Example

Firm that cleans used metal parts

Measure Baseline Waste Generation

New solvent

Waste disposal

Fugitive emissions

CLEANING PROCESS

4,000 gallons

3,950 gallons

50 gallons

Measure Baseline Costs

Input solvent $3.50/gallon × 4,000 = $14,000 per

yearWaste disposal

$2.50/gallon × 3,950 = $9,875 per year

Assumptions

5% inflation rateReal price increase for solvent of 1%

annuallyReal price increase for disposal of

4% annuallyDiscount rate of 6%

Baseline Costs

Year Annual Cost

Inflation 5%+real price increases

PV (using 6%)

1 23875 23875 23875

2 23875 25603.75 24154.50

3 23875 27462.89 24441.87

4 23875 29462.64 24737.4

5 23875 31614.05 25041.29

6 23875 33929.07 25353.77

7 23875 36420.63 25675.11

8 23875 39102.71 26005.54

9 23875 41990.43 26345.31

10 23875 45100.15 26694.71total 252324.00

Identify Options

1. Recycle solvent2. Use non-hazardous cleaning

method

Measure Waste Generation for Option 1

New solvent

RECYCLE

Fugitive emissions

CLEANING PROCESS

360 gallons

3,950 gallons

50 gallons

Waste disposal

3,640 gallons

310 gallons

Measure Benefits Option 1

No change in production of output, so no revenue change for output

No revenue from recycled solvent because it is used rather than sold.

Measure Costs Option 1Investment Expense ($66,500)

$40,500 Tanks, pumps, mixers $20,000 Installation (design, piping, labor) $6,000 Contingency

Operating Expense $240 Utilities $5,000 Operations labor $3,325 Maintenance $1,260 New solvent (360gallons @ $3.50

per gallon) $775 Waste disposal (310 gallons @ $2.50

per gallon) $120 for training

$8,565

Assumptions10 year equipment life, no salvage valueStraight-line annual depreciation (divide

capital cost by 10)Cost of capital is 12% annually for 3 year

equal payments5% inflation rateReal price increase for solvent of 1% annuallyReal price increase for disposal of 4%

annuallyDiscount rate of 6%

Measure Waste Generation for Option 2

New solvent

Non-hazardous waste disposal to sewer

CLEANING PROCESS

4,000 gallons

4000 gallons

Assumptions

5% inflation rateWaste solvent can be sewered at

negligible costDiscount rate of 6%

4000 gallons solvent at $4.60/gallon.$120 for training

Measure Costs Option 2

Outcome?

Comparing recycling to current practice, would save $81,317.23 over 10 years

Comparing material substitution to current practice, would save $75,702.02 over 10 years

What is Life Cycle Analysis?A tool to understand environmental impacts

associated with products, processes, and activitiesLCA is a systems approach to evaluating

environmental consequences of a product or process

It takes a “cradle to grave” or “cradle to cradle” perspective.

A systematic set of procedures for examining the environmental impacts of a product or service throughout its life cycle

Applications

Alternative Fuels/energy sourcesAlternative materials (Aluminum vs. Steel body,

Asphalt vs. concrete, wood vs. brick

Alternative processes (Corn-biomass ethanol)

Alternative products (cloth diapers vs. disposable diapers)

Alternative packaging (cans vs. tetra-packs)Alternative end of life management options

(recycle, incinerate, dispose)Environmental, economic tradeoffs