Avoided emissions are increasingly used to measure the climate value of renewable energy assets and inform investment decisions. But they are not a fixed number. They evolve with energy production, grid decarbonisation and the physical impacts of climate change. In this publication, the Altitude team at AXA Climate explores how investors can build more robust avoided emissions estimates for renewable energy assets.
Estimating avoided emissions means understanding what would have happened without the renewable asset. The result depends on several factors: the reference scenario, the electricity grid the asset displaces, its life-cycle emissions and the amount of renewable electricity it is expected to produce over time. Different assumptions can materially change the final estimate.
Three pillars for credible avoided emissions estimates
The paper identifies three pillars for a robust assessment: methodology, data and governance.
For instance in a PV asset in northern France, using Altitude’s renewable energy production analysis, the platform assesses how output could evolve through 2050 under three IPCC climate scenarios: SSP1-2.6, SSP2-4.5 and SSP5-8.5, using both P50 and P90 production estimates.
The analysis also considers the changing carbon intensity of the electricity grid. As the grid decarbonises, each MWh of renewable electricity may avoid fewer emissions, meaning that an asset’s avoided emissions need to be assessed dynamically rather than assumed to remain constant throughout its lifetime.
Climate risk also affects the long-term climate value of renewable assets
Physical climate risk is another important part of the equation. For the solar asset analysed in the paper, flooding is the main physical exposure identified. Understanding these risks helps assess whether an asset can maintain reliable production and deliver its expected climate contribution over its lifetime.
Bringing these elements together creates a dynamic view of avoided emissions, connecting climate impact with renewable energy production, physical resilience and long-term asset performance.
This approach can help investors distinguish between renewable assets that may appear similar at the point of investment but could evolve differently over the holding period as climate conditions, electricity grids and production change.
Download the full paper to discover how avoided emissions can be assessed more robustly for renewable energy investment, due diligence, portfolio monitoring and LP reporting.
