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Risk-based methodology to measure CO lifecycle
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In today’s industrial landscape, businesses must consider sustainability alongside financial feasibility when
planning large-scale infrastructure and energy projects. However, traditional Life Cycle Assessment (LCA)
methods often fall short because they do not account for operational risks, the timing of CO reductions, or
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the flexibility of different technologies. This paper introduces a risk-based approach to measuring lifecycle CO
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emissions, integrating LCA with financial tools like Discounted Cash Flow (DCF) and Real Options Analysis
(ROA). This method provides project managers and industry leaders with a more reliable way to assess the
real impact of investments in a net-zero economy. The limitations of traditional LCA create challenges for
decision-making in industrial plants and energy projects. First, conventional models assume stable operations,
but real-world projects face risks such as regulatory changes, extreme weather, or supply chain disruptions.
Second, LCA does not consider how quickly a project can start reducing emissions—solar and wind farms
can be built in a few years, while nuclear plants may take over a decade. Third, flexibility in project design
is not accounted for, meaning decision-makers may miss opportunities to adapt to changing conditions.
This paper proposes a new methodology that addresses these gaps. By discounting CO emissions over
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time, our approach prioritizes actions that deliver faster climate benefits. Additionally, incorporating ROA
helps businesses assess the value of flexibility in project design—such as modular construction or backup
systems—that can reduce long-term risks. A real-world case study demonstrates this approach, analyzing
a nuclear power plant located near a river where droughts could disrupt operations. The study evaluates
the feasibility of building a backup water reservoir to mitigate this risk. The results show that considering
risk-adjusted CO savings and flexibility leads to more informed decisions that balance sustainability with
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operational reliability. This methodology provides a practical framework for making strategic investments that
align with financial goals and sustainability targets for industrial plant operators, energy companies, and project
managers. By integrating risk management, financial principles, and environmental impact assessments,
companies can make smarter, future-proof decisions that support the transition to net-zero.

Impiantistica Italiana - Marzo-Aprile 2025 33