www.isa.org.usyd.edu.au

The University of SydneyAUSTRALIA

The University of SydneyAUSTRALIA

Manfred Lenzen

Barney Foran

Christopher Dey

Balancing Act A triple bottom line account of the Australian

economy

What is Balancing Act ?

It is a complete life-cycle assessmentof Australia’s industry sectorsacross 10 sustainability indicators.

Why is Balancing Act new / special ?

people

profit

planet

Economic:

• profits

• imports

• taxes and subsidies

Environmental:

• energy & greenhouse

• material flow

• water & biodiversity

Social:

• employment

• health and safety

• income

A Global Reporting Framework

The Triple Bottom Line -

There are some problems with the GRI’s approach

to the TBL .

1: Investors need meaningful company benchmarks

Water service provider

A

Pumping

Catchment

Water service provider

B

Pumping

Catchment

C

D

2: Policy makerswant to avoid loopholes in legislation

Dairy farming

Transport

Dairy processing

AWater con-sumption

98%

<0.1%

2%

Dairy farming

Transport

Dairy processing

A 1

A 2

3: Producersneed incentives for improving performance

Dairy processing

B

Alum. / HDPE

Packaging

X

Bio-plastic

Packaging

Dairy processing

B

Y

4: Insurersneed to see hidden risks, eg. carbon taxation

Construction Pty

C

On-site emissions

Embodied emissions

from materials

Water supplier Pty

D

On-site emissions

Lower embodied emissions from

materials

Balancing Act showshow to solve the boundary problem.

It is therefore relevant toinvestors, policy makers, producers and

insurers.

How does Balancing Actsolve the boundary

problem?

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F R G E SF R G E S F R G E S F R G E S F R G E S 2

Aluminium for use

Food Resources EnergyGoods Services

0

1

Shipping of bauxite to smelter

Manufacture of ship

Iron ore for steel

Energy foriron ore mining

Steel for ship

It looks at the whole supply chain.

Integrating

National Input-Output Tables

Structure and function and knock-

on effects

Physicaldata

The maths behind the model

Into domestic production Into domestic final

demand International exports

Total output

1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8

1…n 1…n 1…n 1…n 1…n 1…n 1…n 1…n 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

1 1 n

2 1 n

3 1 n

4 1 n

5 1 n

6 1 n

7 1 n

Out

of

dom

esti

c pr

oduc

tion

8 1 n

Domestic inter-industry transactions

trs

ij

)(

)( = industrial flow from

sector (i) in region (r) to sector (j) in region (s).

Domestic final uses

frs

i

)(

)(= final demand

of region (s) for the output of sector (i) in region (r).

International exports

err

i

)(

)(= international

exports out of sector (i) in region (r).

[ 0)()(

)(sre

rs

i]

Gross State

Output of industrial

sectors

Xr

i

)(

)(

1 1

2 1

3 1

4 1

5 1

6 1

7 1

Val

ue a

dded

8 1

Domestic primary inputs to domestic production

prs

j

)(

)(= primary inputs from

region (r) into sector (j) in region (s).

Domestic primary inputs into domestic

final uses

prs

f

)(

= primary

inputs from region (r) into final demand of region (s).

International exports of domestic

primary inputs

prr

e

)(= international

exports of primary inputs from region (r).

[ 0)()(

srprs

e]

Gross State

Production

Pr)(

1 1

2 1

3 1

4 1

5 1

6 1

7 1

Inte

rnat

ion

al

imp

orts

8 1

International imports

mss

j

)(

)( = international

imports into sector (j) in region (s).

[ 0)()(

)(srm

rs

j]

International imports into

domestic final uses

mrr

f

)(= international

imports into final demand in region (r).

[ 0)()( srm

rs

f]

International re-exports

mrr

e

)(= international

re-exports in region (r).

[ 0)()( srm

rs

e]

Intern. state

imports

Mr )(

Total input

Gross State Input into industrial sectors

Xs

j

)(

)(

Gross State Expenditure

Fs)(

Intern. state exports

Es)(

What did Balancing Actcome up with ?

Financial Indicators per dollar of final demand

Import penetration:19 cents per dollar

Export propensity :16 cents per dollar

Operating surplus:38 cents per dollar

Social Indicators per dollar of final demand

Employment: 1.75 minutes per dollar

Income: 34 cents per dollar

Government Revenue:21 cents per dollar

Environmental Indicators per dollar of final demand

Greenhouse emissions: 1.02 kg per dollar

Energy use: 7.65 MJ per dollar

Water use: 41 litres per dollar

Land disturbance: 3.2 sq metres per dollar

Wheat and Other Grains

Wheat & other grains

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Production layers

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

0.0

0.5

1.0

1.5

2.0

2.5

Employment (min)

Wheat & other grains

rem321dir

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Income ($)

Wheat & other grains

rem321dir

0.0

0.2

0.4

0.6

0.8

1.0

1.2

GHG emissions (kg CO2-e)

