LCA and Natural Capital Accounting (NCA) in product design. Julie Raynaud - TRUCOST Lise Lyngfelt Molander - thinkstep

Transcription

1 LCA and Natural Capital Accounting (NCA) in product design Julie Raynaud - TRUCOST Lise Lyngfelt Molander - thinkstep

2 Today s speakers Julie Raynaud Trucost Senior Research Analyst Lise Lyngfelt Molander Thinkstep Director, Strategic Accounts Principal consultant

3 thinkstep thinkstep enables organizations worldwide to succeed sustainably. Our industry-leading software, data and services help businesses drive operational excellence, product innovation, brand value and regulatory compliance. With a global presence in 19 countries we serve more than 2,000 companies, including 40 percent of the Fortune 500 such as BASF, Hewlett-Packard, Interface, Siemens, Unilever and Volkswagen. Trucost Delivered the world s first public Environmental Profit and Loss Account, PUMA Other Profit and Loss Accounts include: Yorkshire Water and Novo Nordisk Study for TEEB for Business Coalition estimating the natural capital cost across a range of business sectors at a regional level. It demonstrates that some business activities do not generate sufficient profit to cover their natural resource use and pollution costs. Is leading the development of the Sector s Guide (Food and Beverage and Apparel) as part of the Natural Capital Protocol

4 Feedback from the participants What is your experience with Natural Capital Accounting? 7% 37% I don't know anything about it I know something about it 56% I have experience but I'm stuggling to implement it

5 Agenda 1. Presentation of todays webinar 2. LCA and NCA how can it create value 3. Basic steps for a NCA 4. Business cases 5. From LCA to NCA live demo 6. Q & A session

6 SUBMITTING QUESTIONS

7 Why Use Life Cycle Assessment? To develop more sustainable products and resilient supply chains Life Cycle Assessment RAW MATERIALS DISPOSAL Cradle Grave 1 Enables You To Quantify the environmental performance holistically and systematically MANUFACTURING PACKAGING LCA DISTRIBUTION USAGE 2 3 Compare environmental impacts at each stage of the product s life Benchmark and compare environmental impacts between products Examples of LCA s Success One of several decision support tools considered best practice in measuring environmental performance Specified in rating and sourcing systems (e.g., green buildings, product standards) Numerous commercial software systems Thousands of practitioners

8 Evolving considerations in sustainable product development To what extent does your business depend on the environment? How much of the resource is available? Sustainable Product Development How is environmental performance linked to financial performance?

9 Some Current Challenges with LCA Survey Question 1. What kind of challenges do you have communicating LCA results to others in your business? Except for the sustainability team and LCA practitioners, most business people do not readily understand LCA study results 28% LCA results are not easily understood by: 18% 25% Other stakeholders? No one Other business functions? 29% The wider sustainability team?

10 Some Current Challenges with LCA Survey Question 2. How well are you able to weigh trade-offs using LCA results? Over 80% of survey respondents are unable to sufficiently evaluate environmental trade-offs in different scenarios 53% 29% 18% Use existing methods, which are insufficient Use existing methods, which are sufficient Unable to weight trade-offs

11 Some Current Challenges with LCA Survey Question 3. Are you able to consider regional resource availability or scarcity with your LCA results? Over 60% of survey respondents think its important to consider regional resource availability but are unable or have insufficient information to do so 31% 5% 11% 53% Unable Able but insufficient information Able and have sufficient information Not important

12 WHAT IS NATURAL CAPITAL?

13 Trends in Natural Capital Valuation INVESTORS SOVEREIGN NGOs CORPORATIONS Scale Enterprise-wide Supply Chain Product Category or Brand Portfolios Products Technologies Site or Facility level MULTI-STAKEHOLDER GROUPS

14 Our General LCA Valuation Approach LCA mid-point impacts Climate change Acidification Eutrophication Results in physical terms Results in monetary terms Ozone creation potential Human toxicity Eco-toxicity Reflects the damage impacting society and human well-being, expressed in monetary terms Water consumption etc For each mid-point impact Investigate the characterization model Define the scope Identify the valuation technique Develop and apply the valuation Calculate and aggregate the results How does the model calculate the considered mid-point impact? What impact do we want to capture? Health impacts Impact on forests Impact on crops Etc Is the valuation going to be geographically specific? What is the most appropriate valuation technique given the budget and data available? Shall we integrate end-point models?

