The fund promotes electricity generation from renewable energies. Due to its low production costs, electricity from renewable energy sources is given priority when fed into the grid. Through this effect, renewable energies ensure that emissions that would otherwise have been generated by the combustion of fossil fuels are avoided throughout Europe.1 This avoidance effect is expressed in so-called “avoidance factors” and published country-specifically by the “Technical Working Group of International Financial Institutions” (IFI)2. In Germany, feed-in priority also applies within the framework of the German Renewable Energies Act3, which gives preference to using electricity from renewable sources in the electricity grid (provided grid stability is guaranteed). When determining the CO2e avoidance4 of the fund portfolio, the emissions from the materials and construction of the fund’s wind and solar farms are also included.
The calculation of the avoided CO2 e emissionsis based on internationally established standards and is based on the following steps:
- First, the amount of electricity generated by the renewable energy plants that, in retrospect, was actually fed into the electricity grid is recorded. These amounts of electricity are measured in megawatt hours.
- In a second step, the country-specific avoidance factors of the Technical Working Group of the International Financial Institutions (IFI) are obtained. These avoidance factors are based on the Combined Margin Approach of the United Nations Framework Convention on Climate Change (UNFCCC), which is applied in the Clean Development Mechanism of the Kyoto Protocol for the quantification of emission reductions from energy generation projects (ACM00025). The UNFCCC framework is a globally recognised standard for calculating emission avoidance through renewable energy projects.
- The gross CO2 avoidance per year results from multiplying the fed-in electricity in megawatt hours (from step #1) by the avoidance factor (from step #2).
- The CO2 e emissions of the upstream chain, i.e. from materials and construction, are retrieved by multiplying the technology-dependent upstream chain emission factors of the Federal Environment Agency by the megawatt hours produced. These upstream emission factors are also publicly available for specific technologies6.
- The final net CO2 avoidance results from the gross CO2 e avoidance (from step #3) minus the upstream emissions (from step #4).
The fund reports on the calculated CO2 avoidance in its mandatory publications, such as the annual report. This makes fed-in electricity quantities and the associated CO2 e-avoidance transparent and comprehensible for investors.
Important: While fed-in electricity is physically measurable, CO2 avoidance naturally remains a calculated value that makes assumptions about how electricity generation would have developed without the feed-in of a renewable energy plant and compares this with the scenario of actual feed-in.
