“Large, multi-purpose expenditures” are projects undertaken for numerous business reasons: they are expected to reduce emissions while also impacting other important metrics such as production quality, shipping time, or costs. To create incentives for emissions reductions that would not have otherwise occurred, these expenditures (opex or capex) will be adjusted based on the level of carbon benefit expected from the project.
The following table shows how such expenditures are weighted based on groups of technologies. This approach mirrors how many clean energy tax incentives work: groups of technologies are eligible for varying levels of incentive based on their expected outcome for carbon emissions. Here, total spend is 'discounted' relative to the expected materiality on your annual GHG inventory.
Capital/Lease/Service Cost Eligibility for VCA
| Project Qualification | Expected Carbon Benefit (Materiality) | Weighted Eligibility towards VCA Spend |
Tier 1 | Equipment intended solely for carbon capture; NCS project with a primary objective to sequester or remove CO2 | High (51-100% improvement) | 100% of project cost |
Tier 2 | Energy-generating assets that use a renewable source (e.g. solar panel) | High (51-100% improvement) | 100% of project cost |
Tier 3 | Equipment that transforms energy with ultra high efficiency or electrifies existing fossil fuel-powered equipment (e.g. heat pump, LED lights, electric ovens, EVs) | Medium (11-50% improvement) | 50% of project cost |
Tier 4 | Efficiency upgrades to energy-consuming equipment (e.g. HVAC, tote washer, die cut machinery, production line equipment, cost to retrofit or upgrade existing manufacturing equipment) -OR- projects that reduce material consumption and/or waste | Low (under 10% improvement) | 25% of project cost |
Tier 5 | *Facility relocation to reduce operational or supply chain emissions. | Variable | 10% of project cost |
– | All other projects | None | 0% of project cost |
The weighted percentage for each tier may be applied to the total project cost or the annual depreciation expense, whichever amount is submitted for certification. See this page for more info.
*A facility relocation can affect nearly every part of a company's annual GHG inventory. The expected net carbon benefit is widely variable and can be difficult to quantify. Since facility relocations may have many other business benefits and extremely high costs, 10% of facility relocation costs are eligible towards VCA Spend. This cap is in place to credit the intent to reduce operational or supply chain emissions and incentivize further reductions with other projects. See this page for eligible and ineligible relocation costs.