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Input/Output analysis - Shortcuts to life cycle data?

6. Applications of IO-Models for LCA: Some experiences from the energy area

Jesper Munksgaard, Institute for local government studies

6.1 Abstract.

Founded in the life cycle approach, this paper aims at giving a brief overview of two applications of integrated Input-Output Analysis (IOA) in the energy area. First, a study on energy and CO₂ embodied in household consumption. Second, a study on transport energy and CO₂ embodied in food. Besides presenting design of analysis, modelling, data sources and results, the paper highlights some of the shortcomings and benefits of using IO-modelling for Life Cycle Assessment (LCA). Although lacking "specificness" we conclude that IOA is very operational and might result in studies of high relevance.

6.2 Introduction

IOA is a tool of high relevance for LCA-studies, since it takes into account all production inputs of infinite order caused by the demand for a specific good. Using integrated IO-models make it possible to investigate the linkage between consumption, production, energy use and environmental effects.

In this paper we show how IO-modelling has been used for LCA oriented studies focusing on energy and CO₂ embodied in goods consumed by households. Two applications (cases) are described: First, a study in which the total CO₂ impact from Danish household consumption is analysed, (Munksgaard et al. 2000a,b; 1999, 1998 and Wier et al. 2000). Energy and CO₂ embodied in 72 commodities are analysed and the influence from different causes influencing CO₂ emissions over time are analysed. Second, an ongoing study on transport energy and CO₂ embodied in different food products. This study is a preproject (phase 1) aiming at developing a methodology that can be used in a fullscale project.

The outline of the paper is as follows: In Section 6.3 the design of analysis applied in the two studies is described. In Section 6.4 the basic IO-model is documented. The kind of data used for the two studies are described in Section 6.5. Some results of the studies are presented in Section 6.6. Section 6.7 is highlighting shortcomings and benefits of the model approaches applied. Finally, some concluding remarks are given in Section 6.8.

6.3 Design of analysis

The design of analysis applied in the two studies is illustrated in Figure 6.1 and Figure 6.2 respectively.

Figure 6.1
Energy and CO₂ in household consumption: design of analysis

In Figure 6.1 there is a distinction between energy and non-energy commodities and services. In analysing the energy and CO₂ impact of Danish household consumption, we make a distinction between direct and indirect energy consumption. Direct energy consumption is energy used directly by households (i.e. for heating, lightning and gasoline in private cars). Indirect energy consumption is energy embodied in goods and services consumed by households. This kind of energy is actually used by the industries producing the goods and services used by households. CO₂ emissions from direct energy use is simply estimated by multiplying CO₂ emission coefficients by energy use in physical terms. Emissions from indirect energy use is calculated by using an integrated IO-model, cf. model (1) in Section 6.4.

Figure 6.2
Transport embodied in food: design of analysis

The design of analysis applied for the study on "transport embodied in foods" is somewhat different as shown in Figure 6.2. As international transport is of special interest in this study, we apply a hybrid modelling approach in which we distinguish between Danish and foreign transportation and production technologies. Foods and inputs produced in Denmark are analysed by using an IO-approach only, whereas foods and inputs imported to Denmark are analysed by using process analysis including data on importing countries, travel distance, transport mode and energy efficiency.

6.4 IO-modelling

The basic model applied in the two studies is an extended IO-model based on Danish IO-tables plus energy flow matrices and CO₂ emission factors. These can be linked together due to the use of common classifications. The strength of the model is that it covers all sectors of the economy and operates at a very disaggregated level. Moreover, it covers the entire energy production and consumption cycle, and is able to distinguish between direct and indirect (embodied) uses of energy.

In the household consumption study, we focus on total energy use and CO₂ emissions associated with Danish household consumption, distinguishing between direct and indirect emissions. The direct emissions are emissions associated with the consumption of energy commodities in the households, i.e. electricity, district heating, gas and other liquids. The indirect emissions (embodied emissions) are emissions associated with the production of all other commodities for households, i.e. emissions that takes place in the industry producing furniture, food, clothes, services etc. used in households.

