Financing Manufacturer Decarbonization with Asset-backed Carbon Credits

This paper presents an evaluation of asset-backed carbon credits as a financing mechanism for decarbonization efforts in the manufacturing sector, with a focus on a novel emissions factor approach. A piece-rate emissions factor methodology is proposed to estimate emissions and link Life Cycle Analysis (LCA) regression variables to facility projects by leveraging existing sustainability-linked debt performance indicator disclosure requirements. The statistical confidence of existing emissions factor methodology is assessed in practice within the manufacturing industry with a discussion on the impact to the claim integrity related to emissions abatement and sustainability- linked debt for marginalized industry actors. The results suggest that asset-backed carbon credits are a useful tool for financing decarbonization efforts in manufacturing while minimizing the challenges in determining the value of carbon credits and ensuring positive environmental impact.

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