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.
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 due to a specific action or intervention. These actions might include the adoption of renewable energy sources, energy efficiency measures, the implementation of carbon capture technologies, or buying carbon offsets [1].
For example, if a company replaces a coal-fired power plant with a solar power plant, 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 can be calculated by subtracting the avoided emissions from the induced emissions. It represents the impact of a company's actions on the environment.
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 [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.
Cautious Communication: Companies should exercise caution in using avoided emissions to make claims of carbon neutrality or net-zero emissions. The reporting should be transparent and avoid misleading allegations about a company's climate impact.
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.
It is important not to share only net emissions because it does not provide a complete picture of the emissions associated with a specific action or intervention. By only sharing net emissions, you are not accounting for the emissions that are caused by the specific action or intervention, which can be significant. By providing information on both induced and avoided emissions, you can provide a more comprehensive understanding of the emissions associated with a specific action or intervention. [3]
An example of visual communication:
Sources
[1] European Union (2020), Annex A: Methodology for calculation of GHG emission avoidance
[2] World Business Council for Sustainable Development (2023), Guidance on Avoided Emissions: Helping business drive innovations and scale solutions towards Net Zero
[3] World Resource Institute (2019), ESTIMATING AND REPORTING THE COMPARATIVE EMISSIONS IMPACTS OF PRODUCTS