1 Measuring the intensity of production and

Edgar G. Hertwich

Industrial Ecology Programme Norwegian University of Science and Technology

OECD/UNEP conference on Paris 23-25 April 2008

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 2 Outline

• Tools for resource efficiency • The value chain • Resource use and value added • E2 vector – resource efficiency graphs • Relating production and consumption • The impacts of consumption • Conclusions

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 3 Resource efficiency

Substances Materials Products

Businesses Business- Business Life-cycle level SFA level MFA assessment

Economic Industry- Physical IO Eco- Activities level SFA analysis efficiency benchmarks Nations, Economy- Economy- Environment globe wide SFA wide MFA al input- output analysis

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 4

• Biotic resources • Fossil resources • Mineral resources • Land • •Air • Health, functioning ecosystems, genetic diversity, life-support systems

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 5 Production & Consumption

Consumption Transport

Resources

Waste treatment

added Health Production Value a Value

Value chain

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 6 Resource intensity defined

This definition is standard for intensity and has become well established as emissions intensity. urce use Resource use ≡ Resource intensity Value added Resourc Value added ≡ Resource efficiency Resource use Value added

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 7 The Eco-Efficiency Vector

Chemical base Agri- E2 vector for products culture the Netherlands

Direct environmental Electricity impacts divided by e value added per industry us Transport sector and storage ce ce Mark Goedkoop, PRe

esour Oil and gas Business services R extraction Trade

Value creation 53 other sectors, invisible

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 8 The Importance of Industries

Oil & Gas Trade e Transport Business services

Electricity urce us

so The Netherlands

Reso Agriculture E2 vector for the Netherlands Chemicals Mark Goedkoop, PRe

Value added

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 9 The Importance of

Buildings&furniture Trade and services e

Transport Oil & Gas

urce us Food

so The Netherlands Reso Hypothetical E2 vectors for all goods consumed Electricity in the Netherlands Chemicals

Consumption Expenditure

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 10 Resource intensity of a product

Insurance & fees Recycling

Driving use

Car life cycle rce Gasoline

Resourc Car manufacturing Value added

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 11 Why is this relevant?

• Resource/pollution intensity can be consistently defined across various scales. – For a company, it is resource use per value added of the company. – For a product, it is life-cycle resource use per unit cost of the product – For an industry, it is total resource use divided by total value added in the industry – For a nation, it is total resource use divided by GDP.

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 12 Vector addition

RU(A) + RU(B) RI(A + B) = VA(A)+ VA(B)

• The total resource use of a country can be defined as the sum of individual resource use • The total value added of a country can be defined as the sum of value added in all economic activity going on in a country • It is meaningful to compare the RI of a product or company to the RI of products, companies, industries, and countries.

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 13 Input-output analysis

… allows us to convert the resource intensity of industries in an economy to the resource intensity of goods produced by the economy. Life cycle assessment … allows us to convert the resource intensity of processes to the resource intensity of product systems. Hybrid IO-LCA … can bridge any scale in between and consistently analyse activities across scales.

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 14 Production & Consumption

The resources used in the production of goods = The resource footprint caused by the consumption of the goods

The value added in the production of goods = The price of the goods to the consumer

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 15 Prioritization

Scientific prioritization of products and resources from an environmental point of view

• Input-output based studies have been used to identify the product and final demand categories that cause the largest impacts. • EIPRO study

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 16 Emissions from Norwegian household consumption

5.2 t/p 14 kg/p 23 kg/p 100 %

80 %

Other Recreation 60 % Other mobility Vehicle fuel Care Clothing 40 % Food Other shelter Household energy

20 %

0 % CO2 SO2 Nox

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 17 7.1 21 8.5 8.0 5.2 5.4 4.8 3.9 7.8 5.6 24 100 %

80 % Other Recreation Other mobility 60 % Vehicle fuel Care

40 % Clothing Food Other shelter O2 EmissionsO2 (t/capita-y) CO 20 % Household energy

0 % F 1990 D 1990 N 2000 A 2000 A NL 1990 DK 1992 2000 SK JP 1995T JP 1995N USA 1997USA CO2 emissionsAUS 93/94 in tons per capita and year

Hertwich (2005) Environmental Science & Technology 1

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 18 Prioritization – what do we know?

• Limited number of environmental pressures is considered • Studies consistently find that the most important areas are – Buildings, including energy use in buildings, constr – Food – Transportation • Poor countries: food is important • Rich countries: transportation important • Geographical factors, like density and climate, influence results.

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 19 Conclusions

• Input output analysis and hybrid analysis let us consistently define resource intensity. • Resource intensity can be calculated for, and compared among, individual processes, facilities, consumption activities, households, regions, industry sectors, and nations. • Useful information also for local decision makers, e.g. in municipalities or corporate purchasing departments

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 20

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 21 The Norwegian Economy

16

14 Water transport Oil&gas 12

10 ions [Mt] 8

6 Chemicals

CO2 emissio 4 Land transport

2 Construction Trade Real estate and services 0 0 50 100 150 200 250 300 350 Value added [billion Kr]

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 22 Economic activity caused by consumption

x=Ax+y x … Economic output of each industry sector -1 y … Final consumption of each sectors output x=() I-A y A … Coefficient matrix, indicating the inputs required to produce one unit of output in each industry sector. Input-output economics and life-cycle assessment have a similar mathematical structure. We assume a linear relationship of the flows among different nodes in a production network.

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 23 Value added

• We can do the same for value added (e.g. labour) v = i Fi xi

• Notice we normalize with respect to output (x) and not demand (y), so…

− vFxFIA==() −1 y

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 24 Life cycle assessment of consumption

= ()−1 IyLC CS I - A

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 25 Modelling the entire life-cycle Electrici Dinner Waste Waste mgmt Pizza

... ty ... Contrary to IO analysis, the A matrix also ... includes processes in households, such as Pizza apd the heating of a frozen pizza or the Electrici a combustion of fuel in a ty ed A A moped. Waste ii ih mgmt ... Dinner a Ahi dw Ahh

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 26 Technology

1 2 FD Output

1 0.15 0.625 175 500

2 0.08 0.05 340 400

VA 0.13 0.35 0 205

CO2 1.0 0.1 10

Electricity is CO2 Manufacturing uses electricity intensive intensively

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol 27

Driving Car manu Petrol Final demand Driving 0 1

Car manu 1

Petrol 10

VA 0

RU 10

Edgar,hertwich@ntnu,no, www,ntnu,no/indecol