15 Extending Insights from LCA Studies Natural Capital Valuation Provides these business insights One common metric for all environmental impacts allows for comparison Which impacts are most material Which environmental trade-offs are more important in design or optimization schemes Links the regional availability or scarcity of the natural resource to its use, Provides results in standard monetary, business terms Understand regional sourcing or production risks (for example, related to water scarcity) Allows businesses to integrate the LCA results alongside standard business metrics (e.g., profit, margin, etc.) Allows businesses to communicate the results to a general audience not expert in LCA or sustainability

16 Example 1: Evaluating a cell phone take-back program What is the environmental and financial ROI of a cell phone take back program? Business Implications: Recycling has significantly lower environmental impacts overall, compared to other disposal options

17 Example 2: Optimizing T-Shirt Design and Production Which type of environmental impact is most material? Business Implications: Focus product optimization and sourcing efforts on reducing greenhouse gas emissions, followed by air pollutants

18 Example 3: Apparel Sourcing and Production Locations How does sourcing and production in different regions affect environmental impacts? How important is water scarcity in the region where commodities are being sourced? Business Implications: Same product, but different natural capital costs as a result of sourcing from a region where water is more scarce

19 Example 4: Beverage Production Comparison of natural capital costs for two breweries based on water availability 100,000 m 3 water used Cordoba High water scarcity (100%) Natural capital cost: $14.1/m 3 = $1,410,000 Bilbao SPAIN Cordoba Bilbao Moderate water scarcity (53%) Natural capital cost: $4.0/m 3 = $400,000

20 Example 5: Integrating Environmental and Financial Results What are the financial and natural capital costs of a new production facility for biobased or petroleum based ingredients? 1.20 Financial and Natural Capital Costs (NPV, $ per kg) Bio-based butanol - Europe Bio-based butanol - US Propylene-based butanol - Europe Propylene-based butanol - US Financial costs GHGs VOCs Sox CO N20 PM Water Land conversion

21 Example 6: Communicating Results

22 Summary Applying a single, impact oriented metric expressed in financial terms enables businesses to: Determine which impacts are most material Assess trade-offs Quantify regional resource risks Integrate environmental and business results Communicate environmental performance to a broader audience Better strategies for sustainable product development The value to your business More resilient business models Market differentiation, leadership, and transparency

23 Basic steps to conduct Natural Capital Analysis What is the business case? What business decision will be supported by research and question? What is the scope? Analysis Feedback, review and integration How can Trucost- thinkstep solution feed into this process?

24 Getting Started: Trucost-thinkstep solution Full scale natural capital assessment can be a lengthy and costly process. Materiality assessment allow s you to: - Save time and focus effort - Get familiar with the process Data to quantify impacts (tonnes of CO 2 eq, m 3 of water ) Natural capital valuation coefficients ($ per tonne of CO 2 eq, $ per m 3 ) Analyse several products, impacts, life cycle stages in one click Can be applied to any GaBi datasets across 9+ impact categories Build a business case and refine focus for potential further, more detailed assessment

25 LCA to NCA Aluminium 30. april

26 Bauxite to aluminium sheet

27 Mining bauxite

28 Processing bauxite to ingots

29 Refining process to sheets

30 Use of aluminium and recycling

31 LCA and NCA Results

32 LCA results 1 kg Aluminium sheet GWP Global Warming Potential Climate change [kg CO2-Equiv.] Water depletion 0.0 Total 1 Bauxite Production 2 Alumina 5 Aluminium alloy mixer 3 Electrolysis (Pre-baked) 6 Aluminium sheet Rest Water 7.0 Resource depletion, water Total 2 Alumina 4 Cast house Rest Bauxite Production 3 Electrolysis (Pre-baked) 6 Aluminium sheet 32

