A Comparison Between Conventional LCA and Hybrid EIO-LCA: Analyzing Crystal Giftware Contribution to Global Warming Potential

Abstract

Introduction The growing concern of European citizens with environmental quality and the European Commission's determination to develop stronger environmental policies has contributed to the development and optimization of environmental manage-ment tools to support decision-makers in industry and government. These tools help to pro-actively identify sustainable options, optimized according to environmental, social, and economic criteria. In line with recent European Commission initiatives, an Integrated Product Policy (IPP) approach is to be considered in any economic sector. IPP addresses the whole life cycle of a product, and seeks to avoid shifting environmental prob-lems from one phase of the product life cycle to another. This vision has emphasized the role of Life Cycle Assessment (LCA) methods, (see, for example, Guinée et al. 2002), which are frequently used with the purpose of accounting for environmental impacts of products and services. These methods show practical limitations, considering that each industry is dependent, directly or indirectly, on all other industries. Consequently, this approach is expensive and time-consuming because resource input and environmental discharge data have to be estimated for each of the modeled processes of the life cycle of a product or service. The LCA based model has the following advantages: it is accurate within a de-fined system boundary; it is independent from price fluctuation, and it facilitates unit process level analysis. The disadvantages of this model are related with its high cost for complex product systems, and inherently, it provides incomplete system boundary, as the process inventory associated to the life cycle analysis has to be broken at a given point, there are no infinite boundaries. An alternative macroeconomic approach, considering the inter-industry effects of product/process decisions for a diverse set of commodities, makes use of the economic input-output tables and environmental information. This approach is known as Economic Input-Output Life Cycle Assessment (EIO-LCA) analysis, (Hendrickson et al. 1998). This methodology allows for the use of standard data sources, such as the na-tional sector-based economic input-output tables. The method constitutes a coherent approach to environmental accounting, provided that information on emissions and use of natural resources is added. The use of input-output models is advantageous since they take into account the entire supply chain for a product (including indirect suppliers), allowing for tracing of the full range of inputs to a process, and conse-quently providing a complete system boundary. The main limitations associated with this methodology are the poor level of disaggregation of the economy, the linearity of the model, its dependence on cost in-formation, the fact that the result omits environmental intervention associated with capital goods, and the temporal difference may cause additional error. For example, the Portuguese economy characterization within the European System of National and Regional Accounts (ESA 79) is based on a national economic input output ta-ble, which includes data from 49 sectors, while the USA economy is divided in 500 commodity or service sectors. Additionally, inherently in EIO-LCA lies the assump-tion that within one production sector, environmental effects are proportional to the price of the product. Both LCA and EIO-LCA provide interesting characteristics and complementary advantages. The important question is how can one take the most benefit from the two and reduce both truncation and aggregation errors. An answer that has been confirmed by input-output energy analysts is the hybrid approach, as discussed by Suh and Huppes (2005). This new technique, the HEIO-LCA, (hybrid EIO-LCA), is a process-based methodology analysis that replaces the price-proportionality as-sumption with an assumption of proportionality according to physical units. The three methodologies, LCA, EIO-LCA, and HEIO-LCA, are discussed and assessed making use of a case study on the production of crystal giftware. The anal-ysis is focused on the greenhouse gas emissions in the context of the Portuguese economy and, in particular, considering the economic sectors environmental perfor-mance. This analysis is used to assess the role of these methodologies to promote sustainable policy making in the context of the Kyoto protocol.