Model (1) below estimates the indirect CO₂ emissions from household consump-tion by using the extended IO-model as introduced by Leontief and Ford (1972).

where

E_p denotes total indirect CO₂ emissions from the production of goods for household consumption

F is CO₂ emissions per unit of energy consumption

M_p is the fuel mix in the production sectors

R_p is energy intensities, i.e. total energy consumption per unit of production

(I-A)^-1 is the Leontief inverse matrix

C is the composition of consumption commodity aggregates, i.e. 72 private consumption commodity aggregates apportioned by production sectors

c is commodity mix in private consumption, i.e. demand for 72 commodities per unit of total consumption, and

c^N denotes total private consumption.

The analyses made in the study on household consumption is based on model (1) whereas the study on embodied transport in food will be based on a further development of the model, e.g. including industry investments, foreign production technologies and a bottom-up approach to international transport.

As a first step we have developed the model (1) by introducing a matrix (R) defining which energy types are used for transport (road, rail, sea and air):

The direct energy used for transporting imported goods to Denmark is computed by process analysis according to model (3):

En_tⁱ = I^j # v # dⁱ _t# mⁱ_t # e_t (3)

where

En_t^j denotes energy used for transporting the goods from country j to Denmark by transportation mode t

Iⁱ is the value of goods imported from country j

v is the weight of the goods in tonnes pr unit value

d_tⁱ is distance in km from country j to Denmark depending on transportation mode t

m_tⁱ is the share of good i transported by transportation mode t

e_t is specific energy use pr tonne-km (energy efficiency) depending on mode of transportation t.

6.5 Data sources

IO-modelling is founded in IO-tables supplied by national statistical bureaus, e.g. Statistics Denmark. These tables are detailed annual accounts including the economic flows from production to final demand (end use). Danish energy balances corresponding to the IO-tables are available, making it possible to develop integrated IO-models including the linkage between economic activity and energy use in physical terms. Thereby it is also possible to link emissions of e.g. CO₂ to economic activity.

Other kind of national data sources have been applied in our studies, e.g. national consumer surveys and foreign trade statistics. An overview of some data types used in the studies is given in Table 6.1 below.

Table 6.1
Economic, energy and emission data. Sources: E.g. Statistics Denmark, EU, Risø/DMU.

In the study on "transport embodied in food" energy used for international transport of goods from foreign countries to Denmark is estimated by the use of specific data on transport. These data includes data on:

6.6 Results

Some results based on the models presented in Section 6.4 are shown in the tables below. Table 6-2 shows total CO₂ emissions in 1966 and 1992 from private consumption divided on eight commodity groups.

Table 6.2
CO₂ emissions in 1966 and 1992 by commodity groups. All figures in million tonnes CO₂. * Includes vehicles and public transport services.

Since 1966, CO₂ emissions associated with the consumption of clothing and household appliances (incl. operation) decreased by 30% and 10% respectively. Emissions associated with consumption of the remaining commodities increased in some cases significantly. Thus, emissions from consumption of services (mail and telecommunication, law and financial services, private teaching and day-care) have increased by 234%, while emissions from consumption of recreation increased by 59% and emissions from transportation (vehicles and purchased transport services) increased by 54%.

Policies directed towards household consumption of commodities other than energy offer considerable potential for reducing CO₂ emissions. As the differences in CO₂ intensities for various goods are significant, changes in commodity mix towards less CO₂ intensive goods could be of significant importance. Table 6.3 illustrates the large variation in CO₂ intensity listing the five commodities with the highest and the lowest CO₂ intensity in 1966 and 1992.

Table 6.3
Commodities with the highest and lowest CO₂ intensity (kg/DKK)

In 1992 the most CO₂ intensive commodity is transport. Second came margarine etc. followed by various food products. The five commodities with the lowest CO₂ intensities are various types of services. This implies that greater demand for services together with reduced consumption of commodities such as transport, foods and beverages will be accompanied by major decreases in CO₂ emissions. The reduction potential of altering the commodity mix suggests policies directed towards this end.

