Ik Kim and Tak Hur Konkuk University, Korea

1. 2nd APO World Conference on Green Productivity 9-11 December 2002. Edsa Shangri-la, Manila, Philippines An Attempt to Measuring Green Productivity Ik Kim and Tak Hur Konkuk University, Korea

2. Eco-efficiency I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • recognized as “one of the primary way in which business can contribute to the concept of sustainable development”. • Countries or companies engaging in the eco-efficiency revolution will become stronger in international competitiveness. • This recognition led to the development of Green Productivity (GP) program of the Asian Productivity Organization (APO) in 1996.

3. Green Productivity (GP) I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions A strategy for enhancing productivity and environmental performance for overall socio-economic development • Measurement of GP is important in order to evaluate the GP performance of a company or product. • Needs for GP Indicators which analyze both environmental and economic aspects in an integrated fashion.

4. In this study I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • The measurement framework of GP is discussed. GP Indicators ; GP Portfolio • A case study of polystyrene(PS) production system of a Korean companyis provided to illustrate the applicability of the GP indicators. • GP Index • GP Ratio

5. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions GP = Productivity / Environmental Impacts Productivity; - Conventional Concept; the ratio of output to input - Recently; the efficiency with which outputs are produced GP is in line with Eco-efficiency !!! - Total productivity = Total output / Total input - Partial productivity = Total output / Partial input

6. What to measure? How to measure? I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions GP Measurement - global level - national level - sectoral level - company level - factory level - each product level - material level - process level

7. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • Productivity at product level • production rate • - total no. of products/time • - total mass of products/time • mass of products/mass of raw materials • price/cost • profit/cost • total sales/year • total profit/year • return of investment/year

8. Green (denominator) I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • environmental impact • (ex) ecoindicator,… • LC(CO2) • LC(energy) • LC(water consumption) • total material consumption • total material intensity • total energy consumption • total energy intensity • land use • ecological footprint

9. SP($) / LCC($) EI GP Index = Productivity/Environmental Impact = I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • GP Index • The economic value created from the input of life • cycle cost divided by environmental impact • SP : Selling Price • LCC : Life Cycle Cost • EI : Environmental Impact. • To measure and compare the level of GP for a product • or service with currently competing equivalent products • or services

10. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • GP Ratio • GP ratio is not defined as the ratio of the GP indices • of the existing and new systems. • - GP ratiois designed forinternal managerial decision- • making, considering both costs or profits over • time and environmental impacts. • If GP is larger than one, a new system is better than the • existing one from the perspective of GP.

11. Ratio of Productivity = Ratio of Env. Impact = I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • The ratio of environmental impact between the current and alternative is plotted against the ratio of the productivity between the current and alternative. Green Productivity Portfolio;

12. II I : Environmental Performance : Productivity ; E (good), P(good) ; E (good), P(poor) ; E(poor), P (poor) ; E(poor), P(good) Ratio of Env. Impact E P I II III IV 1.0 III IV ; Current Process Ratio of Productivity 1.0 I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • GP Portfolio

13. Life Cycle Assessment Total Cost Assessment GP Indicators I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions III. Case Study

14. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions 1. Life Cycle Assessment 1.1 Goal and Scope Definition • Goal of this study • understand the environmental aspects of the PS production in company A and identify the improvement opportunities. • assist decision-making between the improvement alternatives. Scope of this study • System boundaries - from crude oil extraction to PS resin production • Functional unit (Reference flow) - 1ton of PS product

15. Raw Material Extraction to Gate to Gate Gate to User to Disposal Gate SM airemission Crude oil Ele Polymerization unit c W Coal Stm WT wateremission PW Devolation unit Gas CA waste Water CN Pelletization unit Co-product PE Wood Pap Storage&packaging unit PS Etc. Systemboundary • SM(Styrene monomer), Elec(Electricity), Stm(Steam), PW(Process water), CA(Compressed air), • CN(Compressed nitrogen), PE(Polyethylene), Pap(Paper) I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions 1.2 Life Cycle Inventory Analysis Preparing for data collection • Data collection boundary • Unit process - raw material unit - polymerization unit - devolation unit - pelletization unit - storage & packaging • Drawing up process tree

16. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions 1.3 Life Cycle Impact Assessment • according to the framework of ISO 14042 in order to identify significant environmental issues. • LCIA methodology - involves eight impact categories defined in the scope definition. - use the methodology developed from the Korean national LCA project. • normalization reference • weighting factor

17. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions 1.4 LCA results and Discussion LCI results (unit process)

18. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions Ranking of each unit process Ranking Criteria ▪ A : contribution >50% ▪ B : 25% < contribution < 50% ▪ C : 10% < contribution < 25% ▪ D : 2.5%< contribution < 10% ▪ E : contribution < 2.5% • For most emissions, the contribution of raw materials are much greater than the contributions of other unit process.

19. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions LCIA results • Resource depletion and global warming were the two dominant impact categories.

20. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions LCIA results(by unit process) • The unit process of the raw material production was identified as the biggest source for resource depletion and global warming.

21. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions The LCA Study Reduce the environmental impacts associated with the raw materials(SM)

22. I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions Alternative 2 • Baffle equipment is a mixing system which is expected to enhance the mixing efficiencyby minimizing the dead volume in the reactor.

23. Production yield (Product/Raw Material) I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions Alternative 2 Electricity required

24. Eco-indicator Values I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions

25. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 2. Total Cost Assessment 2.1. Life Cycle Costing(LCC) Cost type and categories • Conventional and hidden costs (Types I and II) were addressed throughout the entire life cycle of a product.

26. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions Life Cycle Cost of PS 1 ton

27. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 2.2. Total Cost Assessment • TCA was conducted to assess if a new baffle process (Alternative 2) is better than the existing process from the economic perspective. • Financial calculation • - The present costsincorporate the concept of decreasing • monetary value over lifetime of the new baffle process. • - Use the compound interest table to calculate the present • cost of an annuity over ten years. • (5% of interest rate : 7.72 of conversion factor)

28. Net present value 30USD/PS 1ton I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions Present Costs “Recommend to implement baffle process”

29. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions TCA Results • The introduction of a new baffle equipment (alternative 2) is expected to increase the profit by 21% over 10 years. • However, TCA results only consider the costs but do not consider the environmental aspects, even if both direct and indirect environmental costs are considered.

30. 3.1. GP Index GP Index = SP/LCC EI = ($890/$749) 4.20E-01 = 2.83 I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 3. GP Indicators • This index value can be used to estimate the GP of a product and compare it with other competing equivalent products.

31. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 3.2. GP Ratio • Since GP ratio is larger than one, a new system is better than the existing one from the perspective of GP.GP ratio can be applied to select one alternative out of a list of contenders in order to improve GP of the existing systems.

32. : Current system : Alt 1 (SM change) : Alt 2 (Baffle Equipment) : Alt 2’ (after 10yrs) : Alt 3 (Alt 1 + Alt 2) : Alt 3’ (after 10yrs) I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 3.3 GP Portfolio Ratio of Env. Impact II I-1 1.066 I-2 1.040 1.020 III IV 1.0 1.006 Ratio of Productivity 1.0 1.005

33. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions IV. Conclusions • The measurement framework of GP was discussed. - GP Indicators(GP Index & GP Ratio) and GP Portfolio analyze both the environmental and economic factors in an integrated fashion. • The LCA results show that the environmental impacts of the PS production are improved through the reduction of the amount of the raw materials. • The TCA results show that the solution to the environmental • problem is not costly but beneficial.

34. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions • GP index can be used for the measurement of GPand GP ratio can be used for its improvement. • GP Portfolio makes it easy to see the effect of alternatives from • both environmental and economic perspectives. • Effort to develop, apply and promote GP or Eco-efficiency will • encourage business to become more competitive, more innovative • and more environmentally responsible as well as contribute much • toward the sustainability of our society.