Transcript Integration of Life Cycle Analysis, ExternE and Economic

Integrated assessment
for
Sustainable Regional Energy Systems
An approach Integrating Life Cycle Analysis, ExternE and Economic
Models
Ben Maddox
University of Newcastle
Australia
Research Aim
•Develop framework for Integrated Assessment
•Include models for: – Life Cycle Analysis
– Externalities (ExternE)
– Economics.
•Encompasses:
–
–
–
–
technological
environmental
economic
social impacts.
•Facilitate the inclusion of regional drivers for
sustainability
Integrated Assessment?
• Process of dealing with complex issues, using
knowledge from various scientific disciplines and/or
stakeholders.
• Achieves equal consideration for each element of
sustainability;
– Environmental
– Social
– Economic
• Provides a decision support framework for determining
trade-offs for sustainable development.
Trade-offs
Economic
Ethics
Social productivity
Markets
fs
ad
eof
Tr
Environment
Governance
s
off
ead
Tr
Eco-efficiency
Trade-offs
=
Transition
to SD
Social
Social viability
Variations over time/project cycle
Batterham 2002
Challenges for integrated
Assessment
– Ensuring that assessment is adapted to particular needs (e. Regional
National or Project level)
– Accessing baseline information on environmental, social, and economic
issues and integrating multiple data sets in forecast modelling, valuation
techniques and BCA.
– Ensuring that the principle of stakeholder involvement and consultation is
applied more widely and effectively;
– Avoiding a black box approach ensuring model uncertainty and
assumptions understood by stakeholders
Elements of IA
•
•
•
•
•
•
•
•
•
Input-output models
General equilibrium models (GE)
Partial equilibrium models
Environmental Impact Assessment (EIA)
Risk assessment
Scenario building e.g BAU
Life-cycle analysis (LCA)
Benefit-cost analysis (BCA)
Multi-criteria analysis – takes stakeholder preferences into account
Abazza 2003
Externalities Valuation
An externality exists if:
– Negative/positive impacts are generated by an economic activity and
imposed on others not directly involved in a transaction.
– The impact is not already priced in the market place, e.g. if the effect
is negative there is no existing compensation
Why value externalities?
– Economists claim that getting the prices right is a prerequisite for
market mechanisms to work effectively for the goals of sustainable
development (NEA 2001).
– Aapproaches for determining a monetary valuation for external costs
and benefits of energy supply, in principle, provide a means to quantify
and integrate these costs and benefits into the decision making of
corporations, governments and consumers.
Internalised & Externalised cost
of Energy
• Internalised costs of energy
– Cost of coal/fuel
– Capital costs
– Labour costs
• Externalised costs of energy
– Community health (respiratory illness via PM, SOx, NOx, etc.)
– Ecosystem health (e.g. acid deposition)
– Infrastructure degradation (roads)
– Global warming (greenhouse gas emissions)
– Smog (SOx and NOx transformations)
• But also: Externalised benefits of energy
– Energy security
– Fuel replacement (eliminating burning of coal directly in the
home e.g South Africa)
LCA & Externality Valuation
• LCA is a traditional systems analysis approach used by
manufacturers, engineers and other stakeholders to quantify where
environmental burdens are generated, and where opportunities for
improvement exist.
• LCA is also an attractive tool for decision and policy makers for
evaluating the environmental credentials of development
options/policy. However, policy makers have generally found it difficult
to deal with the numerous and diverse outputs of an LCA, which
generally report all quantities of pollutants and resource consumption
and use various methods for assessing and comparing the relevance
of these values.
• Externality valuation has been used as a complimentary tool to LCA
by transforming impacts into an an economic indicator.
Externality Studies
A review of externalities studies was undertaken. A wide variety of
approaches was found, however the ExternE approach was adopted
for this research effort
Why ExternE?
– The Impact Pathway Approach used in ExternE is the most
consistent with Life Cycle Analysis as it traces impacts from the
bottom up from cradle to impact, and it is also consistent with the
economic theory for an externality, I.e measures damage cost in
contrast to control costs.
– The Externalities of Energy (ExternE) project began as a joint EC,
US project in 1994 it is under continual development by the EC
(Due for an Update this year) and has been implemented across
the EU, China and Brazil http://externe.jrc.es/.
