Carbon Enterprise Value



Carbon Enterprise Value

A Simple, Rigorous, and Standardized approach to Quantify Avoided CO2 Emissions

By Mark J. Lewis and Charlotte Neuhoff, Lime Rock New Energy

As a climate-focused investor, Lime Rock New Energy is dedicated to deploying growth equity capital in businesses delivering products or services that help reduce greenhouse gas emissions. But simply avoiding emissions is only part of the battle. Accurately quantifying the avoided carbon emissions resulting from the use of a product or services versus the traditional solution, or the counterfactual, is critical. Yet, our team has found current methods for reporting carbon emissions avoidance (aka Scope 4 Emissions) to be confusing and inconsistent, with limited comparability.

Further, LRNE did not feel that existing approaches to measuring avoided CO2 emissions adequately reflect the riskiness of future emissions avoidance and relied too heavily on “fat thumb” assumptions and estimates.  To address these challenges, we set out to develop an approach to quantify portfolio company avoided CO2 emissions in a clear yet analytically rigorous way, and one that could be easily adopted by impact practitioners and be understood by technical and non-technical audiences alike. The result is our Carbon Enterprise Value (CEV) approach. In this whitepaper, you’ll learn about our CEV concept and our approach using clear, third-party assumptions and an analogue to discounted cash flow analysis as a clear, consistent, and understandable methodology of measuring carbon emissions avoidance.

We encourage you to download our CEV whitepaper.