Canada-U.S. Binational EIO-LCA Model

1. Canada-U.S. Binational EIO-LCA Model Jonathan Norman Heather L. MacLean Department of Civil Engineering University of Toronto LCA of Oil Sands Technology – Kick-Off Meeting November 3, 2006 University of Calgary

2. Outline • Environmental Input-Output Analysis • Overview, limitations, applications • Canadian and U.S. EIO-LCA models • Rationale for Binational EIO models • Canada-U.S. EIO-LCA model • Applications • Life-Cycle Assessment for Canadian oil sands

3. Motivation • Quantify energy use & emissions associated with oil sands economic activity Economic Activity ↕ International Trade ↕ Energy Use/Emissions Canada United States

4. Input-Output Tables • Systems of National Accounts Accounts for all transactions in an economy… Outputs Final Demand Y Interindustry Demand Z Inputs Total Output, X

5. Input-Output Analysis • Uses IO tables to quantify interrelationships between industrial sectors (Leontief, 1941) ∆X = (I-A)-1∆Y ∆X = Change in Economic Output by sector ∆Y = Change in Consumer Demand (I-A)-1 = Leontief Inverse E = Total emissions across all sectors • Accounts for direct and indirect effects of production E= E E

6. Source: Bjorn et al. (2004) Final Demand Direct Impacts Indirect Impacts ... Motor vehicle parts Primary iron and steel Motor vehicle parts Business services Other transport equipment Other transport equipment Motor vehicles Business services ENERGY Primary iron and steel ENERGY Pollutants (CO2, CH4, etc.) Pollutants (CO2, CH4, etc.) Pollutants (CO2, CH4, etc.) EIO-LCA Analysis

7. U.S. & Canadian EIO-LCA models • U.S. model created by Green Design Initiative – Carnegie Mellon University (1995) (www.eiolca.net) • 1997 US Input-Output Table (491 sectors) • Coupled to wide array of environmental data • Energy, Fuel use, Greenhouse Gases, much more. • Canadian model originally created by U of T (2003) • 1997 Candian Input-Output Table (117 sectors) • Coupled to energy, fuel use and GHG data (compiled by Statistics Canada)

8. Comparing US and Canada Significant international differences in fuel use: Agriculture Mining, Oil & Gas Manufacturing Canada Canada U.S. Canada U.S. U.S. Propane Petroleum Products Natural Gas Coal Electricity

9. Comparing US and Canada Greenhouse Gas Emissions Electricity & Natural Gas MT CO2 eq. per $US Million Secondary Manufacturing Light Manufacturing Primary Manufacturing Mining & Utilities Agriculture

10. Canada’s economy is highly dependent on that of the U.S. ¼ to ⅓ of GDP in Canada associated with US Trade NAFTA Trade Block – over past 10 years trade has increased signifcantly. To improve accuracy EIO-LCA of major international projects like the oil sands must consider emissions and energy use in the U.S. Canada – U.S. Trade

11. Binational model links Canadian & U.S. EIO-LCA models via trade flows Captures Biregional Feedbacks: Demand Canada  Production Canada & Demand U.S. Imports  Production U.S.  Demand Can Imports  Production Canada ….etc. Result is total energy use and emissions across Canada & the U.S. for a particular economic activity. Canada-U.S. EIO-LCA

12. Big Benefits for Canadian LCA Difference between bi-national EIO and Canadian EIO alone Secondary Manufacturing Primary Manufacturing Light Manufacturing Mining & Utilities Agriculture

13. Canada-U.S. EIO-LCA Analysis • Limitations • Simplified linear, static view • Product mix issues • Cradle-to-gate • Data limitations • Advantages • Intersectoral detail • System boundary is entire economy (Canada & U.S) • Quick, transparent – often needed for ‘real-world’ policy • Excellent first-round estimation for a snapshot in time

14. Application to Oil Sands LCA • Advantages of Binational EIO-LCA allow it to be used effectively for comparison of different oil sands technology scenarios, considering: • Total emissions across the supply chain • Economy-wide Canada and U.S. emissions • Binational EIO-LCA can be improved by using hybrid techniques that incorporate process-based LCA for crucial aspects of oil sands processes.

15. Thank You! Questions & Comments More Information: Jon Norman Department of Civil Engineering University of Toronto Tel: 416-327-8545 Fax: 416-978-3674 E-mail: jon.norman@utoronto.ca

16. North American EIO Model • Based on a Chenery-Moses Multiregional Input-Output Framework (Chenery & Clark, 1959; Moses, 1955) • Modified to account for Competitive Imports • Separates out trade in the Canada/U.S. IO Tables • Final demand = domestic demand + exports • Economic output = domestic output + imports • Import co-efficient: = Imports of commodity i Total domestic demand for commodity i

17. Linking Methodology Bi-national Canada-U.S. I/O Model = Total Output Final Demand International (I-A)-1

18. Limitations & Advantages Limitations • Same limitations as National EIO models, but also: • Import proportionality assumption • Data Limitations in terms of harmonization Key Advantages • Accounts for trade effects ignored in national EIO • Allows for North American-wide policy application: • More accurate Life-Cycle Assessment • Modeling cross-border impacts of production/consumption

19. US Energy Pull on Canada Energy Use Resulting from $1M U.S. Final Demand TJ/$US Million of U.S. Final Demand

20. Canadian Energy Pull on US Energy Use Resulting from $1M Canadian Final Demand TJ/$US Million of Cdn. Final Demand

21. Methodological Approach • Environmental Input-Output (EIO) Analysis • Popular modeling technique based on National Accounting methods used to determine GDP • Applied effectively to estimate environmental/energy impacts associated with economic production since early 1970’s • Our approach: Build new EIO models for Canada and US and link them through trade flows