Our approach to greenhouse gas quantification
How we calculate potential greenhouse gas emission reductions from our various areas of work
Our grants and initiatives
Greenhouse gas emission (GHG) reductions are the primary focus of our grant and initiatives; however, our theory of change centers on systems change and socioeconomic transformation (the initiative's potential to unlock emissions reductions at scale), not just direct project-level emissions. This is in line with the LC3 Theory of Change. The role of LC3 is not to directly deliver carbon reductions at scale, but to use its resources to catalyze breakthrough solutions and enable their broad implementation by other parties.
A forecast of the total GHG reductions potentially unlocked by a project, policy, technology, or other initiative is evaluated over a time horizon of 20 years within the geographical boundary of Calgary and Edmonton, across the addressable market. Activity/usage data for the baseline and alternative scenarios are obtained with the data that is available to us and our knowledge of the ecosystem at the time. Evaluations can potentially be revisited as better data becomes available.
Generally, only Scope 1 and 2 emissions are calculated for projects. Assessing Scope 3 emissions is more difficult, and quantification methodologies in this area are less developed. However, we attempt to quantify Scope 3 emissions where possible.
Our process will continue to evolve, and approaches can vary slightly based on the unique objectives and constraints of each project.
How Potential GHG Reduction is Used in Decision-Making
At the full application stage, projects will be evaluated using the evaluation criteria detailed in the Application Scorecard. These criteria include: GHG Emissions Reduction Potential, Scale Potential, Community Benefits, Social Equity, Indigenous Leadership, and Organizational Capacity. For the GHG Emissions Reduction Potential in particular, a score ranging from 1 to 4 is assigned for projects with quantifiable emissions reductions, based on the thresholds identified in the scorecard.
Impact investments
Our Impact Investing team is committed to a consistent and transparent approach for quantifying the potential greenhouse gas (GHG) impact that could be catalyzed at scale through direct investments. Our internal process is continuously evolving to include new information and is customized for each opportunity we review. Current quantification applies concepts from the Project Frame Methodology Evaluating Greenhouse Gas Impact for Early-Stage Investments, released in December 2024, and prior to that included aspects of the precursor guidance Pre-Investment Considerations (April 2023).
The Project Frame guidance was selected because it meets the intent of the LC3 Network metric for Potential GHG Reduction (forecast potential at scale over 20 years) and considers the unique needs of investors. It provides a structured and consensus-based approach to assessing the potential for a solution to reduce or avoid GHG emissions across a given market. By adopting this methodology, we can better evaluate the climate impact of our Enterprise and Project investment types. We do not complete GHG quantification for our Pooled investments, but instead evaluate the rigour of their screening approach for GHG impact.
To ensure our impact estimates are relevant and meaningful to the LC3 mandate, we apply a geographical boundary that is specific to the two cities we focus on: Calgary and Edmonton. This localized approach allows us to make more accurate and contextualized assessments of the climate solutions we support in these communities.
Within those boundaries, we always include Scope 1 and Scope 2 emissions to align with each city’s GHG inventory. However, as we continuously improve our understanding of GHG impact, we are exploring how to incorporate Scope 3 emissions as well. An example of this is the consideration of embodied carbon when evaluating opportunities in the building and construction sector.
General Notes:
GHG emissions are reported as total cumulative potential for over 20 years. This method assumes maximum uptake at an accelerated rate within a given sector or market, within the city's boundaries.
No attribution is applied to prorate the total potential impact with the size of the investment provided by Alberta Ecotrust.
Emission factors are reviewed annually and updated to account for changes in the electrical grid forecasts. Primary sources include:
Natural Gas & Transportation Fuels: National Inventory Report
Electricity Grid Intensity: Environment and Climate Change Canada forecast, without biomass and renewable natural gas emissions.
How Potential GHG Reduction is Used in Decision-Making
Impact Investment opportunities are evaluated against minimum GHG impact thresholds, which are codified in our investment thesis and criteria.
In addition to aligning with one of the four focus areas of the Alberta Ecotrust Foundation Climate Innovation Fund, direct investments must support a solution that:
Could result in a cumulative total of 250,000 tCO2e at maximum scale over 20 years within each city’s total addressable market; or
Achieves at least a 25% reduction over the incumbent product or business-as-usual activity per functional unit.
Questions?
Get in touch! Email us if you have any questions or comments about our greenhouse gas methodologies.