Allocation: How Shared Emissions Are Distributed in PCF and LCA Calculations

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Allocation is the process of distributing the greenhouse gas emissions from a shared process, facility, or activity across multiple products, services, or functions that benefit from it. It is one of the most methodologically consequential decisions in any Product Carbon Footprint (PCF) or Life Cycle Assessment (LCA), because the allocation approach chosen can significantly change the CO₂e assigned to each product — and therefore the comparability of PCF results across companies and industries.

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Both ISO 14067 and the GHG Protocol Product Standard establish explicit requirements and a preference hierarchy for how allocation should be handled, making transparent, documented allocation decisions a compliance requirement for audit-ready CSRD and regulatory PCF calculations.

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When allocation is needed

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Allocation arises whenever a single process, facility, or raw material produces more than one useful output — and the emissions of that shared process need to be distributed between them. Common situations include:

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• Co-products from a single production process: a chemical plant that produces two or more chemicals in the same reaction; a steel mill that produces steel and slag simultaneously; a refinery that processes crude oil into multiple fuel and chemical products
• Recycled materials: when a material is recycled, both the original production and the recycling process involve shared activities — how much of the recycling process's emissions and credits belong to the material that was recycled, and how much to the material being produced from it?
• Multi-use facilities: a factory that produces multiple product lines shares building energy, heating, cooling, and overhead utilities across all products — these shared emissions must be allocated among the product lines
• Waste treatment: when waste from one process becomes an input to another, how emissions are assigned at the point of transfer affects both processes' PCFs

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The allocation methods

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ISO 14067 and the GHG Protocol both establish a clear hierarchy of preferred allocation approaches:

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1. Allocation avoidance: subdivision. Where possible, the system should be subdivided so that each sub-process has only one output and no allocation is needed. For example, if metered data is available for energy consumed by each production line separately, allocation by subdivision avoids the problem altogether.

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2. Allocation avoidance: system expansion. If the product system produces a co-product that substitutes for another product elsewhere in the economy, the system boundary can be expanded to include that substituted product — and the emissions credit for avoiding that product's production can be subtracted. This approach avoids allocation but requires assumptions about what the co-product substitutes for.

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3. Physical allocation. If neither avoidance approach is feasible, emissions are allocated based on a physical relationship between the products — typically mass (kg), volume (liters), or energy content (MJ or kWh). For example, a process producing 60 kg of product A and 40 kg of product B allocates 60% of shared emissions to A and 40% to B.

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4. Economic allocation. Emissions are allocated based on the economic value of each co-product at the point of diversion from the shared process. For processes where products have very different economic values, this often produces more meaningful results than physical allocation.

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Why allocation choices affect PCF comparability

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Different allocation approaches applied to the same production process can produce meaningfully different CO₂e results for the same product. This is why ISO 14067 requires that the allocation approach be explicitly documented and disclosed in the PCF report — and why procurement teams comparing PCF data from different suppliers must consider whether the underlying allocation approaches are consistent before drawing conclusions.

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For CSRD external assurance, inconsistent or undocumented allocation decisions are a common audit finding — underscoring the importance of following a systematic, documented approach in every PCF calculation, whether performed in-house or through a PCF service.

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Allocation and recycled content

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Allocation for recycled materials is one of the most debated methodological questions in PCF. When a material like aluminium is recycled, the question is: how are the emissions and energy of the primary production process, the collection and recycling process, and the resulting secondary material distributed between the product that generated the scrap and the product that uses the recycled output?

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ISO 14067 provides guidance but allows several approaches — including the cut-off method (where secondary materials enter the system "burden-free") and the recycled content method. The choice affects recycling credits in a product's cradle-to-grave PCF and should be aligned with the approach used by any emission factor database from which secondary data is drawn.

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Want to calculate PCFs with transparent, documented allocation in line with ISO 14067?

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Explore our CO₂e database and PCF calculation tools, or contact our team to access the sustamizer® and build audit-ready PCFs with consistent allocation documentation.

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