One approach is allocation. But when allocation feels arbitrary or doesn’t represent the real-world consequences of your system, system expansion can offer a much more meaningful perspective. This guide breaks it down without jargon, helping beginners and sustainability teams understand when system expansion actually helps create clearer, more realistic insights.
What Is System Expansion?
System expansion is a modeling approach that widens your system boundary so you can account for the full set of functions your co-products provide. Instead of splitting impacts between outputs, you ask:“What product or process does this co-product replace in the real world?”Once you identify that displaced function, you subtract its impact from your system. The result is a model that captures how your product interacts with the broader market — not just its own internal emissions and energy flows.
System expansion helps you show the consequence of creating a co-product, not just divide emissions by a ratio.
A Simple Example: Biogas From Food Waste
Imagine a process that digests food waste and produces:- Compost
- Electricity from biogas
- Compost may displace synthetic fertilizer
- Electricity may displace grid electricity
This is where system expansion becomes powerful — it lets you account for the real-world value of your co-products.
Allocation vs. System Expansion: The Honest Comparison
| Approach | What It Does | When It Works Well | Things to Watch Out For |
|---|---|---|---|
| Allocation | Splits impacts across outputs using ratios | Simple systems with similar co-products | Can feel arbitrary or distorted |
| System Expansion | Models what co-products replace in the economy | Circular systems, energy recovery, recycling | Requires clear assumptions |
When System Expansion Makes Sense
System expansion is not something you use everywhere — it is most useful when:- Your outputs are fundamentally different (e.g., heat + material)
- You are comparing recycled vs. virgin systems
- Allocation would distort results or hide real consequences
- You’re working in a consequential decision-making context
(e.g., “What happens if we change this process?”)
- Waste management and recycling
- Bio-based systems
- Multi-output production plants
- Circular economy modeling
Key Considerations Before Using System Expansion
You’ll get the most reliable results if you:- Clearly define what your co-product replaces
- Use realistic, region-specific assumptions
- Document substitution logic in plain language
- Run sensitivity tests to see how results shift
How Sustainly Helps Teams Model System Expansion Responsibly
System expansion can feel abstract, especially for beginners. Sustainly makes it easier by providing:- A transparent AI assistant that explains assumptions, flags inconsistencies, and helps structure scenarios
- Centralized sustainability data, so co-product logic stays consistent across products
- Guided workflows that support both simple allocation and system expansion paths
- Collaborative notes and documentation, so teams stay aligned while refining assumptions
Scenario Modeling
Explore substitutions, recovery loops, and avoided burdens.
Transparent AI Guidance
Understand assumptions without hidden black boxes.
Final Takeaway
System expansion offers a deeper way to understand multi-output systems — one that reflects real-world consequences rather than dividing impacts by a formula.It’s more work than allocation, but when used thoughtfully, it provides insights that are fairer, clearer, and more aligned with how markets actually function. With a structured workflow and transparent AI support, Sustainly helps teams model system expansion without the confusion — letting you focus on meaningful sustainability decisions rather than technical complexity. When the goal is to understand change, not just bookkeeping, system expansion is often your strongest tool.