Use of monetary environmental values in life

cycle assessments and product development

Bengt Steen

Environmental system analysis & CPM, Chalmers

Why?

• To include environmental costs in prices is an accepted EU policy ”Get the prices right”

• There is a lack of tools to assess ”right prices”

• The UN ”Polluter Pays Principle”

History• An LCA method, the EPS system was developed in

its first version 1989 as a tool for designers at Volvo

• The first case was about the choice between plastics and metals in a front piece

• Since 1992, damage costs (WTP) has been used as a measure for environmental impacts in the EPS system

• A competence centre, CPM was formed to develop and maintain LCA knowledge including the EPS system

CPM

• CPM = Centre for the environmental assessment of products and material systems

• CPM is a competence centre since 1996 at Chalmers, where industry, academy and government join forces in the ambition to reduce the environmental impact of product systems.

http://lifecyclecenter.se

The LCA concept

ISO 14044

The EPS system

The EPS default

method

EPS = Environmental Priority Strategies in product design

All choices depend on three things

• What is included

• How trade-offs are made

• How uncertainty is handled

What is included in the EPS default method?

• Impacts on five safeguard subjects:– Human health– Biodiversity– Bioproductivity– Abiotic resources– Recreational values

• Temporal and spatial system boundaries– As long as the impact exists, global

How is trade-off made?

• WTP to avoid changes in the safeguard subjects

• No discounting of future impacts

• All WTP values representative for OECD countries

How is uncertainty handled?

• Impacts included even if uncertain

• Best estimate and uncertainty quantified

• Monte Carlo simulations used for assessing uncertainty in technical choices

• Uncertainty in choice means inefficiency (=costs) in sustainability measures

Product calculation

•Manufacturing

•Use

•Waste management

Product calculation

•Manufacturing

•Use

•Waste management

WTP for materials and processes

•Manufacture of PE

•Material recycling of PE

•Incineration of PE

•Heat recovery of PE

•Land fill of PE

•etc

WTP for materials and processes

•Manufacture of PE

•Material recycling of PE

•Incineration of PE

•Heat recovery of PE

•Land fill of PE

•etc

EPS in practiceWTP for emissions

•Carbon dioxide

•Carbon monoxide

•Nitrogen oxides

•Sulphur oxides

•VOC

•etc.

WTP for emissions

•Carbon dioxide

•Carbon monoxide

•Nitrogen oxides

•Sulphur oxides

•VOC

•etc.

Willingness to pay for env. assets

•Preserved species

•Crop

•Wood

•Meat/fish

•Decreased mortality

•Etc

Willingness to pay for env. assets

•Preserved species

•Crop

•Wood

•Meat/fish

•Decreased mortality

•Etc Impact models Inventory IInventory II

Safe guard subject Impact category Category indicator Indicator unit Weighting factor (ELU/indicator unit)

Uncer-tainty factor

Human health Life expectancy YOLL Person-years 85000 3Human health Severe morbidity Severe morbidity Person-years 100000 3Human health Morbidity Morbidity Person-years 10000 3Human health Severe nuisance Severe nuisance Person-years 10000 3Human health Nuisance Nuisance Person-years 100 3Ecosystem production capacity

Crop growth capacity Crop kg 0.15 2

Ecosystem production capacity

Wood growth capacity Wood kg 0.04 1.4

Ecosystem production capacity

Fish and meat production capacity

Fish and meat kg 1 2

Ecosystem production capacity

Soil acidification Base cat-ion capacity of soil

mole H+ -equivalents

0.01 2

Ecosystem production capacity

Production capacity for irrigation water

Irrigation water kg 0.003 4

Ecosystem production capacity

Production capacity for drinking water

Drinking water kg 0.03 6

Abiotic stock resources Depletion of oil reserves Fossil oil kg 0.506 1.4Abiotic stock resources Depletion of coal reserves Fossil coal kg 0.0498 2Abiotic stock resources Depletion of natural gas

reservesNatural gas kg 1.1 2

Monetary values for Environmental Assets

Abiotic stock resources Depletion of Ag reserves Ag reserves kg of element 54000 2.2

Abiotic stock resources Depletion of Al reserves Al reserves kg of element 0.439 2

Abiotic stock resources Depletion of Ar reserves Ar reserves kg of element 0 1

Abiotic stock resources Depletion of As reserves As reserves kg of element 1490 2.2

Abiotic stock resources Depletion of Au reserves Au reserves kg of element 1190000 3

Abiotic stock resources Depletion of B reserves B reserves kg of element 0.05 10

Abiotic stock resources Depletion of Ba reserves Ba reserves kg of element 4.45 3

Abiotic stock resources Depletion of Bi reserves Bi reserves kg of element 24100 2.2

Abiotic stock resources Depletion of Be reserves Be reserves kg of element 958 3

Abiotic stock resources Depletion of Br reserves Br reserves kg of element 0 1

Abiotic stock resources Depletion of Cd reserves Cd reserves kg of element 29100 2.2

Abiotic stock resources Depletion of Ce reserves Ce reserves kg of element 45.2 3