Now we turn to the study on transport embodied in foods and show some preliminary results for two cases considered: bread and potatoes. The results are based on the assumptions that the imported goods are produced by using the same technology as used for similar goods produced in Denmark (the process energy use is computed according to model 1), the Danish direct and indirect transportation energy is calculated according to model 2, and energy used for international transportation is calculated according to model 3.

In Table 6.4 energy and CO₂ embodied in annual household consumption of bread and potatoes are shown. A distinction is made between energy used for production only (process energy) and energy used for transportation. Also, a distinction is made between Danish and foreign activity (import).

Table 6.4
Energy and CO₂ embodied in bread and potatoes (per year)

It is interesting that the two cases are very different with regard to the composition of Danish and international transport energy and CO_2. International transport energy for potatoes is higher than total Danish transport energy use and in total transport amount to as much as 20% of the total energy used for production of potatoes. With regard to bread, energy used for Danish transport is four times the amount of energy used for international transport. Comparing total transport and process energy use, it is interesting that total transport amount only to 12% of the total energy used for production of bread.

In Table 6.5, mode of transportation is shown for the cases of bread and potatoes and for the aggregated commodity groups of relevance: "Bread and cereals" and "potatoes". Most of the transport energy is due to road transport. Almost all potatoes imported to Denmark are transported by road. Comparing bread and potatoes, it is interesting that 20% of bread imported to Denmark is transported by ship, whereas this is true for only 1% of potatoes imported to Denmark.

The high figures for domestic air transport might be due to data problems. The figures might include transport energy from passenger transport as well.

Table 6.5
Transportation energy split on mode of transportation (%)

6.7 Shortcomings and benefits

From the point of view of life cycle assessment the studies considered in this paper have some shortcomings and benefits. These are summarised briefly below.

The study on "household consumption":

Shortcomings:

Benefits:

The study on "embodied transport in food":

Shortcomings:

Benefits:

6.8 Conclusion

Based on our experiences of using IOA in studies on the embodiment of energy and CO₂ in different consumer goods we have the opinion that lack of "specificness" can restrict the use of IOA. However, the methodology has proved to be very operational, data is easily available and of high quality and the studies made are of relevance from a practical as well as a scientific point of view. At present, the challenge is to include information on foreign production technologies in IO-modelling in order to produce better estimates of global effects of domestic consumption. That is of special relevance for open economies like Denmark, having a significant trade with other countries.

6.9 Acknowledgements

This paper is part of a research project "Transportation embodied in foods - a preproject" financed by the Danish Board of Transport (Transportrådet).

6.10 References

Leontief, W. and Ford, D. (1972): Air Pollution and the Economic Structure: Empirical Results of Input-Output Computations. In: Brody, A. and A. Carter (Eds.), Input-Output Techniques. North-Holland Publ. Company

Munksgaard, J.; K.A. Pedersen and M. Wier (2000a): Changing Consumption Pattern and CO₂ Reduction. International Journal of Environment and Pollution (in press)

Munksgaard, J.; K.A. Pedersen and M. Wier (2000b): Impact of household consumption on CO₂ emissions. Energy Economics 22 (2000): 423-440

Wier, M., M. Lenzen, J. Munksgaard and S. Smed (2000): Linking Environmental Effects to Consumption Pattern and Lilfestyle - an Integrated Model Study. XIII International Conference on Input-Output Techniques, Macerata, Italy, 21-25 August, 2000.

Munksgaard, J.; K.A. Pedersen and M. Wier (1999): En dekomponering af det private forbrugs CO₂-belastning. Nationaløkonomisk Tidsskrift 137 (1999): 52-65

Munksgaard, J.; K. Alsted Pedersen and M. Wier (1998): Miljøeffekter af privat forbrug. AKF Forlaget.

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