. To calculate avoided emissions, you can use the following equation:
∆GHG = (Baseline Emissions - Project Emissions) x Project Life [1]
Where:
∆GHG is the absolute GHG emissions avoided due to the project
Baseline Emissions are the GHG emissions that would have been released in the absence of the project
Project Emissions are the GHG emissions that are released due to the project
Project Life is the expected life of the project
Net emissions are the total emissions that are released into the atmosphere after taking into account both avoided and induced emissions. Net emissions are calculated by subtracting the avoided emissions from the induced emissions.
Reporting
To display avoided, induced, and net emissions, you can use a variety of methods, including tables, charts, and graphs. The World Business Council for Sustainable Development [1] and the Net Zero Initiative [2] published guidelines on how to report avoided emissions. A summary:
Clear Separation: Avoided emissions must be distinctly reported from other metrics such as GHG inventory footprints, carbon sinks, and financial contributions to ensure transparency and accuracy.
Comprehensive Disclosure: Complete and transparent reporting is crucial, requiring companies to disclose details about the life cycle GHG emissions of solutions, the approach used for quantification, verification status, and potential negative side effects or rebound effects, along with actions taken to mitigate them. The more extensive the information provided, the more you allow stakeholders to make sustainable decisions. [3]
Never report on net emissions. While avoided emissions are an important contribution to a corporation net-zero strategy, project emissions still need to be reduced as much as possible as soon as possible to uphold the Paris Agreement. Yet, reporting on net emission is often used to justify stagnating or growing project emissions. To avoid any greenwashing accusations, never report on net emissions and systematically disclose both avoided emission and project emissions. In particular, any claim related to a net-zero project or product must be avoided. [2]
Sources
[1] World Business Council for Sustainable Development (2023), Guidance on Avoided Emissions: Helping business drive innovations and scale solutions towards Net Zero
[2] Net Zero Initiative (2022), The 10 NZI principles for an ambitious climate action https://www.net-zero-initiative.com/en/nzi-10-principles
[3] World Resource Institute (2019), ESTIMATING AND REPORTING THE COMPARATIVE EMISSIONS IMPACTS OF PRODUCTS