Supply Chain Carbon Carbon Cost Estimator

The Supply Chain Carbon Carbon Cost Estimator converts covered supply-chain greenhouse-gas emissions into an estimated carbon-related financial cost. It is useful when a company wants to understand how an external carbon price, supplier pass-through charge, procurement assumption, or internal scenario price could affect the cost of emissions embedded in its value chain.

Rather than assuming every ton is exposed, the calculator lets you define the emissions footprint, the percentage considered financially exposed, the carbon price per tCO2e, and an optional annual price-growth assumption over a selected horizon. It reports the current annual carbon cost and a projected annual cost at the end of the horizon. The output is a scenario estimate, not a forecast of a specific regulation or market, so the price and exposure assumptions should come from your own policy, supplier contract, market scenario, or risk analysis.

Inputs

Supply-chain emissions

tCO2e

Emissions financially exposed

Current carbon price

$/tCO2e

Annual price growth

Projection horizon

years

Result

—

Projected annual carbon cost

Current annual cost—

Exposed emissions—

Projected carbon price—

How to use

1. Enter the emissions base
Provide the annual supply-chain emissions amount to which the carbon-cost scenario will be applied.

2. Set financial exposure
Enter the percentage of those emissions expected to carry a carbon-related cost or supplier pass-through.

3. Enter the current carbon price
Use the applicable market, tax, contract, or internal scenario price per metric ton of CO2e.

4. Define price growth and horizon
Set the annual escalation rate and number of years for the scenario. A 0% growth rate keeps the price constant.

5. Compare current and projected cost
Review exposed emissions, today’s annual cost, the projected future carbon price, and the resulting annual cost at the end of the horizon.

Formula

Projected cost = Emissions × Exposure rate × Carbon price × (1 + Growth rate)^Years

What the result means

The result shows the annual carbon-related cost at the end of the selected horizon if the entered emissions exposure remains constant and the carbon price grows at the chosen rate.

The model does not predict carbon-market prices, supplier behavior, regulation, free allocations, exemptions, tax treatment, or changes in emissions volume.

Example calculation

Given: 18,000 tCO2e, 65% exposure, a current carbon price of $55/tCO2e, 6% annual price growth, and a 5-year horizon.

Calculation:
Exposed emissions = 18,000 × 0.65 = 11,700 tCO2e.
Current annual cost = 11,700 × $55 = $643,500.
Projected price = $55 × 1.06^5 = $73.60/tCO2e.
Projected annual cost = 11,700 × $73.60 = about $861,170.

Result: Projected annual carbon cost ≈ $861,170.

The scenario implies that price escalation alone would add roughly $217,670 to annual carbon cost if exposed emissions remain unchanged.

FAQ

What does “financially exposed” mean?

It is the share of the emissions footprint expected to face a carbon-related price in your scenario. The share can be lower than 100% when only certain suppliers, regions, materials, or activities are affected.

Can I use an internal carbon price?

Yes. The calculator works with any price assumption expressed per tCO2e, including an internal shadow price used for planning.

Why does the model keep emissions constant?

This version isolates the effect of price and exposure. If you expect emissions to fall, run separate scenarios with lower emissions values or use a reduction-target tool first.

Is the projected price a market forecast?

No. It is a compound-growth scenario based entirely on the growth rate you enter, not an estimate of future allowance, tax, or credit prices.

How should I use the result?

It can support budgeting, supplier negotiations, sourcing comparisons, or transition-risk scenarios. It should be paired with the specific rules and commercial terms that determine whether a real cost is incurred.

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