Environmental Project, 980 – Prioritisation within the integrated product policy

Prioritisation within The Integrated Product Policy

Summary

Environmental measures should first target food, housing, ships and electricity

Food, housing, transport by ship, and electricity are the four product areas where environmental measures in Danish industry will provide most environmental improvement. Looking at the Danes' private consumption, priority areas are housing, food, tourism, clothes, personal hygiene and car driving. Public consumption generally has much less impact on the environment than private consumption, but nevertheless reach the top-10 when consumption groups are sorted according to total environmental impact. These are some of the conclusions from the project ”Prioritisation within the integrated product policy” in which a detailed method for making such prioritisations has been developed. The method is based on a combination of environmental statistics and the Danish national accounts, divided on 138 product groups.

Background of the project

The integrated product policy in Denmark has hitherto been organised as prioritised activities in selected industries and/or product areas. The basis for this prioritisation has been e.g. the results of the project "Environmental prioritisation of industrial products" (Hansen 1995a). As a first step towards an update of this, the Danish EPA initiated in 2001 a pre-project on a "Model for selection of future target areas in the Danish Program for Cleaner Products" (Schmidt et al. 2003). Also at EU level, the Commission has initiated a project (with the acronym EIPRO), which aims at identifying the products with the largest environmental improvement potentials.

As a Danish contribution to this, the Danish Environmental Protection Agency has now commissioned an updated and more detailed method, which provides a well-documented decision basis for planning and selecting products for the future product-oriented activities. The method is based on a combination of environmental statistics and the Danish national accounts and is therefore easy to maintain.

The method has been applied to provide prioritised lists of those product groups and industries where Danish environmental measures will give the largest environmental improvement, both for the products currently produced in Denmark (for domestic consumption or for export) and the products currently consumed in Denmark (domestically produced as well as imported).

Furthermore, the project has provided a complete set of background-data for lifecycle assessment of products used and/or produced in Denmark. The intention is that these data should be part of the LCA database provided by the Danish LCA Centre. These background data can be used to fill gaps in LCAs where specific process data are missing, and will at the same time be able to serve as a sort of "backbone" in the Danish LCA-database. At the same time, the project's uncertainty analysis provides a basis for planning and prioritising future data collection for the LCA database.

Project organisation

The project has been carried out from January 2003 to June 2004 by a project group under management of 2.-0 LCA consultants ApS with participation of CML (Leiden Universitet) and PRé Consultants (The Netherlands).

An International seminar was hosted as part of the project. Proceedings has been separately published (Nielsen et al. 2003). Throughout the project, an associated advisory expert group has commented the method and model proposals of the project group and has assessed the project results.

Main conclusions

Danish exports are responsible for approximately half of the environmental impacts caused by Danish industry (see Figure 1.2) in spite of this export contributing only half as much economic value as the Danes' own consumption (see Figure 1.1). Thus, the export is relatively environmentally intensive. Especially noticeable is the export of meat and ship transport.

Food production is a major source of environmental impacts. Besides meat, we find dairy products and restaurant services among the 10 product groups with the largest environmental impact.

Wholesale trade is also among the top-10 of environmental impact, mainly due to a large consumption of transport and packaging and to a lesser extent consumption of advertising and buildings. Of course, the environmental impact from wholesale trade contributes to the environmental impact of many different products, and therefore does not become visible unless ”Wholesale trade” is regarded as a ”product” in itself. This shows the importance of being able – as in this project – to analyse the environmental impacts from different perspectives, i.e. both:

the supply perspective (supply of products for final consumption or export, produced by Danish enterprises or institutions),
the consumption perspective (private and public consumption in Denmark, of both domestically produced or imported products), and
the process perspective (processes in both Danish and foreign production and in Danish households, caused by Danish consumption or export, combining the other two perspectives and specifically including products used internally in Danish industry).

Product groups with large environmental impact

From the supply perspective, i.e. the supply from Danish production, product groups with large environmental impact are food, transport by ship and wholesale trade, as already mentioned. Furthermore we can mention dwellings, electricity and heat, and industrial cooling equipment (the only important Danish product in which ozone depleting substances is still used).

In the consumption perspective, the project divides Danish consumption in 98 product groups, out of which dwelling use and heating, food, tourism, clothes, personal hygiene and car driving appear as the environmentally most important.

Out of the public consumption groups it is ”General public services, public order and safety affairs” and the education sector, which has the largest environmental impact. ”General public services, public order and safety affairs” arrive among the top-10 of environmental impact mainly due to the toxic substance tributyltinoxide, which is used as anti-fouling agent on the navy ships, while also having a relatively high consumption of fuels, electricity, chartered flights and transport materiel. For the educational sector it is particularly buildings, heating and electricity that contribute to the environmental impacts.

