The embedded carbon reduction for lack of reusability represents part of the asset that cannot or will not be recycled at the end of the useful life of the asset, and will end-up being disposed as waste, or equivalent.
For example, in the case of a real estate asset, this would represent the part of the infrastructure and/or the inner fitting of the asset will need to be renewed on a regular basis during the useful life of the asset and will end-up as construction waste by opposition of the superstructure which useful life can be considered as indefinite, as it can be re-used as part of the retrofitting of the asset.
For other assets this could represent the potential recycling efficiency of the carbon intensive material used to produce the asset.
For example, in an electronic product this could be the amount of material that will be lost in a recycling process because it cannot be properly recovered.
4.2.1 Initial recognition
The Embedded Carbon deduction for lack of reusability is recognised at the time of the recognition of the embedded carbon asset to which it relates.
It is booked on the asset side of the carbon balance sheet of the reporting entity, on a specific line item.
A counter booking is recognised on the reporting entity carbon P&L.
4.2.2. Initial Measurement
The initial measurement of the Embedded Carbon deduction for lack of reusability is estimated by the reporting entity either (i) specifically for the asset or (ii) as an average across its balance sheet of all assets of the same kind and quality.
Embedded Carbon deduction for lack of reusability = fv(ECA) x Rf
Where:
fv(ECA) is the fair value of the Embedded Carbon Asset under consideration
Rf is the percentage of the asset that cannot or will not be recycled at the end of the useful life of the asset, and will end-up being disposed as waste, or equivalent.
Rf is determined by the reporting entity. It can be precisely calculated using a carbon life cycle analysis or approximated. The reporting entity will need to disclose how Rf has been determined in its carbon accounting notes.
4.2.3. Subsequent Measurements
Embedded Carbon deduction for lack of reusability is remeasured at each reporting date using the same methodology then for its initial measurement.
Change in the value of Embedded Carbon deduction for lack of reusability triggers an equivalent counter booking through the Carbon P&L.
4.2.4. Derecognition
An Embedded Carbon deduction for lack of reusability is derecognized if the asset to which it related is derecognized under the GAAP accounts of the reporting entity.
The derecognition of Embedded Carbon deduction for lack of reusability triggers an equivalent counter booking on the Carbon P&L of the reporting entity.