Journal of Cleaner Production 15 (2007) 1469e1481 www.elsevier.

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Positive and negative feedback in consequential life-cycle assessment

Bjorn A. Sanden*, Magnus Karlstrom
Division of Environmental Systems Analysis, Department of Energy and Environment, Chalmers University of Technology, SE-412 96 Goteborg, Sweden Received 6 July 2005; accepted 23 March 2006 Available online 30 May 2006

Abstract In this paper we develop a typology of consequences that can be used for environmental assessments of investment in technologies. As an illustration we estimate how the inclusion of different causeeeffect chains could affect the estimated greenhouse gas emissions resulting from buying and using a fuel cell bus today. In contrast to earlier studies, we include causeeeffect chains containing positive feedback from adoption (e.g. economies of scale and learning). We discuss how our ndings affect the usefulness and limitations of consequential life-cycle assessment (LCA) and how LCA methodology in more general can be used to support strategic technology choice. A major conclusion is that environmental assessments of investment in emerging technologies should not only include effects resulting from marginal change of the current system but also marginal contributions to radical system change. 2006 Elsevier Ltd. All rights reserved.
Keywords: Fuel cell; Life-cycle assessment; Consequential; Experience curve; Climate change

1. Introduction Mitigation of climatic change while sustaining worldwide economic growth will require a radical reduction of the greenhouse gas (GHG) intensity of energy and transport systems [1]. As a consequence, there is a need for development and large-scale diffusion of a range of new technologies. Different technologies are competing for investments and environmental arguments are crucial to legitimise the money spent by governments and rms. To gain credibility, arguments are often supported by environmental assessments of the merits and drawbacks of different options. The quality and validity of the used assessment studies could therefore be of great importance. Life-cycle assessment (LCA) is a methodology that is frequently used to assess products and technologies and it strives

* Corresponding author. Tel.: 46 31 772 8612; fax: 46 31 772 2172. E-mail address: bjorn.sanden@chalmers.se (B.A. Sanden). 0959-6526/$ - see front matter 2006 Elsevier Ltd. All rights reserved. doi:10.1016/j.jclepro.2006.03.005

to give a complete picture of the environmental impact. However, standard LCA methodology is developed to answer questions about environmental impacts of the current (or historical) production and use of one unit of a product or minor product or process changes. When this methodology is used (unmodied) to provide answers to questions about strategic technological choices, i.e. not decisions that aim at improving a process within an existing technological environment, but with the long-term goal of changing large-scale technological systems, the result is of little value and in the worst case interpretations of the result may be grossly misleading. Within the LCA research community, the standard methodology has earlier been criticised for not being designed to support decisions about where to go in the future [2e7]. Consequential (or change-oriented) LCA that investigates the likely environmental consequences of a decision has been proposed as a more appropriate method [4]. However, Ekvall [8] concludes that consequential LCA has several limitations in describing effects of change. Ekvall as well as de Haes et al. [9] see the need for new hybrid methodologies where LCAs

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are linked to and combined with other types of assessment tools. This raises the question of what consequences or causee effect chains to include in such hybrid methodologies. In this paper we develop a typology of consequences that can be used for environmental assessments of an investment decision. In particular, which we believe is a novel idea in this context, we include effects resulting from positive feedback (or increasing returns to adoption). As an illustration we estimate how the inclusion of different causeeeffect chains could affect the estimated GHG emissions resulting from buying and using a fuel cell bus today. To make a quantitative assessment of effects resulting from positive feedback from adoption we use scenarios and experience curves. We discuss how our ndings affect the usefulness and limitations of consequential LCA, and what assessment methodologies in general need to be considered to support strategic technology choice. 2. LCA typology An assessment should contribute meaningful information to a specic situation. For every assessment there is a need to consider the intended application of the result [10]. In the LCA methodology research community there has been an increasing understanding that the application of the result of an assessment has consequences for methodological choices, and in order to clarify when different methodological choices are suitable, several attempts have been made to classify LCAs into different types [5e7,11]. In particular, a distinction between two perspectives has been highlighted. Lately, the distinction has been claried but some confusion still prevails. The rst type is LCAs aiming at mapping the environmental impacts that a product can be made accountable for, so called accounting [2], descriptive [7], retrospective [11] or attributional LCA [8]. The second is LCAs aiming at describing the consequences of changes, so called changeoriented [7], prospective [11] or consequential LCA [8]. The rst perspective is assumed to look backwards at effects that have occurred. The latter perspective is assumed to be forward-looking. A problem with this subdivision is that at least two dimensions are lumped together. The rst dimension is time. We would simply suggest that some studies are retrospective, looking back at historic environmental impact, while others are prospective, looking forward at future environmental impact. To be more general, it is a matter of specifying a point in time, or a time period, for which the study is valid, be it 1985, 2005 or 2025. In this respect, retrospective studies and prospective studies only differ with regards to uncertainty (we know more, but not everything about the past). The second dimension is responsibility, i.e. how the responsibility for environmental impacts is shared between the object of study and other products and services. A product can be looked upon as being part of a given situation or steady state. The product is responsible for a share of the total environmental impact in the state e a share is attributed to the product. In this case, it is reasonable to use average data for inputs. Therefore, LCAs of this kind, made for different products, are additive in principal.