However, when comparing the environmental impact per used DKK, see Table 1.50, it becomes clear that public consumption has much smaller environmental impact intensity than private consumption. This is because public consumption includes a relatively high proportion of labour, which does not contribute with environmental impact. Depending on the impact category, one DKK used by public authorities has an environmental impact between 13% and 64% of that of one DKK used by a private Dane.

A quantitative uncertainty assessment has been performed, and the prioritisation results are provided with confidence intervals. Generally, the difference between the product groups are so large that their overall position in the prioritisation (among the 10 most important, among the 20 most important etc.) is very stable, even for product groups where the environmental impact is determined with relatively large uncertainty.

For those product groups that have been identified as most important, significant improvement options have been identified and ongoing activities have been reviewed.

Environmental impact intensity of products

The comparison of environmental impacts per DKK is especially relevant for the discussion on ”de-coupling” of welfare and environmental impact, i.e. how a reduction in environmental impact can be achieved without necessarily reducing the total level of consumption.

Products with high environmental impact intensity, i.e. high environmental impact per DKK, in the Danes' shopping baskets include fireworks, car driving (especially abroad), many food products, pet food, and detergents. If we look at Danish production, it is still meat and other foods, as well as fertilisers, semi-manufactured aluminium etc., tobacco products, transport by ship, cement, bricks and tiles, industrial cooling equipment, parts for motor vehicles, trailers etc., and basic plastics, which have high environmental impact intensities.

As can be seen, some of the product groups with high environmental impact intensity were also mentioned as having a large environmental impact in the overall picture, including car driving, foods, transport by ship, and industrial cooling equipment. Thus, these products are important, not only because they have a relatively large production volume, but also because the have a high environmental impact ”in their own right.”

Products with low environmental impact intensity are particularly services, e.g. bookkeeping and auditing, insurance, social security, financial and legal services, education and research, kindergartens and crèches, home and day care services and retirement homes. It is obvious that the products with high environmental impact intensities, such as food and transport, cannot be directly substituted by these low impact intensity services, since they do not fulfil the same needs.

However, the information on impact intensities can be used to point out the products for which it would be highly desirable to search for satisfactory substitutes, which may go beyond the mere substitution of products with identical properties. For example, the general consumer welfare would not necessarily be affected by a non-compensated reduction in the amount of (high-impact-intensity) meat consumed. This could point to possible, desirable changes in the general consumption pattern.

At a more general level, the information on impact intensities points out that it is an environmentally beneficial strategy to increase the service content of the products – provided the customers are willing to pay for this – since the value added by human labour adds no environmental impact.

Method

Methodologically, the project takes its starting point in the Danish national accounts of the economic flows between Danish enterprises and institutions, i.e. their mutual purchases and sales, imports and exports, and supply to final consumption. This is then combined with data from different environmental statistics, adjusted to the same level of detail as the industries and product groups of the national accounts.

The project includes all substances that contribute significantly to the environmental impacts that are normally included in product life cycle assessments, i.e. global warming, ozone depletion, acidification, nutrient enrichment, photochemical ozone formation, ecotoxicity, human toxicity and nature occupation.

By taking the economic flows between all enterprises as a starting point, the chosen method ensures a high degree of completeness – avoiding that processes with small contributions to many products, e.g. transport processes, are left out.

The recording of environmental impacts per DKK has the additional advantage that it prevents a product group from being ”concealed” when it is disaggregated into several smaller product groups. The national accounts' division into product groups has not been made with the purpose of environmental analyses, and if the division is too coarse an important product group may ”hide” among other products with a lower environmental impact. For example, fireworks would probably not have shown up among the prioritised products if we had considered exclusively the total environmental impact of this rather small product group. Conversely, the educational sector only reaches the top-10 of environmental impact because it is a very aggregated product group. In it self, education has very low environmental impact intensity and would not have reached the lists if it had been subdivided into primary, secondary and higher education, and adult education etc. When we consider environmental impact intensity, a product group keeps its position in the prioritisation, also when the product group is disaggregated, and it does not move up when aggregated.

Therefore, it is recommended first to consider a prioritisation according to impact intensity, and only in a second step to include considerations on the size of the product groups.

Other sources of information (see also the reference list at the end of the report)

EU commission's web-pages on the integrated product policy (IPP): http://www.europa.eu.int/comm/environment/ipp/home.htm

Hansen E. (1995a). Miljøprioritering af industriprodukter. Copenhagen: Danish Environmental Protection Agency. (Environmental Project no. 281).

Nielsen A M, Christiansen K, Weidema B P. (2003). Prioritisation of product groups and product areas in the integrated product policy. Proceedings of a seminar, Copenhagen, 2003-03-10. http://www.lca-net.com/files/seminarreport.pdf

Schmidt K, Poulsen P B, Schmidt A. (2003). Model for selection of future target areas in the Danish Program for Cleaner Products. Copenhagen: Danish Environmental Protection Agency. (Environmental Project no. 797).