16. Report from expert meeting, Danish Environmental Protection Agency

Input/Output analysis - Shortcuts to life cycle data?

16. Report from expert meeting

16	Report from expert meeting
16.1	Introduction
16.2	Presentation of participants and their current work
16.3	Other current work of interest
16.4	Dynamics and modelling
16.5	Applying I/O-A in LCA
16.6	References

16.1 Introduction

This chapter summarizes the discussion at the expert meeting held on Saturday the 30th of September - the day after the workshop. The participants were:

-	Tapio Pento, University of Jyväskylä, Finland,
-	Ole Gravgård Pedersen, Statistics Denmark, Denmark,
-	Greg Norris, Harvard University, USA,
-	Manfred Lenzen, University of Sydney, Australia,
-	Sangwon Suh, Leiden University, The Netherlands,

and hosts were:
Bo Weidema and Anne Merete Nielsen, 2.-0 LCA Consultants, Denmark

The debate was structured around the following issues:

Presentation of participants and their current work
Other current work of interest
Dynamics and modelling
Applying I/O-A in LCA

16.2 Presentation of participants and their current work

Tapio Pento, Professor at the University of Jyväskylä, Finland, has been working for a decade with material flows, mainly in the paper sector. He mentioned having constructed a hybrid model in 1993. He has currently 9 Ph.D. students working on different topics within this field:

-	Two work on a 65 by 65 input/output satellite account for the forest products sector for Finland (both tons and monetary units).
-	One studies dynamic industry-level emission data.
-	Two work on large forest sector LCA based on 2200 by 2200 product to product matrices for Finland and Germany, made with the KCL-ECO software with modifications, based on data from 1991 and 1997. The functional unit is the FAO forecasts of the market demands of products, and the analysis covers changes in investment, technology, recovery rate and re-use patterns.
-	Two work on quasi-dynamic market based hybrid models for the forest sector in the Nordic countries and UK (environment, money and employment).
-	One prepares a regional LCA-hybrid of energy and main material flows.

Tapio Pento presented a number of slides that analysed the relationship between pollutant emission and scale of plant in the pulp and paper industry as an example of large potential uncertainties of using the linearity assumption in I/O based LCA. Tapio Pento also described it as challenging to obtain the "off-diagonal" data which links a satellite model to the original model. With further discussion it became clear that the challenge focuses on linking outputs from the satellite system to users elsewhere, and that these challenges are surmountable with data from the companies involved.

Ole Gravgård Pedersen described his NAMEA and physical I/O work at Statistics Denmark. He indicated that most European countries had constructed NAMEAs by now. Denmark has published annual I/O tables since 1966. The air emissions factors for Denmark’s NAMEA are based on fuel consumption data together with emissions factors (kg/energy unit) for groups of industries, published by the Environmental Research Agency. Also measured emissions and some non-energy-related emissions are included.

Greg Norris described his work on making LCA-tools integrating NAMEAs (see http://www.sylvatica.com/tools.htm).

Manfred Lenzen gave a quick review of the extensive work he has completed to date. Among other work, he mentioned a paper including the rebound effects from changes to disposable income. He mentioned that 1^st order rebound effects could be significant, 2^nd order effects were not investigated. He mentioned a paper in the US looking at the impacts on CO₂ emissions of cutting the defence budget and how it depended on what was done with the money. He also mentioned research to strengthen the upstream component of Rees and Wackernagel’s work, and work by CSIRO using satellite imagery to bring land disturbance impacts into I/O-LCA (Graetz et al. 1995).

Sangwon Suh has 4 years of funding to complete his PhD at Leiden University (CML), working on a multi-national I/O-LCA model, which captures the bulk (i.e. 80%) of world economic activity. He also presented a hybrid LCA model in which a process based foreground matrix is linked to an I/O background system. CML is working on modification of CMLCA software (http://www.leidenuniv.nl/interfac/cml/ssp/cmlca.html), which will allows users to apply this hybrid modelling technique. Sangwon reported looking for some application fields, such as:

-	Materials flow analysis,
-	CO2 budgets for nations and regions with a focus on consumption-driven allocation rather than activity-driven inventories,
-	Extending Leontief’s "factor content approach" which looks at upstream capital intensity versus labour intensity.

16.3 Other current work of interest

It was suggested that the resolution of GTAP (http://www.agecon.purdue.edu/gtap/) was very coarse, suited to strategic, long-term policy questions at a world level, but not to LCA. Evidently this level of modelling has lead to two articles using coarse global I/O-models to look at sustainability questions; one by Imura & Moriguchi (1995) and one by Proops et al. (1999).

The "London Group" (http://ww2.statcan.ca/citygrp/london/london.htm) is meeting to revise the 1993 UN guidance document entitled "Integrated Environmental and Economic Accounting." (This older report is UN report number ST/ESA/STAT/SER.F/61). Ole Gravgård Pedersen cautioned that the focus of this group is more on general environmental accounting and not on pollutant releases only.

Harald Florin, IKP in Stuttgart, Germany (http://www.ikpgabi.uni-stuttgart.de/) is the German point of contact in connection with the multi-regional project of CML. Their research interests include searches for "zero emission" scenarios of waste-to-feedstock conversion in the economy.