Alternatively, it is possible to apply a change-oriented or consequential perspective, i.e. the addition of a unit of the product changes the state. The product is then responsible for how the environmental impact is affected when the state is changed. In this case it is reasonable to use marginal data. We follow Ekvall [8] and Rebitzer and co-workers [12] and use the terms attributional and consequential LCA for these two types.1 In our terminology, the traditional accounting type of LCA is attributional and retrospective (or relevant for the present state, 2005, and recent historical states). However, it is also possible to investigate how a technology or product would perform in a different steady state, for example a future state (2025), a historic state (1985) or a ctional stylised state characterised by changed performance and a different technological environment, e.g. different background systems [13]. Thus attributional LCA can be prospective, i.e. prospective studies do not have to be comparisons of changes on the margin of the current state but could also be comparisons of products and processes in future steady states. Even though consequential LCA is commonly used to investigate the future environmental consequences of a decision today (2005), in principle, it would be possible to use a retrospective change-oriented perspective to track the environmental consequences of a historic choice (e.g. in 1985) or to speculate about the consequences of a future choice (e.g. in 2025). Since we here are concerned with strategic technology choice we nd it useful to suggest one more distinction: that between product and technology LCA, where the former seeks to investigate the impact of a specic product, plant or production process, while the latter is an assessment of a more general technology. For the former, data valid for a specic situation, or state, could generate a useful result, while for the latter the impacts under many different and more general circumstances are of greater value. For consequential technology LCA a broader spectrum of causeeeffect chains are of interest than for consequential product LCA. In our view both attributional and consequential technology LCA could be used to support decisions on strategic technology choice. Prospective attributional technology LCAs could be used to analyse the general performance of a technology under different circumstances. The key methodological problem is to analyse the technology in a relevant state or scenario of consecutive states [12,13]. In this paper we wish to demonstrate how the environmental consequences of a single decision today could be assessed. For this we need a consequential technology LCA. Then the key methodological problem is to select which consequences or causeeeffect chains should be included and nd ways to quantify their environmental impact.2

We have earlier used the terms state-oriented and change-oriented [13]. The differentiation between the time and responsibility dimensions makes it possible for us to use the terms attributional and consequential in a slightly different way than for example Rebitzer and co-workers [12, p. 705]. 2 In this paper we do not attempt to go beyond the inventory phase. We only investigate what emissions an action leads to, excluding any further impact assessment.

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3. A typology of consequences A rst order of consequences is the proportionate relations between the use, production and waste handling of a product (one functional unit) and environmental impacts (e.g. emissions). These are causeeeffect chains made up of physical ows. A second order of consequences and a more indirect type of effects that takes into account the economic ows related to the physical ows has been identied. In the literature on consequential LCA it has been observed that an increased demand on the margin does not have to imply that one more unit of the demanded good is supplied (see for example Ref. [14]). Instead increased demand for an input that is constrained will induce the production of a substitute. As a consequence, marginal data (the last unit produced) differ from average data. An increased production could also affect the demand for the product and related products [14]. In this way consequential LCA has started to bring in elements of equilibrium thinking and negative feedback mechanisms stemming from constrained (or xed) supply. These types of effects are propagated by a price mechanism controlling supply and demand relationships. Since this mechanism is based on constraints and negative feedback, the assessed action leads to a shift to a new equilibrium between demand and supply of different goods and services. The marginal environmental effect in this sense is the difference between the old and the new state of equilibrium. It is not only production capacity, or the supply ow, that can be constrained. Also stocks of resources are constrained. We therefore suggest that one could argue for that the demand for a limited resource leads to the use of less limited resource (or back-stop resource) on the stock-margin, albeit delayed in time. As in the case of arguments grounded in equilibrium models this argument presumes that preferences and available technologies are xed. While the causeeeffect relationships based on models of equilibrium between supply and demand are borrowed from neoclassical economics, we suggest that a third order of consequences could be brought in from theories of technical change.3 These effects depend on the cumulative build-up of stocks and structures, such as physical structures, institutions and actors and networks, leading to altered availability and cost of technologies and to changed preferences [17]. First, an investment in a technology could change physical structures such as manufacturing equipment and physical infrastructure. This will affect future costs and have implications for future technology choice and thus future environmental impact. Second, a technology is also part of an institutional system, or rule system that guides actions. There are cognitive as well normative rules. Cognitive rules in the form of explicit and tacit knowledge are decisive for technical change.

