The urgency to significantly decarbonize is increasing with the rising frequency of natural disasters caused by climate change. In 2019, the industrial sector produced more than 3 billion tons of carbon dioxide equivalent (CO2eq) (Ritchie et al. 2023) and played a crucial role in the reduction of global greenhouse gas (GHG) emissions, due also to substantial cross-sector emission contributions. The reduction of GHG emissions in the industrial sector can be achieved with proper and ambitious decarbonization planning, but formulating decarbonization strategies for the industrial sector is complex due to supply chain activities related to various sectors. Furthermore, the tools currently available are generally not easily accessible and have not integrated emission reduction with the impacts and costs generated. Recognizing this complexity, the Indonesian Corporates Decarbonization Evaluator (INCODE) was developed as an Excel-based tool that is easy to use, accessible, and comprehensive for the development and evaluation of net-zero emission strategies employed by companies involved in the industrial sector. In performing its functions, INCODE consists of two tools, namely the Corporate Greenhouse Gas Inventory Tool for Scopes 1, 2, and 3 (AIGRK) and the Decarbonization Evaluator Tool (AED). These two tools will offer four different features: emissions inventory, emission reduction evaluation, cost evaluation, and impact evaluation. 

This technical note will specifically explain the scientific methodology for all INCODE’s calculations. INCODE’s analyses follow the basic emission calculation guidelines used by the Intergovernmental Panel on Climate Change (IPCC) and decarbonization emission calculations from the GHG Protocol to inventory corporate GHG emissions and calculate emission reductions from decarbonization projects. As this tool focuses on corporate decarbonization, the GHG Protocol is used for emission reduction through the application of various decarbonization strategies, along with an evaluation of the investments and operational costs associated with those strategies. INCODE performs impact assessments by converting emission reductions to social costs. In addition, the avoidance of emissions through decarbonization also contributes to the relaxation of the global natural carbon absorption capacity (such as forests, oceans, land) because GHG emissions from other activities can also be absorbed. Therefore, this tool also integrates the assessment of the number of trees equivalent to the emission reduction. All impact calculations made with INCODE aim to justify the reasons why companies should make decarbonization investment decisions. 

The methodology presented in this technical note is not only important for the composition of this tool but can also be adopted by various stakeholders, practitioners, academics, or students to formulate and evaluate various decarbonization strategies. Besides formulating net-zero emission strategies for investment decision purposes, this tool provides many opportunities for the government and companies to integrate it into their ongoing activities, allowing the implementation of net-zero emission strategies to be carried out in real-time and these decarbonization strategies be further refined.