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The allocation section in the base data helps you to allocate emissions correctly to products and processes. It is divided into three tabs: co-products, waste treatment and material recycling. This article first explains the structure of the form and then provides a definition of the various options available.
Structure of the form
Each tab has the same basic structure:
| 1 | Selecting the allocation method Select the method used from the drop-down menu. |
| 2 | Description of the allocation method used A free-text field can be used to describe how the emissions were allocated, which co-products are involved, which allocation keys were used, and what specific values the allocation is based on. |
| 3 | Uploading documents You can use the ‘Upload documents’ button to upload supporting documents for the decision-making process, such as a calculation spreadsheet or the relevant set of rules. Supported formats are docx, xlsx, csv and pdf, with a maximum file size of 15 MB per file. |
The following figure shows the ‘Co-products’ tab as an example – the waste treatment and material recycling sections are structured in the same way:
Important: You should only fill in the tabs that are relevant to the PCF in question.
The following section explains the various allocation methods in accordance with the PACT Methodology Version 3, the Catena-X PCF Rulebook Version 4 and the Together for Sustainability (TfS) PCF Guideline Version 3. Any deviating or additional requirements of individual standards are explicitly highlighted where applicable.
Allocation for co-products
This tab is relevant when the production process produces several products simultaneously – these are referred to as co-products. The available allocation methods must be checked in the specified order. Select the method you have used.
1. Subdivision
When to apply? When the process can be technically broken down into separate steps, each of which serves only one product. Subdivision completely avoids allocation.
The process is divided into sub-processes in such a way that each sub-process can be clearly assigned to a specific product.
Example: A production line manufactures frames and forks. The welding process for the frame and the bending process for the fork can be accounted for separately – no allocation is required. The shared painting process, on the other hand, cannot be split up and requires one of the following allocation methods.
2. System expansion via substitution
When to apply? Where it can be demonstrated that the co-product is displacing another product on the market and this relationship is recognised across the industry. In addition, primary data or representative secondary data must be available for the product being displaced.
The scope of the balance sheet is expanded so that the co-product replaces another product on the market. The emissions from this substituted product are deducted from the PCF of the main product as a credit – thereby eliminating the need for allocation.
PCF main product = Emissions from overall process − Emissions from the substituted product
Important: The PCF of the main product must not become negative as a result of the credit.
If you select this option, the additional text field ‘Name of substitute product’ will appear in the system. Here you can enter the name of the product that the co-product replaces.
Example: Blast furnace slag is produced as a co-product during steel production. This replaces cement clinker in the construction sector. The emissions from the avoided clinker production are deducted as a credit from the PCF of the steel, based on the industry consensus of the worldsteel methodology.
3. Determine the economic value ratio
If neither subdivision nor substitution can be applied, the economic value ratio of the co-products determines which allocation method to use.
Economic value per product = mass × market price
Ratio = highest value ÷ lowest value
The result is used to determine the method for step 4:
| Ratio | Interpretation | Next step |
| ≤ 5 | Market values are similar | → Step 4a: Physical allocation |
| > 5 | Market values vary widely | → Step 4b: Economic allocation |
Example:
- Product A: 5 kg × €200/kg = €1,000
- Product B: 8 kg × €15/kg = €120
- Ratio: 1,000 ÷ 120 = 8.3 → economic allocation
1.3.1 Physical allocation
When to apply? If the economic value ratio of the co-products is ≤ 5, such that the physical properties of the products are considered sufficiently representative.
Emissions from a shared process are allocated to the products involved on the basis of a measurable physical property. Typical allocation keys include mass, number of units or energy content, e.g.:
Allocation factor = Mass of this product ÷ Total mass of all co-products
Example: A paint shop processes e-mountain bikes (14.5 kg) and e-road bikes (10.2 kg), with a total mass of 24.7 kg. Allocation factor for e-mountain bikes: 14.5 ÷ 24.7 = 0.587 – meaning 58.7% of the painting emissions are attributed to the e-mountain bike.
1.3.2 Economic allocation
When to apply? When the economic value ratio of the co-products is greater than 5, such that physical allocation would distort the economic reality.
Emissions are allocated on the basis of the economic value of the co-products. This value is calculated by multiplying the mass by the market price.
Allocation factor = (quantity × price of this product) ÷ (quantity × price of all co-products)
Selecting this option displays two additional fields. In the ‘Price type’ drop-down menu, you can select the basis on which the allocation was calculated:
-
Global market price:
The globally applicable market price for the product. The preferred option according to Catena-X, where available. -
Regional market price:
A regionally specific market price, e.g. for Europe or North America. To be used if no global price is available or representative. -
Other: Other economic indicators such as production costs or selling price. Only use if neither a global nor a regional market price is available.
The “From” and “To” date fields can be used to specify the reference period on which the prices used are based.