Increasing the stock of knowledge and experience could have implications not only for the further development of the technology in a specic application. It could also affect the use of the technology in other applications. Knowledge generation occurs in all parts of the life cycle and includes different elements of technology development, learning by doing and learning by using. Knowledge propagates through different actors, some taking active part in the production chain such as manufacturers and users, others acting on a more general level such as universities. The adaptation of hard normative rules such as laws and regulations are often necessary for the successful adoption of a new technology and normally comes as a result of early investments. Inuencing soft cognitive and normative rules such as beliefs, visions, attitudes and norms is also a prerequisite for change. Finally, all cognitive and normative rules as well as physical structures are changed by actors and networks of actors, which themselves evolve with technology adoption to form advocacy coalitions [18,19]. The investment in a new technology often affects these systems in ways that are benecial for further investments in the technology. In the literature on technical change such positive feedback mechanisms, or positive returns to adoption, have been given a prime role in the development of a new technology.4 On the producer side, economies of scale, learning by doing and incremental product development lead to increased performance to cost ratio when more systems are produced. On the user side, learning by using, decreased uncertainty over cost and performance, and economies of scale or user networks will decrease the hesitation to invest in a new technology and lower the cost and increase the benets of using it. Over time, technical systems, regulations, the educational system and political power will be adapted to the new technology. In this way early investments in a radically new technology can set in motion a self-re-enforcing process towards radical system change. Thus, the environmental effects of the investment can go far beyond the direct effects and marginal equilibrium shifts. 4. An illustrative case: GHG effects of a fuel cell bus investment We have selected fuel cell buses as a case since it is an immature technology that is linked to many surrounding systems. This creates a rich environment for demonstrations of causal relationships. In addition, several LCAs, in this area often termed well-to-wheel studies, have been made to quantify the environmental differences between different vehicle and fuel congurations, and results tend to vary a great deal [23e35]. Results differ between studies depending on assumptions on fuel supply systems, performance of propulsion systems and vehicle types. These are in turn dependent on time frame and geographical scope. In most studies a fairly short
4 Overviews of different positive feedback mechanisms have been published elsewhere [20e22].

See for example Freeman [16] for an overview of the economics of technical change and Bijker et al. [17] for a seminal collection of articles on sociology and history approaches to the study of technical change.

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time-perspective is chosen as well as a specic geographical setting. This limits their usefulness as tools for strategic technology choice and guidance for long-term radical change of the transport system. One source of confusion is that in most cases, it is not clear what type of LCA is conducted, if the studies are based on an attributional (state-oriented) or consequential (change-oriented) perspective, and it is seldom clear on what grounds specic states and consequences have been chosen. In this section we take a consequential perspective and try to assess the importance of different causeeeffect chains leading from an investment in fuel cell buses today to changed GHG emissions.

4.1. A brief system description and rst order effects Fuel cell propulsion systems are in a pre-commercialisation phase and they have mainly been developed for demonstration vehicles. In 2002, only 200 light-duty vehicles and approximately 30 fuel cell buses had been built and operated worldwide [36,37]. To reach a commercial phase, fuel cell systems have several hurdles to overcome. The cost of solid polymer fuel cells (SPFCs), the preferred fuel cell for traction purposes, is large compared to the current cost of internal combustion engines and according to US Department of Energy the life/reliability characteristics of fuel cell technologies have not been veried satisfactorily [38]. Hydrogen is the preferred fuel in SPFC systems since hydrogen has a very high chemical reactivity and close to zero emissions during use. However, there are problems associated with developing hydrogen as a fuel, such as high production costs, lack of infrastructure and standards, concerns about safety and uncertain consumer acceptance and a need for more cost-effective storage technology [38]. Hence, the development of a large-scale fuel-cell-hydrogen system will require radical system innovation and take considerable time. The fuel cell propulsion technology is clearly embedded in a larger fuel-vehicle-transport system and it is the conguration of the whole system that determines the GHG emissions. To track the consequences of an investment in the fuel cell propulsion technology we need to understand how the technology is embedded in and linked to different systems (Fig. 1). The contribution from fuel cell production and waste handling is not insignicant. Pehnt [39] presents an LCA of fuel cells that includes the manufacturing of fuel cell stacks and the use phase of a fuel cell vehicle using hydrogen from natural gas. With no recycling of platinum group metals (PGM), the current German electricity mix and a driving range of 150,000 km/ year, the stack production was responsible for 23% of total GHG emissions, while for 75% recycling of PGM and electricity from hydropower the gure decreased to 10%. Nevertheless, the life-cycle emission of greenhouse gases of hydrogen-powered fuel cells is mainly dependent on how the hydrogen is produced. Hydrogen can be produced from different feedstock (fossil hydrocarbons, biomass and water) and different energy sources (hydrocarbons, nuclear energy and solar energy) using different technologies such as steam

