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Economic allocation: Examples and derived decision tree

Economic allocation: Examples and derived decision tree,10.1007/BF02978533,International Journal of Life Cycle Assessment,Jeroen B. Guinée,Reinout Hei

Economic allocation: Examples and derived decision tree   (Citations: 34)
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Goal, Scope and Background  In the recently published (Dutch) Handbook on LCA, economic allocation is advised as baseline method for most allocation situations in a detailed LCA. Although the Handbook on LCA aimed to provide a ‘cookbook’ with operational guidelines for conducting each step of an LCA, this was not completely achieved for the allocation step. The guidelines for allocation largely remained at the level of principles. This restricted elaboration of economic allocation may hamper application in practice. Therefore, this paper elaborates some examples applying economic allocation. Method  Two concepts are of particular importance when applying economic allocation: functional flow and multi-functional process. The definitions of these concepts are presented and discussed. The basic principle of economic allocation is that having determined the various functional flows of a multi-functional process, all other flows need to be allocated to these functional flows according to their shares in the total proceeds. Proceeds are based on prices and these are not always easy to determine for a process. A summary of possible solutions for different problems when determining prices is given. Results and Discussion  The examples presented focus on co-production and various recycling situations. All examples are hypothetical in order to avoid discussions on the data. The examples show that the prices of the functional flows determine the allocation results. It is of importance to have correct information on the relative prices of the functional flows at stake, especially whether they are negative or positive. Learning from these examples, we establish a decision tree for economic allocation. The decision tree is meant for identifying and handling multi-functionality situations starting from a defined (product) system. This decision tree is with minor adaptations also applicable to other allocation methods and has a more general value than for the economic allocation method only. Conclusions and perspective  The examples have helped us to establish a decision tree for handling the multi-functionality problem by economic allocation. The examples can be broadened to other materials and allocation situations. We would encourage others to provide other examples and experiences as we expect that these will help to further improve and refine the guidelines and decision tree for economic allocation in future.
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    • ...Life-cycle assessment (LCA) is a widely accepted methodology for assessing the environmental impacts of consumer goods (Heijungs and Suh 2002; Guinée, Heijungs, and Huppes 2004)...

    Stéphanie V. Engelset al. Toward a Sustainability Label for Food Products: An Analysis of Expert...

    • ...If “avoiding” allocation is not possible, the ISO series recommends using methods that reflects the physical relationship such as mass and energy content or use other relevant variables to allocate, such as economic value of the products, which is similar to the cost allocation methods in managerial accounting (Guinée et al. 2004)...

    Lin Luoet al. Allocation issues in LCA methodology: a case study of corn stover-base...

    • ...Bergsma et al. (2006), the developers of the indicator, state in their report that life-cycle assessment (LCA), as described in the ISO standards (ISO 2006a, b), has been adopted for the calculation of this indicator...
    • ...The basic format for calculating the GHG reduction is, thus (Bergsma et al. 2006):...
    • ...Bergsma et al. (2006) as they are without discussing what type of LCA methodology would be best to address the topic of bioenergy vs fossil energy...
    • ...In some cases, the part of CO2 fixated but released as CH4 may have been manually corrected by taking the full amount of biogenic CH4 into account, but this is not explicitly reported (Bergsma et al. 2006)...
    • ...Later elaborations by, e.g., Guinée et al. (2004) have provided more precise guidance, e.g., by stressing the importance of identifying the functional flows for every process, and by determining which processes should appear as multifunctional process in a flow diagram...
    • ...& Substitution on the basis of an avoided, hypothetical process & Partitioning on a physical basis, in this case, on the basis of the carbon content (C-content) of the functional flows & Partitioning on an economic basis using the shares in revenues (market prices × quantity of functional flows; see Guinée et al. 2004) & The surplus method, which means ignoring additional functional flows that are not strictly ...

    Jeroen B. Guinéeet al. A greenhouse gas indicator for bioenergy: some theoretical issues with...

    • ...Aluminium window frames were used as an example for economic allocation by Werner and Richter (2000 ), see also Guinée et al. (2004)...

    Walter Klöpffer. Experiences with the critical review process of aluminium LCI data

    • ...Centre 2007), our calculations are based on economic allocation rules (Guinée et al. 2004)...

    Nellemieke Mohret al. Environmental impact of thin-film GaInP/GaAs and multicrystalline sili...

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