Example:
- Product A: 5 kg × €200/kg = €1,000, Product B: 8 kg × €15/kg = €120
- Sum: €1,000 + €120 = €1,120
- Allocation factor Product A = 1,000 ÷ 1,120 = 0.893
Waste treatment
This tab is relevant if waste streams are generated during production, e.g. from offcuts, rejects or process residues. In the ‘Allocation method’ field, select the method you have used.
1. Polluter Pays Principle / Reverse Cut-off Approach
When to apply? When waste is sent to landfill or incinerated and there is no guaranteed recycling. This is the standard scenario for genuine disposal.
The waste-generating company is responsible for all treatment emissions – from collection and transport through to final disposal.
Example: The manufacture of an aluminium frame generates 4 g of paint waste per unit, which is disposed of by incineration. All incineration emissions are attributed to the aluminium frame. No credit is given for the recovered heat.
Standard compatibility: Catena-X refers to this principle as the ‘Polluter Pays Principle’, TfS as ‘Reverse Cut-off’. PACT does not use its own term, but shares the same basic principle.
2. Cut-off Approach
When to apply? If the waste is handed over to an external service provider for disposal and the emissions from that disposal are to be attributed to the recipient – not to the product system that generated the waste.
The producing product system transfers the waste to the end-of-waste point with zero emissions. All emissions from this point onwards are borne by the recipient.
Example: CNC machining of a steel component generates 0.8 kg of metal swarf per unit. This is handed over to an external steel recycler at the factory gate. As the waste is handed over at the factory gate with zero emissions, the steel component incurs no emissions for this recycling process. The emission input for this waste stream is zero.
Standard compatibility: Applies to all three standards.
3. System expansion via substitution
When to apply? Applies exclusively to waste-to-energy incineration in the context of the TfS. The market for the energy source being replaced must be known, and representative data on its emissions must be available.
In the case of combustion with energy recovery, the recovered energy replaces another energy source. The emissions from the replaced energy source are deducted as a credit from the PCF of the producing product system.
PCF = Emissions from combustion process − Emissions from the energy source replaced
Example: Production waste is incinerated and the recovered heat replaces natural gas. The emissions avoided from natural gas combustion are deducted as a credit from the PCF of the producing product system.
Standard compatibility: The substitution method is permitted exclusively within the TfS context and only in cases of combustion with energy recovery. Catena-X does not allow credits for combustion with energy recovery – the polluter pays principle applies in such cases. PACT makes no explicit statement on this matter.
Material recycling
This tab is relevant when residual materials or waste from production are recycled. In almost all cases, the cut-off approach is considered the standard method.
1. Cut-off Approach
When to apply? If the material is recycled externally and is not part of the company’s own product system, or if a cradle-to-gate assessment is being carried out.
The responsibility of the producing product system ends at the end-of-waste point. From the moment of handover, the producing system no longer incurs any emissions. At the same time, it receives no credit for the fact that the material replaces primary production elsewhere.
Example: A bicycle manufacturer sends 180 g of aluminium shavings per frame to an external recycler. Emissions from transport, smelting and processing are borne by the purchaser of the secondary aluminium. The emissions input in the frame’s PCF is zero — nor is a credit for replaced primary production applied.
Standard compatibility: The cut-off approach is the prescribed standard method in all three standards.
2. Upstream System Expansion
When to apply? Exclusively in the context of TfS and only for recycling cases where all the criteria listed below are met:
- A societal benefit can be demonstrated in the form of overall lower GHG emissions compared to other available treatment methods.
- The technology is new and it can be assumed that its efficiency will continue to improve after commercial scale-up.
- Regularly updated data is used in accordance with the TfS guideline.
- The market for the alternative waste treatment is known and the requirements are clearly defined.
- An ISO-compliant substitution approach is applied and the exact end use of the waste is known.
- Substitution is only applied if the alternative treatment replaces the final disposal and thereby eliminates the need for final disposal.
- Data on the impact of the alternative production process must be available in order to calculate the PCF of the alternative product and compare it to the system under study.
- A clear description of the process for selecting the final end-of-life option substituted by chemical recycling must be documented.
In exceptional cases, the upstream system expansion method may be applied when calculating recycling emissions. This method assesses the benefits of a recycled material by comparing it with alternative treatment methods. The method is based on the substitution principle: the recycled material replaces an alternative treatment, and the emissions avoided as a result are counted as a credit. In practice, the method is particularly relevant for chemical recycling.
Example: A company uses chemical recycling to convert plastic waste back into raw materials that would otherwise have been thermally disposed of. As all criteria are met, the Upstream System Expansion method is applied. The emissions avoided from thermal disposal are counted as a credit.
Note on standard compatibility: TfS permits the method as an exception for recycling cases such as chemical recycling, provided all defined criteria are met. Catena-X and PACT prescribe the cut-off approach as the standard and do not provide for any comparable exemption.