reforming, gasication, electrolysis, thermolysis or photolysis. Ogden [40] makes a distinction between short-term options, such as steam reforming of natural gas and electrolysis using conventional electricity production, and long-term options with zero net CO2 emissions such as gasied biomass and water split by various renewable energy sources, nuclear power or even coal if large-scale CO2 sequestration is feasible. The GHG emission from different well-to-pump hydrogen supply system varies a lot. Wang [41] estimates that the GHG emissions of a fuel cell vehicle relative to a reformulated gasoline vehicle vary from 100% reduction to a 60% increase depending on hydrogen fuel production pathway. A well-to-wheel study also takes into account how efciently the fuel is used in the vehicle. Emissions are normally specied in relation to one vehicle kilometre (vkm). As a consequence changes of transport demand are ignored and the vehicle type and driving cycle are kept xed for all alternatives. This is practical but perhaps a bit misleading since new propulsion technologies could allow for new vehicle designs and concepts and change how vehicles are used and combined to satisfy a transport demand and even the transport demand could be affected.5 New functions could also be added. A vehicle with fuel cells and an electrical engine could for example be plugged into the electricity grid to supply peak power. Changing the vehicle design could also imply effects from changed vehicle production and waste handling. An estimate of rst order effects of buying a fuel cell bus instead of an advanced diesel bus today (assuming similar bus types and use and disregarding differences in emissions from the production of the propulsion system) is given by Karlstrom [44]. The emissions of CO2-equivalents for a fuel cell bus running on hydrogen produced from steam reforming of natural gas and an advanced diesel bus are estimated at 896 g/vkm and 1255 g/vkm, respectively. A rst order effect according to this estimate is thus a reduction by about 360 gCO2-eq/vkm. 4.2. Second order effects: constraints, negative feedback and equilibrium adjustments 4.2.1. Constrained capacity and market adjustments on the supply side The main impact consequential thinking has had on LCA practices so far is the occasional, and often arbitrary, use of marginal data for inputs. Limited or xed supply of an input (or production factor) leads to a different effect on the margin than what is attributed to the functional unit in an attributional LCA [45].
5 Pehnt [42] provides a summary of the main differences with regards to energy use between fuel cell propulsion systems and conventional ICE, which result in different performances under different operating conditions. Johansson and Alvfors [43] simulated the fuel consumption of a fuel cell bus and a diesel bus of similar weight operated in the CBD14 drive cycle and the real bus route 85 in Goteborg, Sweden. They demonstrated that the reduction of fuel consumption that was reached by using the fuel cell bus differed. For the CBD14 cycle and bus route 85 the reductions were 33% and 37%, respectively.

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Hydrogen production

Fuel cell and drive train production

Fuel cell & drive train use

Fuel cell and drive train waste handling

Vehicle production

Vehicle use

Vehicle waste handling

Transport

Fig. 1. The fuel cell propulsion technology is linked to and embedded in several other systems.

Electricity production provides a standard example. A fuel cell bus in Sweden that runs on hydrogen produced by electrolysis uses electricity from the Nordic electricity grid. This is mainly produced from hydro- and nuclear power. However, hydro- and nuclear power capacity is constrained. On the margin, other electricity sources will be applied to supply the last unit of electricity that is required for the electrolysis. Coal power is normally assumed to be this marginal technology. In principle this could be viewed upon as a matter of price elasticity. An increased demand raises the price of electricity. This is compensated by increased production from different sources, increased efciency of energy use or decreased demand for energy services from other end uses. The mix of effects depends on the price elasticity of the different measures. Hydrogen produced from bioenergy provides a second example. Currently, bioenergy production is not severely constrained but with increased use, land area for bioenergy production is likely to become a limiting factor. In this case, biofuels could lay hands on biomass that otherwise could have been used to replace coal for heat and/or electricity production. In this case the marginal effect would not be near zero GHG emissions but the emissions from coal combustion, which could be higher than the replaced emissions from a diesel bus. A third example is platinum that is used as a catalyst in SPFC. An increased demand for platinum would not necessarily imply more mining of PGM mineral. It could also induce a price increase that partly stimulates more platinum extraction but also stimulates recycling and reduces the platinum demand from other sectors. If other materials replace platinum in these sectors, the marginal effect is partly the increased production of these other materials. The main idea here is that a constrained input is replaced by a marginal input that is not constrained (see Refs. [14] and [45] for discussions on marginal input and marginal technology).6
6 In the case of decreased use, the marginal technology is the technology that is rst removed, that is, a technology that is not xed.

