Canada-U.S. Binational EIO-LCA Model

Jonathan NormanHeather L. MacLean

Department of Civil EngineeringUniversity of Toronto

LCA of Oil Sands Technology – Kick-Off MeetingNovember 3, 2006

University of Calgary

Outline

Environmental Input-Output Analysis Overview, limitations, applications Canadian and U.S. EIO-LCA models

Rationale for Binational EIO models

Canada-U.S. EIO-LCA model

Applications Life-Cycle Assessment for Canadian oil sands

Motivation

Quantify energy use & emissions associated with oil sands economic activity

Economic Activity

↕

International Trade

↕

Energy Use/Emissions

United States

Canada

Input-Output Tables

Systems of National Accounts Accounts for all transactions in an economy…

Interindustry Demand

ZFinal Demand

Y

Outputs

Inp

uts

Total Output, X

Input-Output Analysis

Uses IO tables to quantify interrelationships between industrial sectors (Leontief, 1941)

∆X = (I-A)-1∆Y

∆X = Change in Economic Output by sector

∆Y = Change in Consumer Demand

(I-A)-1 = Leontief Inverse

E = Total emissions across all sectors

Accounts for direct and indirect effects of production

EE = E

EIO-LCA Analysis

Source: Bjorn et al. (2004)

Motor vehicles

Pollutants(CO2, CH4, etc.)

Motor vehicle parts

Other transport equipment

Business services

Primary iron and steel

ENERGY

Primary iron and steel

Business services

Other transport equipment

Motor vehicle parts

ENERGY

Pollutants(CO2, CH4, etc.)

Pollutants(CO2, CH4, etc.)

Final Demand

Direct Impacts

Indirect Impacts ...

U.S. & Canadian EIO-LCA models

U.S. model created by Green Design Initiative – Carnegie Mellon University (1995) (www.eiolca.net) 1997 US Input-Output Table (491 sectors) Coupled to wide array of environmental data

Energy, Fuel use, Greenhouse Gases, much more.

Canadian model originally created by U of T (2003) 1997 Candian Input-Output Table (117 sectors) Coupled to energy, fuel use and GHG data

(compiled by Statistics Canada)

Comparing US and Canada

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Propane

Coal

Petroleum Products

Electricity

Natural Gas

Agriculture Mining, Oil & Gas Manufacturing

U.S.Canada U.S.Canada U.S.Canada

Significant international differences in fuel use:

0

1

2

3

4

5

6

7

8

9

10

Canada

United States

Comparing US and Canada

MT

CO

2 eq

. per

$U

S M

illio

n

Greenhouse Gas Emissions

Agriculture Mining &Utilities

LightManufacturing

PrimaryManufacturing

SecondaryManufacturing

Electricity &Natural Gas

Canada – U.S. Trade

Canada’s economy is highly dependent on that of the U.S.

¼ to ⅓ of GDP in Canada associated with US Trade NAFTA Trade Block – over past 10 years trade has

increased signifcantly.

To improve accuracy EIO-LCA of major international projects like the oil sands must consider emissions and energy use in the U.S.

Canada-U.S. EIO-LCA

Binational model links Canadian & U.S. EIO-LCA models via trade flows

Captures Biregional Feedbacks: Demand Canada Production Canada &

Demand U.S. Imports Production U.S. Demand Can Imports

Production Canada….etc.

Result is total energy use and emissions across Canada & the U.S. for a particular economic activity.

Big Benefits for Canadian LCA

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Per

cen

t D

iffe

ren

ce in

En

erg

y/G

reen

ho

use

Gas

Inte

nsi

ty

Energy

Greenhouse Gases

Difference between bi-national EIO and Canadian EIO alone

Agriculture Mining &Utilities

LightManufacturing

PrimaryManufacturing

SecondaryManufacturing

Canada-U.S. EIO-LCA Analysis Limitations

Simplified linear, static view Product mix issues Cradle-to-gate Data limitations

Advantages Intersectoral detail System boundary is entire economy (Canada & U.S) Quick, transparent – often needed for ‘real-world’ policy Excellent first-round estimation for a snapshot in time

Application to Oil Sands LCA

Advantages of Binational EIO-LCA allow it to be used effectively for comparison of different oil sands technology scenarios, considering: Total emissions across the supply chain Economy-wide Canada and U.S. emissions

Binational EIO-LCA can be improved by using hybrid techniques that incorporate process-based LCA for crucial aspects of oil sands processes.

Thank You!

Questions & Comments

More Information:

Jon NormanDepartment of Civil Engineering

University of TorontoTel: 416-327-8545Fax: 416-978-3674

E-mail: jon.norman@utoronto.ca

North American EIO Model

Based on a Chenery-Moses Multiregional Input-Output Framework (Chenery & Clark, 1959; Moses, 1955)

Modified to account for Competitive Imports

Separates out trade in the Canada/U.S. IO Tables Final demand = domestic demand + exports Economic output = domestic output + imports Import co-efficient:

=

n

jidij

ii

yz

mM

1

Imports of commodity i

Total domestic demand for commodity i

Linking Methodology

Bi-national Canada-U.S. I/O Model

=

U

C

X

X 1

,

,

)(ˆ

ˆ)ˆ(

UUCCU

UUCCC

AMIIAM

AMAMII

RUCCUUU

RCUUCCC

exYMYMI

exYMYMI,,

,,

ˆ)ˆ(

ˆ)ˆ(

Final DemandInternational (I-A)-1

TotalOutput

Limitations & Advantages

Limitations

Same limitations as National EIO models, but also: Import proportionality assumption Data Limitations in terms of harmonization

Key Advantages Accounts for trade effects ignored in national EIO Allows for North American-wide policy application:

More accurate Life-Cycle Assessment Modeling cross-border impacts of production/consumption

0

5

10

15

20

25

Petroleum andCoal ProductsManufacturing

Pulp, Paper andPaperboard Mills

Primary MetalManufacturing

ConvertedPaper ProductManufacturing

Oil and GasExtraction

Wood ProductManufacturing

Printing andRelated Support

Activities

Motor VehicleBody, Trailer &

PartsManufacturing

OtherTransportation

EquipmentManufacturing

Fishing, Huntingand Trapping

Canadian Energy Use

US Energy Use

US Energy Pull on Canada

Energy Use Resulting from $1M U.S. Final Demand

TJ/

$US

Mill

ion

of U

.S.

Fin

al D

em

and

Canadian Energy Pull on US

0

5

10

15

20

25

30

35

Pesticides,Fertilizer and

OtherAgriculturalChemical

Manufacturing

Basic ChemicalManufacturing

Resin, SyntheticRubber, andArtif icial and

Synthetic Fibresand FilamentsManufacturing

Textile andTextile Product

Mills

Plastic andRubber ProductManufacturing

Motor VehicleBody, Trailer &

PartsManufacturing

ElectricalEquipment and

ComponentManufacturing

HouseholdAppliance

Manufacturing

MachineryManufacturing

Motor VehicleManufacturing

US Energy Use

Canadian Energy Use

Energy Use Resulting from $1M Canadian Final Demand

TJ/

$US

Mill

ion

of C

dn.

Fin

al D

eman

d

Methodological Approach

Environmental Input-Output (EIO) Analysis

Popular modeling technique based on National Accounting methods used to determine GDP

Applied effectively to estimate environmental/energy impacts associated with economic production since early 1970’s

Our approach: Build new EIO models for Canada and US and link them through trade flows