Abiotic stock resources Depletion of Cl reserves Cl reserves kg of element 0 1

Abiotic stock resources Depletion of Co reserves Co reserves kg of element 256 3

Abiotic stock resources Depletion of Cr reserves Cr reserves kg of element 84.9 3

Abiotic stock resources Depletion of Cs reserves Cs reserves kg of element 512 3

Abiotic stock resources Depletion of Cu reserves Cu reserves kg of element 208 3

Abiotic stock resources Depletion of Dy reserves Dy reserves kg of element 1020 3

Monetary values for Environmental Assets

Substance flow group Indicator Pathway

Pathway specific charcterisation factor

Uncertainty factor

Characterisation factor for all pathways

Indicators contribution to EPS default index

EPS default index

CO2 YOLL heat stress 7,43E-08 2,5CO2 YOLL starvation 6,80E-07 3CO2 YOLL flooding 5,70E-09 3CO2 YOLL malaria 3,30E-08 3CO2 YOLL all 7,93E-07 6,74E-02CO2 severe morbidity starvation 3,15E-07 3CO2 severe morbidity malaria 3,80E-08 3CO2 severe morbidity all 3,53E-07 3,53E-02CO2 morbidity starvation 3,15E-07 3CO2 morbidity malaria 3,40E-07 3CO2 morbidity all 6,55E-07 6,55E-03CO2 crop desertification 7,56E-04 2,2 7,56E-04 1,13E-04CO2 wood global warming -1,16E-03 3CO2 wood CO2 fertilisation -3,93E-02 2CO2 wood all -4,05E-02 -1,62E-03CO2 NEX climate change 1,26E-14 3 1,26E-14 1,39E-03CO2 all all 1,08E-01

Example of calculation of a damage cost In EUR/kg of CO2

Substance flow group

Impact index,

(ELU/kg)

Substance flow group

Impact index, (ELU/kg)

As 95.3 HCl 2.13Benzene 3.65 HF 2.07Butadiene 10.7 Hg 61.4Cd 10.2 N2O 38.3CH2O 6.47 NH3 2.90CH4 2.72 Ni 0CO 0.331 NOx 2.13CO2 0.108 PAC (PAH) 64300Cr 20.0 Pb 2910Cu 0 PM10 36.0Ethylene 3.45 Propylene 2.64H2S 6.89 SO2 3.27

Zn 0

WTP for impacts from emissions to air

From CPM report 1999:5, available at http://lifecyclecenter.se

Substance Global emission or

reserve depletion, kg/year

EPS default index, ELU/kg

Added global value

% of adjusted global GNP

CO2 2.20E+13 0.108 2.38E+12 2.24SO2 1.70E+11 3.27 5.56E+11 0.52NOx 1.53E+11 2.13 3.26E+11 0.31Fossil oil 3.40E+12 0.506 1.72E+12 1.62Fossil coal 3.17E+12 0.0498 1.58E+11 0.15Natural gas 1.56E+12 1.1 1.72E+12 1.62Ag-ore 1.30E+07 54000 7.02E+11 0.66Al-ore 2.11E+10 0.439 9.26E+09 0.01Au-ore 1.46E+06 1.19E+06 1.74E+12 1.64Cu-ore 9.03E+09 208 1.88E+12 1.77Fe-ore 5.07E+11 0.961 4.87E+11 0.46Pt-ore 1.24E+05 7.43E+06 9.21E+11 0.87Pd-ore 9.90E+04 7.43E+06 7.36E+11 0.69Pb-ore 2.80E+09 175 4.90E+11 0.46P-minerals 1.73E+10 4.47 7.73E+10 0.07

Validation

Material ActivityEnvironmental cost/unit (ELU) unit

ABS Composting 0,033 kgABS Energy recovery 0,15 kgABS Incineration 0,34 kgABS Landfill 0,0005 kgABS Production 2,07 kgABS Reuse-material -1,04 kgGMT 40% GF Composting 0,03 kgGMT 40% GF Energy recovery 0,19 kgGMT 40% GF Incineration 0,57 kgGMT 40% GF Landfill 0,14 kgGMT 40% GF Production 0,63 kgGMT 40% GF Reuse-material -0,32 kgPBT Composting 0,033 kgPBT Energy recovery 0,24 kgPBT Incineration 0,28 kgPBT Landfill 0,0005 kgPBT Production 3,18 kgPBT Reuse-material -2,54 kgPolyamide (PA) Composting 0,0327 kgPolyamide (PA) Energy recovery 0,0462 kgPolyamide (PA) Incineration 0,342 kgPolyamide (PA) Landfill 0,0005 kg

WTP for environmental impacts of materials and processes

Simple excel version of the EPS default method is available at http://lifecyclecenter.se/tools-data/lca-in-design/

Aluminium bonnet for a car

Monte Carlo simulationEnv. Damage cost for A - B

Probability in % for A-B being less than the value on the Y-axis

Damage cost for A is highest

Damage cost for B is highest

A is an Al bonnet for a car,B is a steel bonnet for a car

Data whose precision is most important for the precision in priority

Standard deviationCritical change factor

Looking ahead

• How to define the ”monetary value” of environmental impacts?

• How to put the ethical dimension on the agenda?

• An IPCC for ”right prices”?