4.2.2. Constrained stocks of inputs The examples given above relate to capacity constraints. We would suggest that also stock constraints can generate similar effects. One could argue that the use of natural gas today decreases the natural gas resource stock and when resources are depleted or too expensive to extract, coal, which is less constrained in terms of resource availability, will be used instead of natural gas. A necessary assumption for this argument is that natural gas is so limited and desirable that it is depleted at a point when coal is still in use. This assumption seems plausible. CO2-stabilisation scenarios above 450 ppmv imply cumulative emissions above 630 Gt C (1991e2100) while the resource base of conventional oil and gas contains only about 500 Gt C [46]. A level as low as 450 ppmv CO2 is considered to be a very tough target [47]. A stabilisation at 550 ppmv implies cumulative emissions of 870e990 Gt C [46]. Thus, if natural gas or oil is used to replace renewables, which indenitely could replace coal, the marginal effect on cumulative CO2 emissions is likely to be the emissions associated with coal conversion. 4.2.3. Second order effects on the supply side: some conclusions In conclusion, the selection of a marginal primary energy source is somewhat arbitrary. It is possible to nd arguments that coal is used on the margin independently if hydrogen is produced from steam reforming of natural gas or electrolysis. The hydrogen fuel cell bus would replace a diesel bus that, following the same line of argument, also could imply more coal use on the stock-margin.7 Depending on different conversion efciencies, the exact GHG emissions would differ somewhat. The bottom line is that well-to-wheel energy efciency (with wide system boundaries) is a good indicator of the GHG
7 This assumes a constant set of technological options and costs. Assuming a different development it is possible to assume other marginal technologies. Wind could be a marginal electricity technology in the current system and solar could replace coal on the stock margin if other scenarios are assumed.

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emissions in most cases. However, if energy from a renewable source (not stock constrained) that has not reached a capacity limit (not capacity constrained) is used, then it is difcult to nd arguments for not using the GHG intensity of its specic fuel cycle. For input materials of specic interest that are a part of the technology in focus, such as platinum in the case of SPFC, it could be relevant to make a closer analysis of the causeeeffect chains due to specic market relationships. 4.2.4. Constrained budgets and market adjustments on the demand side Constraints and negative feedback mechanism are not only at work on the supply side but could also affect the demand for different kinds of vehicles and transport. Such effects are seldom taken into account in LCA, since LCA are normally concerned with the environmental impact that can be associated to one unit of a product. However, the investment in a fuel cell bus could have environmental consequences that are propagated on the user side and affect emissions of the vehicle eet. The transport system consists of several parts and their relationships. The consequences of an investment or a policy could inuence the behaviour of the system in a counterintuitive way, due to feedbacks and synergy effects. Effects on factors such as total demand for transport, travel patterns, modal changes, load factors, vehicle stock changes and speed could inuence the GHG emissions. Transport models that describe such effects and that are linked to models of emissions are reviewed by IPCC [48] and the US Department of Transportation [49]. Here we will only consider some basic relationships. An important class of such effects are related to constrained budgets. An investment in an expensive fuel cell bus could result in less or postponed investments in new less polluting conventional buses and thus affect the environmental impact of the bus eet negatively. Since prototype fuel cell buses currently cost in the order of ve times more than a diesel bus [44] this effect is not insignicant. A hypothetical example: If buses that are 10% more energy efcient costs 10% more than a less energy efcient alternative, then the money saved by not buying the fuel cell bus would be enough to buy 50 energy efcient buses instead of the less efcient alternative. This would in turn save ve times more GHG emissions even if hydrogen were produced with zero GHG emissions. This effect is normally not included as a part of the LCA but is a natural component of a cost-benet analysis that the LCA could be part of. Nevertheless it could be included as a consequence in consequential LCA. One way to avoid crowding out of investments due to the constrained budget of the bus company is to increase the income to the bus company by increasing the price of bus transport. If the cost is taken by a municipality with a limited budget, it could result in less bus kilometres and thus in lower emissions if the load factor is increased. However, it is likely that it will also result in fewer bus kilometres travelled due to the decreased service level. Some of this will result in less transport, while some of the transport demand instead will

