WBCSD Releases New Guidance to Measure Avoided Emissions from Energy Technologies

The World Business Council for Sustainable Development (WBCSD) has released new guidance to help energy companies calculate and disclose the greenhouse gas emissions avoided through low-carbon technologies. Published on 19 October 2026, Avoided Emissions in the Energy Sector provides methodologies for assessing renewable electricity, energy storage, grid optimization, low-carbon hydrogen and waste-based bioenergy. The guidance aims to improve the consistency and credibility of avoided emissions claims as businesses and investors increasingly seek evidence of the climate benefits delivered by energy technologies.

Avoided emissions represent the difference between a solution's lifecycle emissions and those of the most likely alternative without it. Unlike a company's Scope 1, 2 and 3 emissions inventory, the assessment measures how a product, project or service changes emissions elsewhere in the economy. WBCSD emphasizes that these results depend on operating conditions, location, timing and the technology being displaced, making sector-specific accounting essential for reliable comparisons.

 

Five-Step Framework Sets Requirements for Avoided Emissions

 

The guidance introduces a five-step assessment process covering the reporting timeframe, reference scenario, lifecycle emissions, avoided emissions calculation and validation of the solution's contribution. Companies must establish what would have happened without the technology, ensure that both scenarios deliver an equivalent function, and account for relevant emissions across equipment manufacturing, energy production, operation, and end-of-life activities.

Before reporting avoided emissions, companies and their solutions must also satisfy three eligibility criteria: credible corporate climate action, alignment with recognized climate science and evidence of a significant, substantiated contribution to decarbonization. The guidance generally excludes solutions directly supporting fossil fuel extraction, production or distribution, as well as technologies that extend dependence on infrastructure incompatible with net-zero pathways. It also requires companies to assess potential rebound effects and emissions increases elsewhere in the energy system.

 

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Electricity Storage and Grid Optimization Need More Precise Emissions Data

 

A major focus of the guidance is how electricity-related avoided emissions are calculated. WBCSD explains that one megawatt-hour of renewable electricity does not necessarily avoid the same quantity of emissions in every location or operating period. The result depends on which electricity generator would otherwise have supplied demand, making time-specific and location-specific emissions information particularly important for battery storage, demand response and grid optimization projects.

For example, battery storage can reduce emissions by storing renewable electricity that would otherwise be curtailed and releasing it when fossil fuel generation would otherwise supply demand. However, the same battery could increase emissions if it charges using carbon-intensive electricity and discharges when cleaner generation is available. WBCSD therefore generally prioritizes marginal emissions factors for technologies that change electricity dispatch. It also cautions that renewable power purchase agreements and energy certificates do not, by themselves, establish avoided emissions.

 

Hydrogen and Bioenergy Require Credible Reference Scenarios

 

The report provides five worked case studies covering renewable generation combined with battery storage, advanced power flow control, low-carbon hydrogen replacing conventional industrial hydrogen, hydrogen used for industrial heat, and renewable natural gas produced from waste biomass. These examples show how emissions calculations change with the technology's purpose, operating conditions, and the alternative being displaced.

In an illustrative hydrogen example, replacing conventional natural gas-based hydrogen with renewable-powered electrolysis reduces lifecycle emissions from approximately 11 kg to 1.1 kg of CO2 equivalent per kilogram of hydrogen, representing a 90% reduction. Another example examines how renewable natural gas from forestry residues can reduce emissions by replacing fossil-gas electricity generation and changing waste-biomass treatment. WBCSD makes clear that the case studies use fictional providers and illustrative assumptions, rather than reporting verified emissions reductions from operating projects.

 

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Guidance Addresses Double Counting and Climate Claims

 

The report sets safeguards for companies that use avoided emissions in sustainability reporting and investment decisions. Avoided emissions must be disclosed separately from Scope 1, 2 and 3 inventories and cannot be subtracted from a company's operational or value chain emissions. When multiple businesses contribute to the same solution, such as equipment manufacturers, project developers, utilities, and customers, the guidance recommends considering how to allocate avoided emissions to prevent overlapping claims.

The methodology also distinguishes between assessing a technology's emissions impact and financing that technology. Providing investment capital does not automatically entitle a financial institution to claim the project's avoided emissions under the solution-level methodology. WBCSD directs financial institutions towards the Partnership for Carbon Accounting Financials (PCAF) guidance for financed avoided emissions. The report also recommends reassessing calculations when electricity mixes, regulations, operating conditions or input sources change, helping ensure that previously reported benefits remain credible.

The guidance provides energy companies with a more detailed framework for demonstrating the climate contribution of their products and infrastructure. Its practical value lies in distinguishing technologies that are theoretically capable of reducing emissions from deployments that can demonstrate reductions under actual operating conditions. For investors, developers, and corporate buyers, stronger avoided emissions assessments could support more informed capital allocation and procurement decisions while reducing the risk of misleading climate claims.

 

Source: The World Business Council for Sustainable Development (WBCSD)