ExternE
• Involves methods for internalising external costs and benefits
• Provides a monetary valuation of impacts and damages of alternative
technologies
• Approach for comparing production systems
• Increasingly used to provide information for decision making of
corporations, governments and consumers (IER 2003). Uses a
consistent “bottom-up” methodology to evaluate the external costs
associated with a range of different energy cycles
• Multidisciplinary approach:
Economists, environmental scientists, health specialists, energy
technologists, ecologists, atmospheric chemists, modellers and
computer software specialists
Bottom Up – LCA approach
Bickel IER 2003
Results of ExternE
Implementation
Global warming costs (ExternE 1999)
Health costs (ExternE 1999)
Operating costs (1990$) IEA 1999
Nuclear
Biomass
Fuel cycle
Wind
PV
PV operating costs
are approximately
64 EU c/ kWh
Gas
Oil
Lignite
Coal
0
1
2
3
4
5
6
7
8
9
10
EU c/kWh
Germany
Uncertainties
• Data uncertainty ( e.g. slope of a dose - response function, cost of a
day of restricted activity, and deposition velocity of a pollutant
• Model uncertainty (e.g. assumptions about causal links between
pollutants and a health impact, assumptions about the form of a
dose response function (e.g with or without threshold) and choice of
models for atmospheric dispersion chemistry.
• Uncertainty about policy and ethical choices ( e.g discount rate for
intergenerational costs, and value of a statistical life).
• Uncertainty about the future ( e.g. potential for reducing crop losses
by the development of more resistant species
• Idiosyncrasies of the analyst ( e.g. interpretation of ambiguous or
incomplete information)
• Site and regional specificity for local pollutants
• Upstream and downstream processes
• Discounting - Global warming
• Disaster aversion (currently not included)
Ideology
• Integrated Assessment can take separate; technology, economic,
environmental and social models to provide indicators for decisions on
sustainable development options.
• In principle an economic indicator can be achieved which describes the
positive and negative aspects of a development scenario provided
assumptions and uncertainties are transparent.
• Issues of regional significance can be determined and integrated into
the assessment via participatory processes involving relevant
stakeholders applying appropriate weightings for Sustainable
Development drivers.
• A framework for assessing the sustainability of large scale development
options in a regional context can be build upon these principles
Methodology
•
Integrate the use of Life Cycle Analysis (LCA), externality costing and economic input
– output modelling, to facilitate the assessment of the sustainability of regional
development options.
•
The framework is based on normalising, in monetary terms, economic, social and
ecological costs and benefits, so that all of the impacts associated various options
can be considered on a similar basis and the relative magnitude of tradeoffs
analysed.
•
This information can then provide a knowledge base for participatory processes
where a diverse cross section of stakeholders informed by the modeling results can
assess and or formulate development scenarios.
•
Where data does not exist for an impact or there is no acceptable valuation method,
the impact will be included in a qualitative sense while indicators are developed
•
Goal is to identify scenarios which perform well over a range of futures, e.g high or
low global warming costs or high water externality value.
Research Framework
Strategy
GIS Database for
Storage,
Retrieval and
Analysis
Environmental,
Industrial,
Economic, &
Social Data
Traditional Economic
Analysis (TEA)
LCA
L
C
I
Characterisation
Normalisation
Assessment
Putting
TEA
LCA
&
ExternE
Into common units
Trade-offs
e.g. magnitude of net
+ve and -ve effect on
Key Indicator
Categories
(Social, economic,
ecological)
ExternE
Regional Drivers
Regional outlook
Region with increased social
ecological and economic
adaptive capacity/ sustainability
e.g. a more diverse and
adaptive regional energy
system
Legend
Area of Existing Knowledge
Research Area
Weighting
e.g. low
greenhouse gas
emissions,
employment
opportunities
Outcomes
1.
2.
Relative indicator of which
development option is the
more valuable to society
(current)
Sustainability, assessment
of the adaptive options
created by a development
(future) e.g. Social &
economically viable energy
diversification
Case Study
Hunter Valley Coal and Energy Generation System
Hunter Valley as a study region
• The Hunter Valley energy chain was chosen as a suitable Case
Study because it is a large supplier of both domestic electricity and
energy fuel (coal) for international export.
• The location of large electricity generation infrastructure has also
created an economy that contains a number of energy intensive
industries, for example aluminium production. The net outcome of
these operations has made the Hunter Valley a large source of
greenhouse gas emissions
• It is also a region that needs to develop a range of scenarios for a
transition to sustainable development which maintains economic
social and environmental viability through appropriate allocation of
resource competing uses. E.g water for mining viticulture power
generation
GIS Database of the Hunter Valley
Application of the ExternE
Methodology
• Analysis of Air Pollution Effects
– Specification of the power generation technologies and the
environmental burdens they impose (e.g. kg/s of particulates emitted by
a power plant)
– Calculation of increased pollutant concentration in all effected regions
eg ug/m3 of particulates, using models of atmospheric dispersion and
chemistry
– Calculation of the resulting dose and physical impacts (e,g number of
cases of asthma due to these particulates, using a dose- response
function);
– Economic valuation of these impacts ( e.g multiplication by the cost of
an asthma attack).