be transferred to a different transport mode, e.g. cars. This could increase total emissions. Alternatively, the increased cost could be transferred to bus passengers. This would also result in partly less transport and partly a shift of transport mode. This effect is a matter of price elasticity of transport and cross-elasticity between buses, cars, bicycles and other transport modes. To exemplify the effect of modal shift, assume that a city buys fuel cell buses instead of diesel buses. Assume further that the average life cycle GHG emissions for cars are approximately 195 g/vkm and the occupancy rate of cars and buses are 1.4 and 17, respectively. If the cross-elasticity of car travel demand with respect to bus fares is 0.09 [50], and the bus fares are doubled to cover some of the losses from more expensive buses, the GHG reduction of shifting from advanced diesel buses to fuel cell buses is decreased from 360 gCO2-eq/vkm (see Section 4.1) to about 150 gCO2-eq/vkm.8 The argument of demand adjustments can be taken beyond the micro economic price elasticities used above.9 If more money is spent on bus fares, cars and fuel, less will be spent on other goods, implying less emissions from those activities, and vice versa. This leads us out of micro economic elasticity thinking to a macro economic effect and the GHG emission intensity of the entire economy [8,51,52]. A euro or dollar not spent on one thing must be spent on something else.10 What is the true GHG reduction from buying or not buying a specic product in a closed economy? 4.3. Third order effects: learning, positive feedback and system change In the previous section we were concerned with effects that resulted in a shift to a new equilibrium between supply and demand in the short term, in most cases controlled by a price mechanism. Since the effects emerge due to constraints and negative feedback the result of including them is normally just a moderation of the original LCA result and the effect is reversible.11 In contrast, effects leading to positive feedback have the power to change systems radically and irreversibly. As a consequence, they can have a larger effect on the result of the assessment. 4.3.1. Quantifying the technology learning effect LCAs are quantitative assessments. A critical question is if effects magnied by positive feedback can be quantied and compared to other effects. Many of the cumulative effects
It is assumed that no corresponding reduction of bus roundtrips takes place. 9 There could also be non-monetary effects of a similar kind. It is possible to imagine a psychological effect. If I buy an environmental friendly car I can use it more since it does not cause as much harm. In this case it is not the budget constraint that is relaxed but conscience constraints. This effect would lead to emissions that are larger than what an LCA of one functional unit would indicate. 10 This is sometimes referred to as a rebound effect. 11 One exception that is not reversible is the effect resulting from constrained stock of an input.
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stemming from positive feedback cannot be quantied, but the learning and scale effect of increased adoption can be quantied in terms of cost reductions by using an experience curve. This could be translated into a realisation of a scenario where future emissions are avoided. Such an assessment would require a two-step procedure. First, the potential for avoided future emissions of large-scale adoption of the technology is estimated. Second, the contribution from one investment (one functional unit) to the realisation of the future potential is assessed. To estimate the potential for avoided future emissions X (ton CO2-eq.), at least one baseline scenario without the studied technology has to be constructed. This should then be compared to scenarios where diffusion of the studied technology results in lower emissions. These scenarios would be characterised by nal saturation levels (nal technology potential) and the speed of diffusion. A probability parameter p (-) could also be related to each scenario. We do not elaborate on how to estimate this parameter here, but keep it as an unknown. As will become evident in the example in the next section, this is reasonably satisfactory since we are here only interested in estimates of orders of magnitude and not precise gures. There is probably no single best procedure for allocating a share of the future emission reduction to a single investment. Here we suggest one procedure that we think is intuitively appealing. If a certain amount of investments is needed to realise learning and scale economies to an extent that the cost of the emerging technology is bought down to a competitive level, the single investment could be credited a share of the emission reduction in proportion to its share of the total required learning investment. The required learning investment could be estimated with an experience curve. The experience curve is an empirical relationship between cumulative production S (e.g. kW for fuel cells) and unit cost c (US$/kW for fuel cells) that has been observed for a number of technologies [53]. Cumulative production leads to lower costs through learning and scale economies.12 The experience curve is typically expressed in terms of a progress ratio rP (-), i.e. the relative cost reduction for each doubling of cumulative production. A progress ratio of 0.8 implies a cost reduction of 20% for each doubling of cumulative production. The future unit cost can then be described in terms of future cumulative production, current unit cost c0 (US$/kW), current cumulative production S0 (kW) and an experience index b. c c0  b S S0 1a

where ln rP : 2 ln 2 Early in a technologys life when only a few units have been produced it is difcult to establish an experience curve. Then it is advisable to decompose the technology into different parts and procedures and search for recorded progress ratios for similar parts and procedures (see for example Ref. [54]). For each large-scale potential future market that is identied in the rst step, one needs to establish a target cost c1 (US$/kW), i.e. the cost when the technology becomes competitive on the large-scale market. The cumulative production S1 (kW) that is required to reach that target cost can be calculated from Eq. (1b). The total extra cost C1 (US$), or learning investment that is required to buy down the cost of the technology can then be calculated from b
S Z1 0

