Economic Input-Output Life Cycle Assessment

1. Economic Input-Output Life Cycle Assessment 12-714/19-614 Life Cycle Assessment and Green Design

2. sub-system2 process process process process process process process process process process process process process process process process process process process process process sub-system1 Structure of a Process-based LCA Model

3. Criticism of LCA ·There is lack of comprehensive data for LCA. ·Data reliability is questionable. ·Defining problem boundaries for LCA is controversial and arbitrary. Different boundary definitions will lead to different results. ·LCA is too expensive and slow for application in the design process. ·There is no single LCA method that is universally agreed upon and acceptable. ·Conventional, SETAC-type LCA usually ignores indirect economic and environmental effects. ·Published LCA studies rarely incorporate results on a wide range of environmental burdens; typically only a few impacts are documented. ·Equally credible analyses can produce qualitatively different results, so the results of any particular LCA cannot be defended scientifically. ·Modeling a new product or process is difficult and expensive. ·LCA cannot capture the dynamics of changing markets and technologies. ·LCA results may be inappropriate for use in eco-labeling because of differences in interpretation of results.

4. How Research is Done… • Sitting around in an office, we were complaining about problems of LCA methodology. • Realized economic input-output models could solve boundary and circularity problems. • Then hard work – assembling IO models, linking to environmental impacts and testing. • Found out later that Leontief and Japanese researchers had done similar work, although not directly for environmental life cycle assessment.

5. Economic Input-Output Analysis • Developed by Wassily Leontief (Nobel Prize in 1973) • “General interdependency” model: quantifies the interrelationships among sectors of an economic system • Identifies the direct and indirect economic inputs of purchases • Can be extended to environmental and energy analysis

6. The Boundary Issue • Where to set the boundary of the LCA? • “Conventional” LCA: include all processes, but at least the most important processes if there are time and financial constraints • In EIO-LCA, the boundary is by definition the entire economy, recognizing interrelationships among industrial sectors • In EIO LCA, the products described by a sector are representing an average product not a specific one

7. RESOURCES waste system boundary Circularity Effects • Circularity effects in the economy must be accounted for: cars are made from steel, steel is made with iron ore, coal, steel machinery, etc. Iron ore and coal are mined using steel machinery, energy, etc... product emissions

8. Building an IO Model • Divide production economy into sectors (Note: could extend to households or virtual sectors) • Survey industries: Which sectors do you purchase goods/services from and how much? Which sectors do you sell to? (Note: Census of Manufacturers, Census of Transportation, etc. every 5 years)

9. Building an IO Model (II) • Form Input-Output Transactions Table – Flow of purchases between sectors. • Constructed from ‘Make’ and ‘Use’ Table Data – purchases and sales of particular sectors. (Note: need to reconcile differing reports of purchases and sales...)

10. Economic Input-Output Model Xij + Yi = Xi; Xi = Xj; using Aij = Xij / Xj (Aij*Xj) + Yi = Xi in vector/matrix notation: A*X + Y = X => Y = [I - A]*X or X = [I - A]-1*Y

11. Building an IO Model (III) • Sum of Value Added (non-interindustry purchases) and Final Demand is GDP. • Transactions include intermediate product purchases and row sum to Total Demand. • From the IO Transactions Model, form the Technical Requirements matrix by dividing each column by total sector input – matrix A. Entries represent direct inter-industry purchases per dollar of output.

12. Scale Requirements to Actual Product Engine Steel Conferences . . . $20,000 Car: $2500 $2000 $1200 $800 $10 Other Parts Plastics Electricity . . . $2500 Engine: $300 $200 $150 $10 Steel Aluminum

13. Example: Requirements for Car and Engine Engine Steel Conferences . . . Car: 0.0005 0.125 0.1 0.06 0.04 Other Parts Plastics Electricity . . . Engine: 0.12 0.08 0.06 0.004 Steel Aluminum

14. Using a Requirements Model • Columns are a ‘production function’ or recipe for making $ 1 of good or service • Strictly linear production relationship – purchases scale proportionally for desired output. • Similar to Mass Balance Process Model – inputs and outputs.

15. Mass Balance and IO Model Racing Engine Car Production (Motor Vehicle Assembly) Etc. Steel Final Demand Etc.

16. Supply Chains from Requirements Model • Could simulate purchase from sector of interest and get direct purchases required. • Take direct purchases and find their required purchases – 2 level indirect purchases. • Continue to trace out full supply chain.

17. Leontief Results • Given a desired vector of final demand (e.g. purchase of a good/service), the Leontief model gives the vector of sector outputs needed to produce the final demand throughout the economy. • For environmental impacts, can multiply the sector output by the average impact per unit of output.

18. Supply Chain Buildup • First Level: (I + A)Y • Second Level: A(AY) • Multiple Level: X = (I + A + AA + AAA + … )Y • Y: vector of final demand (e.g. $ 20,000 for auto sector, remainder 0) • I: Identity Matrix (to add Y demand to final demand vector) • A: Requirements matrix, X: final demand vector

19. Direct Analysis – Linear Simultaneous Equations • Production for each sector: • Xi = ai1 X1 + ai2 X2 + …. + ainXn + Yi • Set of n linear equations in unknown X. • Matrix Expression for Solution: X(I - A) = Y <==> X = (I - A)-1 Y • Same as buildup for supply chain!

20. Effects Specified • Direct • Inputs needed for final production of product (energy, water, etc.) • Indirect • ALL inputs needed in supply chain • e.g. Metal, belts, wiring for engine • e.g. Copper, plastic to produce wires • Calculation yields every $ input needed

21. EIO-LCA Implementation • Use the 491 x 491 input-output matrix of the U.S. economy from 1997 • Augment with sector-level environmental impact coefficient matrices (R) [effect/$ output from sector] • Environmental impact calculation: E = RX = R[I - A]-1 Y

22. In Class Exercise • Two Sector Economy. • Model Final Demand $100 for Sector 1. • Haz Waste of 50 gm/$ in Sector 1 and 5 gm/$ in Sector 2. • Transaction Flows ($ billion) are:

23. Solution • Requirements Matrix: Row 1: 0.15 and 0.25, Row 2: 0.2 and 0.05 • (I-A) inverse Matrix: Row 1: 1.2541 and 0.33, Row 2: 0.264 and 1.1221 • Direct intermediate inputs: $15 of 1 and $20 of 2 • Total Outputs: $125.4 of 1 and $26.4 of 2 • Hazardous Waste: 6402 gm.