Monetary Value of Receptors
Value of a prevented fatality
Year of Life Lost (acute effects 3% discount rate
Year of Life Lost (Chronic effects 3% discount rate
Chronic Bronchitis
Cerebrovascular hospital admissions
Respiratory hospital admission
Congestive heart Failure
Chronic Cough in children
Restructed activity day
Asthma attack
Cough
Minor restricted activity day
Sympton day
Bronchodilar usage
Lower respiratory symptom
$2,500,000
$125,530
$73,106
$128,280
$12,674
$3,273
$2,470
$182
$83
$57
$34
$34
$34
$30
$6
Value of a Statistical
Australian Life of 2.5
$M (DoHA (2002).
Crops
Euro
Barley Yield loss in decitonnes
6.3
Oats
6.6
Potato
9.6
Material Maintenance costs per m2
Galvanised Steel
17-55
Limestone
299
Mortar
33
Natural Stone
299
Dose Response Functions
Receptor
Impact Category
Reference
Pollutant
fer
Cases/(yr-person ug/m3)
Asthmatics
Adults
Bronchodilator usage
PM10
Nitrates
Sulfates
0.163
0.163
0.272
Children
Bronchodilator usage
PM10
Nitrates
Sulfates
0.078
0.078
0.129
Children
Chronic cough
PM10
Nitrates
Sulfates
2.07E-3
2.07E-3
3.46E-3
Entire
Population
Respiratory hospital
admissions
PM10
Nitrates
Sulfates
2.07E-6
2.07E-6
3.46E-6
Chronic Mortality
PM10
Nitrates
Sulfates
1.57E-4
1.57E-4
2.60E-4
Ref Pope & Dockery (1995), Dockery et al (1989)
Quantification of impacts and costs
• Exposure Response Function:
• Humber of Respiratory Hospital
Admissions (RHA)
• = 3.46E-6. Sulphate ug/m3 .
Population* $3,273(per case)
• Annual averages as determined with
TAPM
Population Density &
400 X 400km TAPM Grid
Bayswater &
Liddell Power
stations
Air pollution modeling and receiving
population
Average PM10
ug/m3 (2002)
Results from Implementation of
ExternE
Population Receptor
Condition
Estimated Cost
Asthma (11.3%)
Bronchodilator
$1,618,714
Cough
$1,890,816
Lower respiratory symptoms
$121,155
Children 20%
Chronic Cough
$220,506
Adults 80%
RAD
$4,882,379
Chronic Bronchitis
$7,365,441
Chronic Mortality
$33,622,943
Entire population
respiratory hospital admissions
Acute
Total
MWh 2002
Bayswater
15250000
Liddell
9290000
Total
24540000
CCSD 2003
$128,464
$1,985,752
$51,836,170
Health Cost estimated at $2 per MWh using
PM, GGE cost of $43.5 PPP Adjusted from a
value of 29 Euro/ t – CO2. For Bayswater and
Liddell this equates to approximately ~
$40/MWh so externalised cost estimated at $
42 per MWh
Economic Impact of the HV energy
Chain
• The economic impact of electricity generation is obvious, however
there will be different benefits associated with different technologies.
Coal has externalised costs as well as externalised security
benefits, it also supports industries important to the Hunter economy
which require a base load supply such aluminum refining.
• 89.5% of coal exported by NSW comes from Hunter Valleys mines
generating approximately $4.2 billion dollars in turnover in 2002
(HVRF). A Price Waterhouse Coopers study showed government
revenue at approximately $10/t. 11.8 of coal Mt were used by
Bayswater and Liddell in 2001-2.(Coal Industry Profile 2003)
• The turnover of the Hunter Aluminum Industry in 2002 was $M1132
(HVRF)
• Macquarie Generation turned over $M757 in 2002 (MacGen 2003)
Future Work
•
Build on the GIS database of information available, Validate pollution modeling against
monitoring data, (including peer review). Widen the number of externalities considered
(e.g Water externalities ) and make uncertainties and assumptions more explicit.
•
Continue Work with the Hunter Valley Research Foundation to determine the economic
multiplier effects of the coal/electricity generation industry
•
Review methodologies for Multi Criteria Decision Analysis and participatory processes.
Develop a methodology appropriate to Australia’s environment and society for
integrating the indicators generated by the externality and economic modeling with
participatory process. Use these processes to guide scenario development.
•
Develop criteria for testing the ability of an existing and alternative development option
to perform in a robust manner under a range of future scenarios. E.g Carryout
sensitivity analysis of options at different damage costs for global warming
•
Mapping existing resource and demographic conditions within the geographical
region, so that key alternative regional spatial organisations of industries and
community can be explored
•
Apply IA framework to a number of energy scenarios for the Hunter Valley
Conclusions
• Building up regional technological, environmental,
economic and social databases are essential for region
based IAs.
• Currently at the stage of being able to extend LCA to
an estimated economic indicator, providing SD
information in regard to technology choices which
require the positives and negatives to be traded off.
• The analysis needs to be extended to allow
stakeholder participation in the formulation
development scenarios which reflect desired regional
futures.