C1

cS c1 dS

b c 1 S1 : 1b

The cost C1 of buying down the unit cost of the technology is then the cost for realising the low emission scenario and avoid emission X1. The extra cost for investing in one unit of the new technology at present is c0 c1. The potential future avoided emissions can then be allocated to a current investment of one unit taking the probability factor p into account x0 c0 c1 1 b c0 c1 X1 p X1 p ton CO2 -eq:=kW: b S1 C1 c1 4

If the amount of cumulative production S1, which is required to make the technology competitive, is small in comparison to the future potential market and thus to the potential to reduce emissions X, this technology learning effect can be large if the probability of realising the scenario is not too small. Early investments, when c0 still is large in comparison to c1 are given a larger share of future emission reduction. When competitiveness is reached, technology learning effects can no longer be put down to an investments credit. 4.3.2. The technology learning effect and the fuel cell bus To exemplify the methodology, let us once again consider the fuel cell bus and hydrogen fuel. First, we construct two diverging background scenarios of the total energy system to create a context for bus scenarios. A low cost (business-as-usual) scenario of the world energy system is a coal scenario as sketched in Fig. 2. In most scenarios of future energy systems (for example most of the SRES scenarios developed for the IPCC [47]), it is assumed that population growth and economic growth will create an increased demand for energy that is moderated by energy efciency gains, resulting in an annual demand for primary energy at about 1000 EJ towards the end of this century. Over this time period oil and gas resources will dwindle.

 1=b c S S0 c0

1b

The experience curve that describes how total costs decrease with cumulative production, is a generalisation of the learning curve, which describes how labour costs decrease with cumulative production.

12

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1200 Unknown 1000 800 Coal Natural gas Oil Bio energy 600 400 200 0 1850 Nuclear and intermittent renewables

EJ/year

1900

1950

2000

2050

2100

2150

2200

year
Fig. 2. A business-as-usual scenario of the global energy supply system. When oil and gas resources dwindle, coal comes to dominate the energy system. Ultimate oil resources are put to 17,200 EJ (3 trillion barrels), ultimate gas resources to 25,000 EJ and coal to 130,000 EJ [46,55]. Bioenergy is limited to 100 EJ/year and nuclear, hydropower and intermittent renewables shows a slight increase to 70 EJ.

Bioenergy supply could possibly increase to 100 or 200 EJ and electricity from intermittent renewables could take a share of perhaps 20% of the electricity market. If advanced nuclear (such as fusion or breeders) and hydrogen from renewable energy sources are not available the remainder would be lled up with coal converted into electricity and synthetic fuels. Finally, towards the end of the 23rd century also coal resources will dwindle. The CO2 emissions of this business-as-usual scenario is staggering. An alternative future is depicted in Fig. 3. Instead of the future based on conventional coal, a hydrogen option is realised. The hydrogen could be produced from water and solar energy (and other intermittent renewables), decarbonised coal (with CO2 sequestration) or possibly nuclear energy. A fuel cell scenario in the bus sector is illustrated in Fig. 4. Global bus travel more than doubles and pass 20,000 billion pkm/year during the second half of the century [56,57]. The FC bus stock grows from 30 buses in 2002 to market dominance after 2050. The market growth is rapid, initially about 30% per year. Nevertheless, FC buses do not have a substantial impact on the market until after 2030, and consequently the impact on emissions is small up to this point. The major impact comes after 2050, when oil and gas resources are on decline. As a consequence and in accordance with the above outlined scenarios, it is possible to approximate the impact of FC hydrogen buses as the avoidance of let us say 100 years of the use of synthetic fuels from coal. If we assume that the fuel in the business-as usual scenario is synthetic diesel produced in chemical factories, where excess carbon dioxide is captured and sequestered, an emission factor corresponding to current diesel buses can be used. Following Shafer and Victor [58] we use an average emission factor of 50 gCO2-eq./pkm.13 The avoided emissions in the fuel cell scenario then amount to in the order of 100 Gton CO2.

