AEAT In Confidence
Title / Policy Coverage of Environmental Impacts of Materials
Customer / The Department for Environment, Food and Rural Affairs (Defra)
Customer reference
Confidentiality, copyright and reproduction / AEAT in Confidence
This document has been prepared by AEA Technology plc in connection with a contract to supply goods and/or services and is submitted only on the basis of strict confidentiality. The contents must not be disclosed to third parties other than in accordance with the terms of the contract.
Suggested citation / Bates, J., and Watkiss, P. (2006). Policy Coverage of Environmental Impacts of Materials: A report to the Department for Environment, Food and Rural Affairs. AEA Technology. Defra, London.
Report status / Final Report Issue 2
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Name / Signature / Date
Authors / Judith Bates
Paul Watkiss / 25/07/06
Reviewed by / Judith Bates / 25/07/06
Approved by / Dan Forster / 25/07/06
Executive Summary
This report presents the findings from the SCP study on the Policy Coverage of Environmental Impacts of Materials. The project aims were to:
· Investigate the environmental burdens associated with 3 materials at each stage of their life cycle, including their use in products and their final disposal;
· Assess the potential externalities associated with these burdens;
· Review the policies in place to address these burdens (the policy coverage), considering both economic instruments and other forms of legislation.
The first phase of the study identified a large number of materials for consideration. These included primary materials (e.g. metals, aggregates, wood) and secondary materials and intermediate products (e.g. plastics, paper). After review, and consultation with the study steering group, the study selected the following materials:
· Plastics, specifically PET (PolyEthylene Terephthalate). This material was chosen to capture the growing use of plastic materials, and to investigate the emerging plastic recycling industry.
· Iron and steel. This material was chosen as it is an energy intensive material, used in construction and products, and an existing recycling market exists.
· Wood. This material was chosen because it is a renewable material and is a major construction material.
Existing life cycle data was found for the extraction and processing of all three materials (although not always for the UK situation), though less useful data were found for each material product. However, the study found that existing LCA studies are not useful for subsequent policy externality analysis. This is because:
· These life-cycles are set up to assess a particular problem or question, and do not easily lend themselves to an examination of burdens for resource flows.
· Data are often aggregated across the life-cycle. Moreover, life cycle impact assessment methodologies are often used to aggregate individual burdens into a few categories. This makes it difficult to assess individual stages or burdens in detail, which is needed to examine externalities and policy coverage.
· LCA studies are aimed at answering a different question to externality analysis. LCAs are primarily undertaken as a comparative (relative) way of looking at different options, using burdens which are usually calculated on average effects. In contrast, detailed externality assessment focuses on (absolute) impacts (not burdens), calculated based on marginal (not average) effects.
· Most LCA studies do not contain the detail on the location of burdens. This information is important for externality studies, both in relation to UK versus non UK effects, and because externalities vary significantly between locations.
This finding is one of the main policy conclusions of the study. It suggests that any subsequent analysis of resource flows would need dis-aggregated life cycle inventory data i.e. emissions of individual pollutants, split by individual life cycle stage.
The study initially planned to use existing LCAs to identify burdens for the three material flows. Due to the reasons above, this was not possible. Instead, the study used an LCA tool (SimaPro) to model simplified life-cycles for each material. This included raw material extraction and processing, one main product use for each material (wood in construction, steel in a car and PET in a drinks bottle) and end of life management of the product. This allowed the output of disaggregated life cycle inventory (LCI) data, split by life cycle stage. Two recognised impact assessment methodologies were then applied to the inventory to identify the most important environmental impacts (as a screening tool).
Using this inventory burden data, the study scoped the externalities for the three material life cycles. Two potential approaches were considered. Firstly, to use life cycle impact assessment (LCIA) output and try and monetise this directly. Secondly, to use the LCI (inventory) output, and apply existing externality estimates using damage costs (simplified £ per tonne values). Regarding the two approaches, the study has found:
· It is difficult to apply valuation estimates directly to LCIA output, as most units do not relate directly to the economic valuation estimates in the literature. There are also problems of consistency, because LCIA approaches do not follow standard UK guidance for impact assessment, e.g. for health impacts of air pollutants. However, the use of LCIA data has a major advantage, as it has complete coverage across all life cycle steps and burdens.
· The use of the LCI data and an impact pathway approach (or simplified impact approach using damage costs) is much more satisfactory in terms of policy consistency, and is methodologically more robust. It also allows a direct match between impacts and valuation endpoints. The main disadvantage is that there are not agreed approaches for analysis and valuation of all burdens from a LCI (though this problem also applies to the use of LCA output). In addition, applying this approach to all the burdens from an LCI is time consuming.
· The two points reflect the trade-off between trying to value everything (with inconsistent methods and high uncertainty) versus only valuing a few areas robustly, but leaving potential gaps.
This study adopted the second approach, using LCI data on burdens. This provided the most robust and evidence based approach for subsequent externality analysis. Our approach has been:
· To produce dis-aggregated LCI data output;
· To use the LCIA as a screening tool to identify important steps and burdens;
· To select the priority burdens and assess these in detail using an impact pathway approach to estimate externalities (in this case a simplified approach using damage costs), using agreed impact and valuation approaches for UK policy.
· To screen the LCI data to see if there are any potential major burdens that have been overlooked. We also highlight that it would be possible to use the priority burden estimates, in combination with the LC impact assessment data, to calculate the relative values for all burdens. This approach should be investigated in any subsequent studies.
