Costs and Benefits: using Life Cycle Assessment and Cost Benefit Analysis to measure the environment

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Costs and Benefitsusing Life Cycle Assessment
andCost Benefit Analysisto measure
theenvironmental effectivenessof waste
regulation

• Gary Parker
• Pira
• IWM LCA Workshop
• 13 April 2004

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Piras use of CBA and LCA

• RDC and Pira undertook a study for the
  Commission in 2003 to analyse the costs and
  benefits of packaging recycling
• Ecolas and Pira are undertaking a study
  currently for the Commission on assessing the
  environmental, economic and social impacts of the
  EU Packaging Directive
• Pira is looking at environmental aspects such
  as re-usable packaging and environmental
  indicators

Evaluation of costs and benefits for the
achievement of reuse and recycling targets for
the different packaging materials in the frame
of the packaging and packaging waste directive
92/62/EC
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Piras use of Life Cycle CBA

• Pira produced a Life Cycle Cost Benefit
  Analysis model to compare recycling with disposal
  options
• The model combined LCA and economic valuation
  to determine environmental costs and benefits
• The environmental cost was combined with actual
  economic costs to produce a total social cost
• The waste management option with the lowest
  total social cost was considered to be the
  preferable option

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Piras use of Life Cycle CBA

• Pira produced specific case studies using the
  model
• RDC extrapolated the findings of Piras case
  studies to cover all packaging in the EU
• Taking account of member states varying
  population densities, waste disposal options and
  packaging mixes, RDC calculated optimal recycling
  targets for each member state

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CBA Methodology
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CBA Methodology

• CBA attempts to quantify the total costs and
  total benefits of a given policy option in order
  to determine whether the policy is worth
  pursuing
• CBA includes costs which are external to
  traditional direct monetary costs
• CBA is, in effect, trying to overcome the fact
  that traditional economics are imperfect
• CBA makes decision-making more apparent

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Economic Valuation of LCA How it works
LCA
CBA
Classification/
Economic
Inventory
Characterisation
Valuation
Global warming in Kg of CO
CO
2
2
equivalent
CFCs
Ozone layer depletion (in Kg of
CFC11 equivalent)
HCFCs
Environmental score
CH4
Photochemical oxidant formation
(in Kg of C
H
equivalent)
2
4
HC
NOx
Acidification (in KG of SO

2
equivalent)
SO
2
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Economic Valuation of LCA How it works
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Economic Valuation of LCA How it works
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Economic Valuation of LCALimitations

• Lack of standardised methodology
• Imperfect raw data
• Wide range of valuation figures and
  environmental cost figures
• Complex real-world economics
• Member states (and regions within member
  states) differ greatly
• Any model of a complex reality is by definition
  imperfect - but the alternative is
  non-transparent, non-fact-based decision-making
• The only perfect model of the universe is the
  universe itself - Einstein

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Life Cycle CBA Results
Min recycling rate
PET Bottles
Max recycling rate
450
400
350
300
250
Total social cost
200
150
100
50
0
Landfill
Separate Kerbside Collection / Landfill
Bring Scheme
Incineration
Separate Kerbside Collection / Incineration
Bring Scheme / Incineration

• Recycled at a sensible rate, all types of PET
  bottle recycling are preferable to landfilling
  (in contrast, in the case of mixed plastics,
  disposal is probably better than recycling)

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Life Cycle CBASensitivity Analysis
PET Bottles
Min recycling rate
Max recycling rate
600
500
400
Total social cost
300
200
100
0
Landfill
Separate Kerbside Collection / Landfill
Bring Scheme
Incineration
Separate Kerbside Collection / Incineration
Bring Scheme / Incineration

• Sensitivity analysis reveals that the results
  are reversed if landfill costs are low (eg UK or
  accession countries) and economic valuation of
  PM10s (ie transport) is high

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Optimum Recycling Rates?

• RDC used Piras case study results to generate
  EU optimal recycling rates

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Current Pira-Ecolas Study

• The new study revolves around two basic
  questions has the Directive worked in
  sustainable development terms, and how can it be
  improved?
• The study looks at environmental, social and
  economic impacts of the Directive
• Pira is focusing on environmental aspects,
  Ecolas on economic aspects

Study on the implementation of Directive
92/62/EC on packaging and packaging waste and
options to strengthen prevention and re-use of
packaging
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Current Pira-Ecolas Study
The type of questions Pira is working on ... Has
the Directive achieved a positive, neutral or
negative effect on the environment? Is any
environmental effect of the Directive significant
in terms of the overall impacts of packaging and
products? What has been the effect of member
states' packaging prevention efforts? Have fees
such as the DSDs encouraged packaging
minimisation? How could packaging prevention be
encouraged? How could re-use of packaging be
encouraged? Have the Essential Requirements been
effective? How could a packaging environmental
indicator work?
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Packaging Environmental Indicator (PEI)

• The PEI concept was championed by Dorette
  Corbey MEP
• We should not continue to
• encourage recycling as an end to itself.
• It is environmental impact that
• must be reduced
• The aim was to measure packaging
  environmentally and so contribute to a Directive
  that encourages sustainability rather than
  recycling
• The PEI is based on streamlined LCA methodology

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Packaging Environmental Indicator (PEI)

• The concept may be difficult in practice
• Packaging systems are as complex as the
  economic and material systems of the products
  contained
• Environmental impact is difficult to measure
  even for relatively simple systems
• In reality the most sustainable pack is that
  which most efficiently facilitates the
  sustainability of the product
• Recognising the conceptual and practical
  difficulties, Pira is developing three PEI
  systems for trialling by industry

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LCA, CBA, PEI DOA?

• LCA is at the root of developments such as CBA
  and PEI
• All techniques share the same strengths and
  weaknesses
• LCA and its derivatives will never be an exact
  science and will inevitably arouse controversy
  when applied to regulation
• The attempt is worth making, however, because
  the alternative might be decision-making based on
  assumptions, emotive responses, hidden agendas or
  political expediency

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LCA and Sustainable Development
Developing new policy tools is never easy or
without controversy, but let us not lose sight of
the fact that the ultimate aim is Sustainable
Development in line with the EUs Sixth
Environmental Action Programme Environmental
policy must be innovative in its approach
and seek new ways of working