Environmentally extended input output models (EEIO) are a vital component of carbon accounting. They provide databases of industry average emission factors (EFs) that companies use to calculate their greenhouse gas (GHG) emissions. Historically EEIO models have been updated at irregular intervals. In 2024, Watershed and the Environmental Protection Agency (EPA) released significant updates to the two most-used EEIO models in corporate carbon accounting, CEDA and US EEIO.
The 2024 database updates have resulted in a median 10-20% decrease in industry average EFs for both CEDA and US EEIO. These decreases were driven in part by the incorporation of the most recent real world economic and emissions data available, which reflect actual progress on global decarbonisation. While this data is more accurate, you may find that you need guidance on how to best incorporate and communicate the changes in your own emissions footprints. To help, Watershed and KPMG have collaborated on a detailed guidance paper for use use of EEIO models for spend-based carbon accounting. A summary of some of the key points are below.
Do you need to recalculate footprints from prior years?
The Greenhouse Gas Protocol (GHG-P) states that: “Any changes in emission factor or activity data that reflect real changes in emissions (i.e., changes in fuel type or technology) do not trigger a recalculation.”
In practice this means that updates from incorporating the latest real world data do not require rebaselining.
Most companies can maintain consistency across footprints by maintaining the prior versions, and simply stating in 2024 that you have updated to the 2024 version of the relevant database.
How should you communicate underlying data updates in reporting and disclosures.
When preparing the emissions footprint, check for updates. Database updates should be adopted from the year of publication and clearly stated in the annual reporting cycle. Therefore, CEDA 2024 and US EEIO 1.3 should be used for 2024 measurements and disclosed in 2024 reporting.
It is recommended that companies disclose the following information:
- Which EEIO model and which version is used for a given footprint
- Which scopes and categories it is used to provide estimates for
- Any historical data limitations
Example wording
“[company] uses industry average emission factors from [database and version]for spend based estimates in [add relevant scopes and categories]. This database was updated in 2024, see more details here (CEDA) (US EEIO) “
In summary, to improve consistency in corporate reporting and comparability between inventories in the 2024 reporting cycle, you are likely best positioned if you:
- Apply EEIO databases from the year of publication
- Do not rebaseline prior years of emissions using the 2024 updates
- Disclose the database update in public reporting on emissions and target progress
Hopefully this helps clarify a plan forward. Once again, here is the full guidance paper with recommendations. These recommendations focus on the reporting year 2024 due to the significant updates to EEIO updates during this year. It should be noted that these updates were primarily data updates. For future updates, if significant methodology changes are also made and historical data is available, companies should follow guidance provided by standard setters to understand if they have an obligation to rebaseline.
Disclaimer: The information contained in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