The analysis revealed significant externalities for each of the three material flows. The externalities are dominated by greenhouse gas emissions and air quality pollutants arising from energy and electricity use, though this reflects the choice of materials (high embodied energy or energy intensive materials). For iron and steel, some trace pollutants (heavy metals) may be potentially significant.
During this analysis, a number of specific methodological issues were identified for externality assessment using LCI data. These were:
· LCI data does not (generally) specify the location of burdens.
· It does not specify when burdens occur (there is no time dimension). Note this is important for economic analysis and discounting.
· A number of potential externalities are not included in LCA frameworks (as LCA is focussed on quantification of resource and emission flows). These include impacts on ecosystems and biodiversity, social impacts, accidents, and amenity.
· A large proportion of burdens are associated with transport and electricity, and the burdens from these sectors change over time (e.g. LCI may be using current information to address a future policy question). The assumptions on the benefits of energy recovery from waste, or recycling are also dependant on energy mixes assumed, and the same issue applies.
The study assessed the policy coverage of the three life-cycles against the burdens identified. It was found that economic instruments in the UK do focus on a number of the key impact areas for the materials – including energy/electricity use and waste. The study also assessed whether these polices internalised the impacts.
For landfill as a waste option, the existing economic instruments seem to cover the potential externalities (i.e. the degree of internalisation suggests prices reflect the appropriate signals). For energy/electricity, and for incineration as a waste option, the analysis suggested that important externalities remain (i.e. prices do not fully reflect environmental burdens), particularly for CO2 emissions, and the conventional air pollutants (SO2, NOX and PM10). Following from this, and the analysis of wider policies, we suggest there might be a need for:
· Full policy coverage to address the total externalities of CO2 emissions, and the conventional air pollutants (SO2, NOX and PM10).
· Market signals to recognise the benefits of recycling (i.e. to reflect avoided externalities). The analysis suggests that recycling avoids significant externalities across the life cycle (i.e. from avoided extraction, processing and waste disposal).
· Policies to tackle burdens associated with resource extraction, e.g. from mining of raw materials, or the potential for marine eco-toxicity from oil/gas extraction.
· Policies to ensure optimal natural resource depletion (implying reliance on market forces is insufficient).
In addition, the results of this study suggest that not all the externalities of incinerating plastic in an energy from waste plant would be directly addressed by current policies. However, plastic would not normally be burned on its own, but as part of a mixed household/commercial waste stream.
It would be useful to examine whether for the incineration of mixed wastes in energy from waste plant, there are externalities which are not addressed by polices (such as the Waste Incineration Directive and local planning regulation), which impact upon waste incineration facilities at the moment.
The study has reviewed the transferability of this type of approach, and concluded:
· The use of a detailed ‘step by step’ life cycle model allows the level of detail needed for a proper resource flow analysis. However, even with relatively simple lifecycles, the volume of data generated by such an approach will be large. For this reason, there is a need to identify and focus on priority burdens (as here).
· The overall approach developed here is, we believe, transferable to other studies. For example, the externalities associated with material production (e.g. PET, iron and steel, wood) would be transferable to other products provided a proper in-depth analysis was undertaken (rather than the scoping analysis here).
· This approach might require some additional work for each product. This would be needed to set up the life cycle stages from material production through to disposal for the specific product. It would also require work to set up for the actual disposal route (e.g. for the material to landfill, incineration, or recycling).
· There is one final issue on transferability. This is over the year of the study and the assumed energy / electricity mix in place, and whether this should reflect current or future baselines. Different policy questions or analysis might want to work with different policy baselines, which would require the adjustment of the life cycle set up. Similarly, it is clear that the assumptions about waste disposal, e.g. energy recovery assumed, type of energy used in recycling, etc. have a big impact on determining the externalities, and again these might change for different studies. This is one area where further consideration is needed for transferability, and further work is needed to improve the analysis.
In relation to research priorities, the study recommendations are:
· Further testing with other LC impact assessment methods would be useful, particularly some of the more advanced tools that include a more impact driven approach.
· The externalities and life cycle impact assessment are generally closely correlated in identifying the most important impacts, but do differ in some areas (notably over the importance of trace pollutants). It would be useful to reconcile these differences in future material flow analysis.
· More work is needed to attribute damage cost values (impact pathway approach) to all LCI burdens, or to develop approaches to screen all burdens more robustly. Similarly, work to progress the valuation of LCA output directly would be useful. We stress that these gaps are not a barrier to the successful implementation of a follow on phase of this study.
· Sensitivity analysis would be useful to examine the potential effect on the results of uncertainty (e.g. on impacts and values) and over the choice of assumptions (e.g. on which energy source is displaced by waste to energy schemes, on future rather than current technologies/policies, etc).
Contents
1. Introduction 3
2. Identification of Materials 3
3. LCA/Environmental Impact Analysis 3
3.1. Introduction 3
3.2. Plastic 3
3.3. Iron and Steel 3
3.4. Wood 3
4. Externalities 3
4.1. Methodological approach for assessment of externalities 3
4.2. Calculation of Externalities from Life Cycle data 3
4.3. Scoping of Externalities for the Three Material Life Cycles 3
4.4. Specific issues on using the LCI data 3
4.5. PET 3
4.6. Iron and Steel 3
4.7. Wood 3
4.8. Findings 3
5. Policy Coverage 3
5.1. Introduction 3
5.2. Input to policy development 3
5.3. Policy Development Outside the UK 3
5.4. Other Policies 3
5.5. Internalisation 3
5.6. Findings 3
6. Recommendations and Research Gaps 3
6.1. Key Findings 3