applying hybrid lca and valuation to ... · apply lca modelling to assess the environmental impacts...
TRANSCRIPT
Applying hybrid LCA and valuation to environmental assessment of supply chains
October 2013
www.pwc.com
PwC
How to manage global environmental impacts of products / services through the supply chain?
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
2
octobre 2013
• What is the impact of my company on nature capital?
• What is the economic valuation of those environmental impacts and how do they affect human welfare?
• How to assess more and more interwoven & complex supply chains?
• How to reflect issues at local scale?
Key challenges to face
Process-based Life Cycle Assessment
Several techniques available
Environmental extended I/O models (EEIO)
Monetary valuation
PwC
Process-based Life Cycle Assessment
Assessment based on physical relations between activities in the supply chain, use and end of life of good and services to quantify the environmental impacts
3
octobre 2013
Energy Raw materials
Need for detailed inventory of quantitative inputs and outputs for processes considered
PwC
Economic-based EEIO assessment
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
4
octobre 2013
EEIO analysis uses economic input/output analysis to map general interdependencies between sectors in the economy of a give region and quantify those relationships (in monetary terms), and then assign environmental factors to the sectors
Data on environmental
impacts of different sectors in an economy
I-O table Environmental extension
Input-output tables assess international trade flows between different regions and sectors. The model shows economic interdependencies among producers of products and services.
EEIO model
Need to know the economic sectors involved in the product / services
PwC
Using economic valuation of externalities to assess societal costs
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
5
octobre 2013
Impact pathway
1. Quantify impact driver - emissions or resource
use
2. Estimate changes in the environment
3. Identify how changes affect people
4. Value loss in human well-being
Water use
Reduced local availability for food production and domestic use
Depleted stock of ground water
Malnutrition
Human health: diseases
Resource increased cost
Welfare economics valuation (€)
Illustration for water use societal costs
PwC
Benefits and drawbacks of each technique
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
6
octobre 2013
Benefits
Drawbacks
LCA
Focused on specific processes
which provide a more accurate
reflection of the processes of a
business
Standardized and widely
adopted approach
Time intensive to collect process
specific data
System boundaries -> cut off
Partial coverage of the economy in
databases
Results are not regionalised EEIO
Comprehensive assessment of
the impacts across the entire
economy
Fast and relatively inexpensive,
enabling identification of hotspots
Results reflect sector averages
Sectors can be quite broad, covering a
range of different processes and
reducing accuracy of results
Economic valuation
Reflects impact on human well-
being
Meaningful results for decision-
makers
Time intensive to develop local
approaches
Research ongoing for some areas and
further work needed for some impact
areas
PwC
Combining the 3 approaches : an hybridization case study
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
7
octobre 2013
Primary
environment data
Extrapolation
Purchase
ledger data
Apply multi
region EEIO model
STAGE 1: DATA GATHERING
STAGE 2: DATA ANALYSIS / MODELLING
STAGE 3: REGIONALISE & HYBRIDISE DATA
Environmenta
l data valued in terms of
impact on
society from
changes in the
environment
STAGE 4: VALUATION
A complete
environmental data set for
cradle to gate
Replace EEIO
model results with primary/
extrapolated data
and LCA results
where
appropriate
Process
analysis dataBuild LCA
model
Regionalise
LCA data using multi
region EEIO
model data
STAGE 0:
SUPPLY CHAIN
MAPPING
Supply chain
mapping
PwC
Combining the approaches to reap the benefits of each technique
8
octobre 2013
Multi-region aspects of EEIO used to regionalise the results of the LCA
Accuracy Data collection: primary
environmental data collected on suppliers
LCA model:
Generic and sector-specific databases
Software TEAM to model the systems
EEIO model:
Mutli-region ESCHER model, based on GTAP 57 sectors in 130 regions
Use of EEIO to complete processes / activities not covered by CLA
Actual data used where available
Use of LCA data for all significant processes
Economic valuation model:
Local pathway for 6 environmental impacts (GhG, air pollution, waste, land use, water use, water pollution)
Based on environmental economics studies
Local pathways for the selection of relevant environmental impacts
Representativity
Comprehensiveness
Specific location of impact drivers
Integration of local effects
PwC
Case study: European leather products supply chain assessment
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
9
octobre 2013
product assembling
Key operating process
Financial services
Peripheral activities
Covered by EEIO
Covered by direct process data (data collection) and LCA modelling
energy
Covered by direct process data (data collection) and LCA modelling
waste
Construction
Machinery & equipment
Raw materials
PwC
Case study: European leather products supply chain assessment
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
10
octobre 2013
Peripheral materials: covered by EEIO Key material
covered by LCA
Raw materials
zips Cotton yarn Leather
Where does it come from ?
Using I/O flow trade tables to identify the origin of the material
Leather processed in Italy sources significant inputs from France and Morocco
PwC
Case study: leather handbag supply chain assessment
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
11
octobre 2013
80 kg of rawhide from calf
20 kg rawhide from lamb, raised
0.22$ : impact on society
Ex : water consumption
8 m3 of water consumed,
0.22$ / m3
Using EEIO model to identify the origin of the material
Apply LCA modelling to assess the environmental impacts
Apply local pathway of economic valuation modelling
Ex : water consumption
0.3 m3 of water consumed
0.35$ : impact on society
FRANCE MOROCCO
0.35$ / m3
PwC
This approach shows the location of impacts on society
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
12
octobre 2013
Graphical distribution of impacts
Cotton Metals
Cattle
Energy Metals
Cotton Linen Paper
Cattle feed
Metals
PwC
What we have learnt from this approach?
Benefits Drawbacks
Allows modelers to apply the best data for different activities in the supply chain
Some hybrid methods theoretical not practical tools
Combined techniques can be applied to a wider range of activities more quickly – therefore modeling boundary is larger
Can be challenge to define consistent boundaries for different studies
Makes valuation of impacts possible by providing more local impact data
Further levels of detail would be a useful development especially for large countries
Provides results with real impact across the whole of organisations, not just sustainability team
Some data sets are limited
Data management challenges significant
The added value of applying a combination of approaches (LCA, EEIO, economic valuation)
13
octobre 2013
Any questions ?
Emilie Floc’h | PwC Sustainability
( : 01 56 57 58 62
Your main contact :
Olivier Muller | PwC Sustainability
( : 01 56 57 80 44