The IPPS system of the World Bank (http://www.worldbank.org/nipr/polmod.htm) was also mentioned. It has taken US emissions factors from the US to offer developing nations an ability to estimate the total upstream environmental implications of development options.

The MARKAL-MATTER model (http://www.ecn.nl/unit_bs/etsap/markal/matter/) was also mentioned. Dolf Gielen was a key person in the development of this model, and he is now working with Yuichi Moriguchi, who is a key contact person for IOA/LCA-work in Japan.

The work of Treloar (1997) was also mentioned as an important contribution (see below).

16.4 Dynamics and modelling

The problems regarding the import assumption (that imported goods are treated with the same production functions as domestic goods) appear to be well taken care of through the multi-regional modelling undertaken by Sangwon Suh.

The problem of structural change could be investigated through time series of I/O data. Greg Norris indicated that he planned to work on this issue.

There was considerable discussion of marginal versus average impacts of consumption changes. It was first concluded that for "allocation of guilt", average models are adequate. For what-if (prospective) decision support, marginal models are more accurate. The question becomes: which plants will increase or decrease output, (or leave production entirely) as a result of the predicted demand changes?

The importance of using marginal production functions and emissions coefficients increases with the variability/heterogeneity of the plants in a sector. It also depends upon economic considerations and constraints specific to each sector.

For modelling of materials with recycled content, I/O matrices include implicitly the average recycled content for products of the sector as a whole. Bo Weidema pointed out that in growing markets, it is most accurate to model material inputs as coming entirely from virgin inputs, since in this situation the recycled content is generally constrained by the supply of recyclable material.

It was concluded that there is a need to create a modified, marginal I/O matrix for dealing with prospective questions. Bo Weidema and Greg Norris indicated that they plan to write an initial paper on this issue.

The impacts of re-spending (the "rebound effect") have been studied by Manfred Lenzen. It is obvious that the impact of re-spending is an issue that can only be treated adequately by marginal modelling.

16.5 Applying I/O-A in LCA

The potential sources of error in developing sector pollutant intensities were discussed at length. Greg Norris exemplified this with respect to the use of the Toxic Release Inventory. These sources of error were summarized as follows:

-	Classification mis-match between reporting sectors (e.g., SICs) and I/O Sectors. The challenge arises in part because the I/O sectors are constructed by separating the production of diverse products (sometimes by the same reporting establishment) into different sectors. The problem also arises when a given SIC has been mapped to more than one I/O sector.
-	Sector non-reporting: not all sectors of the US economy, for example, are required to report toxic releases as part of the US EPA’s Toxic Release Inventory (TRI).
-	Establishment non-reporting: not all establishments within reporting sectors are required to report their toxic releases. For example, establishments with fewer than 10 full-time-equivalent employees are exempt from reporting.
-	Chemical non-reporting: not all chemical releases are reported by reporting establishments. For example, chemicals for which annual usage is less than 10,000 lbs per year are exempt from reporting.
-	Reporting/measurement/estimation error: TRI releases are not required to be measured, but are often reported based on mass-balance calculations, the use of published emissions factors, or "other approaches."

Sangwon Suh indicated that it is part of his current work to seek to limit these sources of error.

A need was identified to inform those responsible for collecting statistics (both environmental and economic) about the requirements from the side of environmental product assessment.

The work of Graham Treloar (1997) was discussed at length. The idea of identifying critical energy paths was recognized as fundamental to further work in this field. It was suggested that uncertainty (and possibly the idea of speed of convergence, see Chapter 9) should be integrated into the approach. Sangwon Suh and Bo Weidema pointed out that Treloar implicitly assumed every value to have the same uncertainty, while a process analysis typically would include processes with a large uncertainty, such as "industrial chemicals", even though the process on average contributes only little to the overall result. Regarding uncertainty, Manfred Lenzen referred to a forthcoming article of his. Important issues mentioned for further research were to test the homogeneity assumption, to investigate correlations in the I/O data, and to investigate allocation procedures based on economic value versus physical quantities.

The development of software for hybrid LCAs was discussed. It was suggested that coordination would be useful between the CML-LCA software, Greg Norris’ LCNetBase and possible future advancements of PRé’s SimaPro software. Greg Norris volunteered to gather the relevant stakeholders for a dialogue.

16.6 References

Graetz R D, Wilson M A, Campbell S K. (1995). Landcover disturbance over the Australian continent. Canberra, Australia: Dept of the Environment. (Biodiversity Series No. 7).

Imura H, Moriguchi Y. (1995). Economic interdependence and eco-balance. Pp. 189-208 in Mura S. (ed): Toward global planning of sustainable use of the earth. Amsterdam: Elsevier.

Proops J L R, Atkinson G, Frhr. v. Schlotheim B, Simon S. (1999). International trade and the sustainability footprint: a practical criterion for its assessment. Ecological Economics 28(1):75-97.

Treloar G J. (1997). Extracting embodied energy paths from input-output tables: towards an input-output based hybrid energy analysis method. Economic Systems Research, 9(4):375-391.