Scope 4: How do avoided emissions work?
Summary
While Scopes 1, 2, and 3 are well-known perimeters of the carbon footprint, Scope 4 remains relatively unknown. This scope represents the avoided emissions.
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What is Scope 4?
Scope 4, also known as avoided emissions, refers to the reductions in greenhouse gas (GHG) emissions that occur outside the boundaries of an organization due to its actions or products. Unlike Scopes 1, 2, and 3, which account for an organization's direct and indirect emissions, Scope 4 focuses on the positive impacts companies can generate by influencing emission reductions elsewhere.
For example, a company that develops and commercializes renewable energy technologies helps avoid CO2 emissions that would have otherwise been generated by fossil fuel sources. Similarly, initiatives aimed at improving energy efficiency or promoting sustainable practices can lead to avoided emissions.
Scope 4 is increasingly recognized for its crucial role in sustainability strategies, allowing companies not only to reduce their own carbon footprint but also to help other organizations. This scope emphasizes the importance of innovation and collaboration in the fight against climate change.
Differences between avoided emissions and direct reductions
Avoided emissions and direct reductions differ primarily in their origin and accounting. Direct reductions pertain to the greenhouse gas (GHG) emissions that a company decreases within its own operations. This includes actions such as improving energy efficiency, adopting on-site renewable energy sources, or reducing emissions from industrial processes. These reductions are accounted for in an organization’s Scopes 1, 2, and 3 of the Carbon Footprint, according to the GHG Protocol principles.
In contrast, avoided emissions occur outside the company’s boundaries due to the use of its products, services, or technologies. For example, a company manufacturing solar panels enables its customers to reduce their dependence on fossil fuels, thus avoiding potential emissions. Avoided emissions are not included in the traditional scopes but are reported separately under Scope 4.
These two approaches are complementary: direct reductions decrease the company's own carbon footprint, while avoided emissions maximize its positive impact on the environment.
How to calculate avoided emissions ?
Calculating avoided emissions involves several key steps. First, it is necessary to define the baseline scenario, which is the situation without the intervention of the company’s product or service. This scenario must be realistic and based on reliable data. Next, accurate data on the use of the product or service must be collected, including information on its lifespan, efficiency, and usage conditions.
Once this data is collected, emission factors are applied to estimate the greenhouse gas emissions avoided compared to the baseline scenario. These factors can come from recognized sources such as the French Environment and Energy Management Agency (ADEME) or the GHG Protocol.
Finally, it is recommended to have the results validated by an independent third party to ensure transparency and credibility of the calculations. Avoided emissions should be reported clearly and consistently to demonstrate the positive impact of the company’s actions.
Tip
Integrating Scope 4 into your sustainability strategy allows you to maximize your positive environmental impact by accounting for the avoided emissions generated by your products and services.
Limitations of avoided emissions
Avoided emissions have several limitations. First, it can be challenging to define a precise and realistic baseline scenario, which can affect the reliability of the calculations. Additionally, emission factors and necessary data can vary depending on regional and sectoral contexts, making comparisons complex.
Next, rebound effects can reduce the benefits of avoided emissions, where energy efficiency gains might lead to increased consumption. Validation of avoided emissions by independent third parties is often necessary to ensure credibility, but this can be costly and complex to implement.
Finally, avoided emissions do not replace direct GHG reductions. They should be considered complementary to efforts aimed at reducing emissions at the source for a comprehensive approach to carbon footprint management.
The Net Zero Initiative
The Net Zero Initiative (NZI) aims to structure and guide companies' actions towards carbon neutrality, considering not only the reduction of direct and indirect emissions (Scopes 1, 2, and 3), but also including advanced strategies such as avoided emissions (Scope 4) for an overall positive impact on the climate.
Scope 4 plays a crucial role in the overall reduction of GHG emissions, complementing companies' direct efforts. Although complex to calculate and validate, it offers an extensive perspective on positive environmental impact. By integrating avoided emissions, companies can not only reduce their own carbon footprint but also positively influence their entire value chain and society.
