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Scenario Modelling: Explained

Clare avatar
Written by Clare
Updated over 3 months ago

Decarbonisation decisions often involve balancing environmental ambition with financial feasibility. Without a clear view of both the carbon and cost implications, it’s challenging to take effective action.

That’s where Scenario modelling comes in. Available under 'Reduce emissions', this powerful tool helps businesses plan and assess decarbonisation strategies before making changes. You can explore carbon reduction scenarios, such as electrifying your fleet or switching suppliers, and instantly see the forecasted impact on emissions and finances. This tool empowers you to:

  • Understand trade-offs between cost, payback time, and emissions reductions.

  • Prioritise actions that bring the most value for your investment.

  • Plan ahead with data-driven insights instead of assumptions.

What are 'Scenarios'?

Each scenario is built around a common decarbonisation initiative. The tool lets you model how these initiatives would affect your organisation’s emissions and financial performance in the real world.

The scenarios currently covered are:

  1. Vehicle fleet electrification – Replacing internal combustion engine vehicles with electric vehicles. Deep dive here.

  2. Supplier spend optimisation – Switching to less polluting suppliers or reducing spend with high-emission suppliers. Deep dive here.

  3. Switching to renewable energy – Increasing the share of renewable energy in your electricity mix. Deep dive here

  4. Business travel optimisation – Replacing one type of travel with a less polluting alternative. Deep dive here

  5. Freight transportation optimisation – Reducing or changing freight transport methods to cut emissions. Deep dive here

Each scenario uses your uploaded emissions data and customisable filters to forecast how making changes would impact your emissions and finances. You can save any scenarios you create for future reference.

What insights can I gain with Scenario modelling?

Scenario modelling provides clear carbon and financial insights, showing both the impact and the business case for each initiative.

Metric

What it shows

Why it matters

Changes to Emissions

Before-and-after comparison of your carbon footprint

Check if the initiative aligns with your decarbonisation targets

BAU (Business-As-Usual) Forecast

Emissions projection if no action is taken

Compare “do nothing” vs. “take action” scenarios

Activity Changes

This changes based on the scenario but covers the activity that impacts emissions (fuel, kWh, spend, distance travelled)

Link activity changes directly to carbon outcomes

Net Present Value (EUR)

Present-day value of all future cashflows, discounted for time and risk.

It is calculated as the sum of all discounted cash flows and the terminal value (if included)

See if the project creates or damages financial value

Total Reduction Potential (tCO₂e)

Total emissions avoided over the scenario period

Quantify the climate benefit of your investment

Marginal Reduction Cost (EUR/tCO₂e)

Cost per tonne of CO₂e avoided

Rank and prioritise projects by cost-effectiveness

Discounted Terminal Value (EUR)

Long-term value beyond the modelled period

Capture the enduring financial benefits of investments

Payback (years)

Time until savings equal the initial investment

Assess capital recovery speed and manage liquidity risks

Cashflow (EUR)

Year-by-year cash inflows and outflows related to the scenario.

It is calculated as −CAPEX − Total difference in costs + Change in annual revenue

Plan budgets and financing around the timing of costs and benefits

Please note: Not every decarbonisation initiative delivers immediate cost savings — and that’s okay. Depending on the parameters you select, a scenario might generate financial savings or represent a cost. These models help clarify the cost or savings per tonne of CO₂e reduced, enabling smarter, data-backed decisions that support both climate targets and business priorities.

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