Sector based data and rebounds for SAT (or, do not be afraid) Mark Goedkoop

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1 Sector based data and rebounds for SAT (or, do not be afraid) Mark Goedkoop

2 Overview IO data, the basics Characterisics No system boundaries Consistent (economic) allocation Problem 1: sectors are not homogenious Problem 2: import problem Why economists believe in it How precise do we need to be? Application: monitoring on the macro level. Analyse the economy by sector Analyse by product or service flow Analyse the consumption side Rebounds Economic (income) effect Case study: car sharing Application for SAT Level 1: Hybrid approach +RB Level 2: model changes in IO (without knowing details of the technology

3 The problem with LCA practioners Most have an engineering background Systems can be measured and measurements can be verified Uncertainties are usually below 10% Economists cannot measure directly, but develop models, and try to verify these Basic assumption: Follow the money Future trends are more important than precise data now For policy making (SAT) trade-offs are needed Weighting is essential (but dirty word in LCA) Objective truth is only one of the inputs

4 Starting point: SAT should help to de-link environment and economy Economic growth is an accepted goal: 3 to 6% economic growth, means 3-6% more products and services Growth will increase pollution, unless we achieve lower load per value Government Taxes Welfare Infra structure Taxes Purchases Industry Wages Consumer

5 E 2 vector: lower the environmental load per Euro Environmental load Production, use, disposal Production, use, disposal Unlinking Value creation

6 IO data, the basics products services export consumption products Internal supplies Products consumed by service Products exported Products consumed services Services consumed by products Internal supplies Services exported Services consumed imports Imported products Imported services Note: in stead of sectors, one can also use commodities

7 Visualization of Input Output 1 p CD booklet 1,03 USD Electric lamp bulbs and tubes 0,395 0,0426 0,0252 USD Paper and paperboard mills 0, ,0302 USD Industrial inorganic and 0, ,00652 USD 2,06 USD Petroleum Book printing refining 0,121 0, ,1 USD 1,04 USD Glass and glass Prerecorded products, except records and 0,00874tapes 0,0579 0,0519 USD 4,07 USD Nonferrous U.S. Postal wiredrawing and Service 0,0073 0,151 0,0205 USD 0,0112 USD 4,36 USD Electric services Natural gas Management (utilities) distribution and public 0,00653 relations 0, ,0693 0,409 USD Paper and paperboard mills 0,0683 0,0137 USD Crude petroleum and natural gas 0,0138 0,0694 USD Petroleum refining 0,0574 0,141 USD Electric services (utilities) 0,0449 0,00585 USD Primary smelting and 0,00426

8 Strong points No system boundaries within the national economy; all data are available Consistent (economic) allocation Very good way to model services value of services is a good functional unit Service sector constitutes over 60% of the economy Hybrid LCA IO data and process data can be easily combined (if the LCA software allows)

9 Problems Sectors are not homogeneous If there is only one sector production of building materials one cannot differentiate between building materials. Bo Weidema split up the Danish 130 by 130 table to 700 by 700, using foreign IO tables Import problem Competing imports, like Japanese cars Non competing, like coffee

10 Application: monitoring on the macro level. Analyse the economy by sector Analyse by product or service flow Analyse the consumption side

11 Environmental load/value per sector Indicator-scores per toegevoegde waarde van de productie [Pt/ gulden] Electricity Agriculture Base metals Base Chemical ind. Refineries Electro mechanical Transport Repair of of cons. goods Eco-indicator 99

12 The most relevant sectors Chemical base products Agriculture Electricity Environmental load Oil and gas extraction Transport and storage Business services Trade 53 other sectors, invisible Value creation

13 Material flow of milk and meat Corn processing Environmental load Natural gas supply Imports Agriculture Packaging? meat processing Milk processing Value creation

14 E2 vector for insurance service Environmental load Banking Business services Transport Insurance Imports Value creation

15 Monitoring Dutch Consumption OECD-Europe input output table (30 sectors) Rest OECD input output table (30 sectors) Non OECD input output table (30 sectors) Netherlands input/output table (with 105 sectors) Indirect load Consumer expenditure over 350 product categories Direct load

16 Share of regions Land use Eutrophication Toxicity Acidification Climate Netherlands Europe other OECD non OECD Energy 0% 20% 40% 60% 80% 100%

17 Share of DIRECT consumption by consumers Freshwater use Land use Noise (traffic) Smog Eutrophication Toxicity Acidification direct indirect Climate Energy 0% 20% 40% 60% 80% 100%

18 Share of consumption domains Freshwater Land use Noise (traffic) Smog Eutrophication Toxicity Acidification Climate Energy Clothing Housing Houshold Feeding Recreation Personal Care Working 0% 20% 40% 60% 80% 100%

19 Environmental load versus value creation 120% 100% 80% pesticides share 60% 40% 20% 0% cumulatief cumulative (%) bestr.middelen pesticides cumulatief (%) cumulative (%) expenditures product groups, decreasing impact/euro Taken from : Playing with the Hyena s; H. te Riele e.a.

20 Rebounds or what limits consumption, Income (you cannot spend what you do not have) Time (if you watch TV for 2 hours, you do not consume much) Space (traffic in cities is limited by parking) Calories (Industry cannot sell more calories)

21 Car sharing Functional unit: per km there is no difference FU: monthly travel We had detailed information on consumer behaviour before and after people joined the system Some drove more (had no car) Some drove less (gave up their car)

22 What members did before introduction of car-sharing Car disposal Public transport Environmental load Gasoline use Production Service Interest, tax and insurance Cumulative value

23 What members did when they joined the car sharing system Environmental load Organisation Driving Public transport Using the car (per hour) Cumulative value

24 Overall impact depends on alternative consumption Environmental load Alternative consumption Reference Decrease Car sharing system Increase Alternative consumption Value creation

25 Application of IO in practice Easy to use Data are available; no problems to produce them, except for the EU. In Europe only national tables, usually quite aggregated EIPRO used US IO data (CML, also in SimaPro), and adapted most important sectors Bo Weidema, disaggregated Danish table, using US data Bo Weidema is developing network for 27 EU economies JRC Seville Is developing Pan European table Japan has 500 by 500 table Australian table is available

26 When to use IO If MACRO view is required If environmental and economic data arte both combined If ratio between environmental load and economic value needs to be optimised If rebounds need to be assessed

27 Application for SAT Level 1: Hybrid approach, use process data if you have them, Add IO data on background, especially to asess the contribution of services (the fastest growing part of economy) Estimate rebounds, income, space, time, calories Level 2: Add a new sector for the technology; Estimate economic value and environmental impacts per euro for this new sector Adjust economic flows between old sectors Recalculate IO to get impacts, plus rebounds Compare changes in terms of load per value

28 My recommendations Do not be scared to rethink LCA, if SAT requires new perspectives SAT studies will be inherently uncertain Functional unit should be a broad as possible. Value creation can be a very good reference flow TCR doe not seem useful at all Develop EU sector data and merge with transparent process data Current black box data not useful Try to model international trade on a continent level

29 Discussion