Avoided Emissions

— making the climate impact of circularity visible
PreZero Visualisierung vermiedener Emissionen: Vergleich der CO2-Reduktion durch effiziente Kreislaufwirtschaft

How the circular economy helps avoid CO₂ emissions

— and why standard corporate carbon accounting often fails to fully capture its impact.

The circular economy does more than reduce CO₂ thanks to greater efficiency. 

Its biggest benefit to our environment comes from replacing energy-intensive virgin raw materials with circular solutions.

This applies to recycled materials that replace virgin raw materials or energy generated from organic waste instead of fossil fuels.

What are avoided emissions?

Avoided emissions are greenhouse gas emissions that never arise in the first place as thanks to circular processes such as recycling, reuse, or replacing fossil fuels with alternative sources of energy.

PreZero Kreislauf der Scope 1-3 Emissionen

The accounting paradox of the circular economy

Traditional carbon accounting under Scope 1–3 measures the emissions generated throughout an entire company and its value chain.

For circular economy companies, that creates a structural challenge with two dimensions:

The visible burden

Waste collection, advanced sorting operations, and energy recovery from residual materials all involve industrial processes.

That means operational emissions — from logistics, energy consumption, and the thermal treatment of waste for energy generation.

Since conventional accounting only captures these emissions, this can make the sector look primarily like a source of CO₂ emissions rather than a solution.

The invisible contribution

What traditional accounting largely fails to capture is the true climate impact of these activities: avoiding the use of virgin raw materials and fossil energy through material substitution and energy recovery from waste.

That puts circular economy companies at a disadvantage simply because there is currently no recognized and auditable method for measuring the climate value they create across their operations.

Their positive impact on our environment — their “handprint” — cannot be properly attributed to them.

As a result, companies helping advance this transition to a more sustainable economy often remain overlooked.

If the transition from a linear to a circular economy is to accelerate, we need measurement tools that make the positive impact of circular solutions visible and encourage investment in the circular economy.

Our objective: building a stronger case for investment in circularity

Our aim is to establish avoided emissions as a reliable metric for the climate impact of circular solutions and, over time, help make it an industry standard.

Such a metric can help:

  • make informed decisions about investment in terms of Sustainable Finance, ESG ratings, and the EU Taxonomy
  • create a clearer framework for assessing the climate impact of circular business models
  • make decarbonization measures easier to compare.

The result is an additional metric that makes the contribution of the circular economy to decarbonization more visible and improves the basis for evaluating investments in circular solutions.

The core principles of our methodology:

For PreZero, one principle is non-negotiable: avoided emissions make the decarbonization impact of circular solutions visible. They are reported separately and not offset against Scope 1, 2, or 3 emissions.

Causality

Emissions and avoided emissions are clearly linked to the specific solution they result from.

Additionality

Clear rules help avoid double counting and define exactly who the savings can be attributed to.

Differentiation

The methodology distinguishes between direct and indirect impact, following the same logic as Scope 1 and Scope 3.

Clear system boundaries

Calculations are done separately for each operational area, such as material recovery or thermal recovery.

Transparency is our top priority.

Clear boundaries for avoided emissions

To prevent misunderstandings and misinterpretations such as “greenwashing,” we apply a clear set of principles in the way we report avoided emissions:

No netting

Avoided emissions are not offset against Scope 1, Scope 2, or Scope 3 emissions.

No offsetting

This metric is intended to show transformation performance, not to act as a compensation mechanism.

No substitute for reducing your own emissions

Reporting avoided emissions does not remove the responsibility to reduce your own emissions in a systematic, measurable way.

No unrealistic comparisons

All calculations are based only on clearly defined system boundaries and transparent comparison criteria. We do not inflate the figures or make them look better than they are.

FAQ: Avoided Emissions

A CO₂ footprint shows the emissions produced by an activity.

A handprint shows the positive climate impact of a solution — for example, when recycled materials replace emission-intensive virgin raw material production.

No. Avoided emissions are not assigned to any scope category.

They are reported separately and are not netted against a company’s existing emissions balance.

The term Scope 4 is sometimes used to talk about avoided emissions.

That said, it is not an officially recognized category in greenhouse gas accounting.

The circular economy reduces the need for virgin raw materials and fossil energy. 

That leads to lower emissions across the value chain than in traditional linear production systems.