Wheat & other grains

rem321dir

Wh 0.687 (0; 67.%)El Wh 0.0234 (1; 2.3%)Ch Wh 0.0173 (1; 1.7%)Fo Wh 0.0114 (1; 1.1%)Sc Cg Wh 0.00936 (2; 0.91%)Fe Wh 0.00925 (1; 0.9%)Wt Wh 0.00874 (1; 0.85%)Rd Wh 0.00853 (1; 0.83%)El Rf Wh 0.00487 (2; 0.47%)Rf Wh 0.00485 (1; 0.47%)Oi Fo Wh 0.00343 (2; 0.33%)El Wt Wh 0.00263 (2; 0.25%)El Ch Wh 0.00261 (2; 0.25%)El St Wh 0.00259 (2; 0.25%)Fr Sc Cg Wh 0.0022 (3; 0.21%)Ap Wh 0.00165 (1; 0.16%)Bc Mp Ho Wh 0.00162 (3; 0.16%)

GHG emissions (kg CO2-e/$)

Structural path analysis

Black coal

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Black Coal

Sector: Dairy Products

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Alumina

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Aluminium

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Alumina and Aluminium

Motor vehicles and parts

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Motor Vehicles and Parts

Electricity supply

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Electricity Supply

0.1

1.

10.Employment

Income

Land disturbance

Water use

Primary energy

GHG emissions

Gross operating surplus

Imports

Exports

Government revenue

Banking

Spin-off 1 :

The BL3 softwarefor businesses

Spin-off 2 :

Detailedsustainability analysis

for business and industry- Example: Aluminium

FUNCTIONAL UNIT

?

detailed on-site audit

complete supply-chain analysis

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F R G E SF R G E S F R G E S F R G E S F R G E S 2

Aluminium for use

Food Resources EnergyGoods Services

0

1

Shipping to smelter

Manufacture of ship

Iron ore for steel

Energy foriron ore mining

Steel for ship

Example: Australian aluminium

Electricity> Al> exports 46.57 PJ (46.29%)Alumina> Al> exports 14.48 PJ (14.39%)Al> exports 8.24 PJ (8.19%)Electricity> Alumina> Al> exports 1.40 PJ (1.39%)Electricity> Al> stocks 0.78 PJ (0.78%)Petroleum and coal products> Al> exports 0.40 PJ (0.40%)Electricity> Bauxite> Alumina> Al> exports 0.34 PJ (0.34%)Bauxite> Alumina> Al> exports 0.29 PJ (0.29%)Iron and steel> Al> exports 0.26 PJ (0.26%)Alumina> Al> stocks 0.24 PJ (0.24%)

10 top upstream paths: energy use

Sector: Aluminium Indicator: PRIMARY ENERGY

agr min food manuf u,t,c t&c f&b serv

households government capital exports stocks

5

4

3

2

1

Al> exports 959,672 t (74.2%)Al> stocks 16,089 t (1.24%)Al> electrical equipm.> construction> investm. 4,514 t (0.3%)Al> electrical equipm.> exports 4,106 t (0.3%)Al> sheet metal> investment 2,963 t (0.2%)Al> basic iron and steel> exports 2,532 t (0.2%)Al> sheet metal> beverages> households 2,144 t (0.2%)Al> electrical equipm.> households 1,891 t (0.1%)Al> electrical equipm.> investment 1,496 t (0.1%)Al> medical,photogr.& scientif.equipm.>exports 1,437 t (0.1%)

10 top downstream paths: aluminium use

Sector: economy Indicator: Aluminium tonnage

agr min food manuf u,t,c t&c f&b serv

households government capital exports stocks

5

4

3

2

1

Spin-off 3 :

The Australian

Triple Bottom Line Atlas

Total energy requirement (GJ/cap)

Energy intensity (MJ/A$)

… and a whole continent.

Covering the full supply chain …

Spin-off 4 :

Environmental Impact Assessment

Wind turbine Solar tower Solar trough Parabolic dish

Embodied

Convent. method 20 kg/kWhel 30 kg/kWhel 30 kg/kWhel 20 kg/kWhel

emissions Holistic method 50 kg/kWhel 70 kg/kWhel 90 kg/kWhel 40 kg/kWhel

Emissions embodied in renewable energy technology

Wind turbine Solar tower Solar trough Parabolic dish

Embodied

Convent. method 20 kg/kWhel 30 kg/kWhel 30 kg/kWhel 20 kg/kWhel

emissions Holistic method 50 kg/kWhel 70 kg/kWhel 90 kg/kWhel 40 kg/kWhel

Emissions embodied in renewable energy technology

Where from here ?

• Interlink time and space• Multi-regional time series

The Next Generation in

Science

Growth in Greenhouse Gas Emissions since 1970

ACCELERATORS:

Population growth +1.1%

Economic growth +1.5%

Industrial structure +1.0%

Export volume +0.8%

Residential energy mix +0.1%

RETARDANTS:

Energy intensity of industry -1.3%

Fuel mix -0.3%

Final demand mix -0.2%

Destination of final demand -0.2%

Export mix -0.1%

Richard Wood

University of Sydney

plus 4.5% /year

minus 2.1% /year

2.3%

Spatial impact modelling using GIS

Complex TBL AccountingWhich Way Forward ?

www.bottomline3.com

www.isa.org.usyd.edu.au

For further info . . .