33 Natural Capital Accouting (NCA), ILCD/PEF recommended impacts NCA Total cost of production Acidification, accumulated exceedance [Mole of H+ eq.] Ecotoxicity for aquatic fresh water, USEtox (recommended) [CTUe] Freshwater eutrophication, EUTREND model, ReCiPe [kg P eq] Human toxicity cancer effects, USEtox (recommended) [CTUh] Human toxicity non-canc. effects, USEtox (recommended) [CTUh] IPCC global warming, incl biogenic carbon [kg CO2-Equiv.] Particulate matter/respiratory inorganics, RiskPoll [kg PM2,5-Equiv.] Photochemical ozone formation, LOTOS-EUROS model, ReCiPe [kg NMVOC] Resource Depletion, fossil and mineral, reserve Based, CML2002 [kg Sb-Equiv.] Total freshwater consumption, including rainwater, Swiss Ecoscarcity [UBP] NCA [USD, 2014], ILCD/PEF recommended impacts Total 1 Bauxite Production 2 Alumina 3 Electrolysis (Pre-baked) 5 Aluminium alloy mixer 6 Aluminium sheet Rest

34 NCA for aluminia production Natural Capital Accouting (NCA), ILCD/PEF recommended impacts Acidification, accumulated exceedance [Mole of H+ eq.] Ecotoxicity for aquatic fresh water, USEtox (recommended) [CTUe] Freshwater eutrophication, EUTREND model, ReCiPe [kg P eq] Human toxicity cancer effects, USEtox (recommended) [CTUh] Human toxicity non-canc. effects, USEtox (recommended) [CTUh] IPCC global warming, incl biogenic carbon [kg CO2-Equiv.] Particulate matter/respiratory inorganics, RiskPoll [kg PM2,5-Equiv.] Photochemical ozone formation, LOTOS-EUROS model, ReCiPe [kg NMVOC] Resource Depletion, fossil and mineral, reserve Based, CML2002 [kg Sb-Equiv.] Total freshwater consumption, including rainwater, Swiss Ecoscarcity [UBP] 0.5 NCA [USD, 2014], ILCD/PEF recommended impacts Total Bauxite transport EU-27: Alumina EAA update 2010 EAA <u-so> EU-27: Thermal energy from heavy fuel oil (HFO) PE EU-27: Electricity grid mix PE EU-27: Thermal energy from natural gas PE Rest

35 World bank price for Aluminium vs NCA 6 US $ per kg Aluminum, 99.5%

36 What is now available in GaBi regarding NCA method? Global factors of the NCA method implemented into GaBi database Implementation enables to convert LCIA based results into dollars of natural capital Implementation done for the flowing LCIA methods CML 2013 EU25+3 Traci 2.1, US-CA 2008 PEF recommendation ReCiPe 1.08 (H)

37 TRUCOST valuation coefficients in GaBi Datasets Trucost NCA methodology and coefficients are now available in your GaBi Datasets and is offered as: Subscription license First license: Additional license: 450 annually 225 annually Perpetual license First license: Additional license: 900 plus 25% annual maintenance 450 plus 25% annual maintenance

38 Moving forward with «NCA Insights» NCA Insights is the first step you can do to dig into NCA and see in real what value your company can get from it. What is it? o A first and quick approach to help you build the business case for NCA internally, get initial results based on existing LCA/EPD project done with thinkstep / GaBi identify main contributors to your NCA results understand the results and value for your company What benefits for you? With NCA Insights, you will get o o o NCA results (reviewed by Trucost) on the basis of a selected and existing project Key findings to help you promote NCA internally Some initial background information on the NCA methodology used What you will get? 5K o o A PPT document (approx pages) with results, main NCA contributors, comments/suggestions A suggested roadmap for action o Presentation of the results through a Web Conference (approx. 1h30) Time limited offer valid until end of June

39 SUBMITTING QUESTIONS

40 Q & A 20 minutes Survey questions

41 and Thank you for your attention! For more information please visit