If we further assume an initial cost of US$ 2000/kW, an ini tial cumulative production of 30 FC buses a 200 kW each and a progress ratio of 0.8, a target cost of US$ 150/kW is reached after a cumulative production of about 20 million kW of fuel cell stacks.14 This corresponds to 100,000 large buses. If we assume a load factor of 15 persons/bus and an annual bus driving distance of 50,000 km this in turn corresponds to a market of some 75 billion pkm or a tiny fraction of the global bus transport market. In the scenario in Fig. 4 the required amount of cumulative production of buses is reached in 2025, i.e. before the main growth phase. If we use Eq. (4), the avoided future emissions that can be allocated to an investment in a fuel cell bus today becomes 25 million ton CO2 per bus or 50 ton CO2/vkm (assuming 500,000 vkm/bus over a lifetime of 10 years). This gure is more than 100,000 times larger than the short-term rst order CO2-emission reduction effect of 360 gCO2-eq./vkm for the switch from advanced diesel to fuel cells fuelled by hydrogen from natural gas. Even if the probability factor is only 1% the long-term technology learning effect is still more than 1000 times larger than the short-term effect.15 The technology learning effect could be even larger if we take into account that the scope of learning could extend outside the bus application. Fuel cell stacks for buses are presumably not very different from those produced for cars. The avoided emissions from ve billion cars16 run on synthetic fuels from coal for 100 years amount to 750 Gton CO2 if we assume an annual driving range of 15,000 km and
The cost of SPFC manufactured in small quantities around the year 2000 has been estimated at about US$ 2000/kW [54,59], compared to the current cost of internal combustion engines of US$ 25e35/kW for cars and about US$ 150/kW for buses. The costs of mass-produced SPFC systems are difcult to predict. Carlson et al. [60] estimated the cost of fuel cell systems using manufacturing costs analyses at $ 195e325/kW if 500,000 units/year were produced and Tsuchiya and Kobayashi [54] used an experience curve approach to estimate the cost at US$ 15e145/kW after ve million units produced. 15 One percent is as an arbitrary gure, but a gure that we (the authors) intuitively (based on our experience and beliefs) consider to be on the lower end. 16 European car density for 10 billion people [57].
14

13 Current recorded emission factors vary considerably between different regions mainly because of varying load factors.

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1200 Hydrogen (from solar, nuclear or coal with carbon sequstration) 1000 Coal Natural gas 800 Oil Bio energy 600 Nuclear and intermittent renewables

1477

EJ/year

400

200

0 1850

1900

1950

2000

2050

2100

2150

2200

year
Fig. 3. A hydrogen scenario of the global energy supply system. During the rst half of the 21st century hydrogen use would increase by 30% per year to reach a signicant share after 2050.

100 gCO2-eq./vkm for a future car.17 The ultimate limit of the scope of learning is that commercialised fuel cells are a prerequisite for the whole hydrogen economy. As depicted in Figs. 2 and 3 the total CO2-credit for avoiding the coal option is about 9000 Gton CO2. The future potential is key for this argument. If there is anything that limits the potential of the assessed technology the future potential emissions reduction must be lowered accordingly. For SPFC, platinum availability could be such an issue. The development of a eet of ve billion fuel cell cars is likely to require an annual platinum demand in the high growth period (2040e2070) that exceeds current mining rates by a factor of 10 or more and the total amount of required platinum metal exceeds the reserve base even if very low platinum loadings are reached [61]. An interesting issue is if the scope of learning can be extended to other fuel cell technologies that do not require platinum. An intriguing question is if SPFC could act as a bridging technology that could pave the way for a fuel cell technology with even greater potential or if it could act as dead-end technology that could lock out fuel cell technologies with greater potential [15,21,22,62]. In conclusion, it is inherently difcult to assess the effects of positive feedback mechanisms since they make the world unstable and evolving far away from equilibrium. In principle, any action can set in motion a process that changes large-scale events (the buttery effect Lorenz (1972) cited by Hilborn [63]).18
17 It should be noted that power train of the car is less expensive (in the order of US$ 30/kW). To reach such a low cost would require a cumulative production of in the order of 7 billion kW of fuel cells or 35 million buses or 140 million cars if an initial volume of 30 buses (200 kW) and 200 cars (50 kW) and a progress ratio of 0.80. 18 Following this reasoning one investment could change the course of history and thus not only be credited for a share of a future emission reduction but the whole reduction in a particular scenario. However, the probability that a particular single investment is this decisive is likely to be very low and completely unknowable. In addition, one could argue that the following investments are necessary for the rst to have this impact. The advantage with the proposed method in Section 4.3.1 is that it relies on an empirically observed relationship between investments and economic performance and it does result in a large allocation of future emission reductions to the rst seminal investments in a new technology.

Moreover, the result derived in this section is very sensitive to changes in some parameters, in particular the progress ratio. However, we believe that we have demonstrated here that if dynamic learning and scale effects are not taken into account at all in assessments of emerging technologies, the most important effect could have been left out. 4.3.3. Change and lock in of surrounding systems Fuel cells are not the only prerequisite for materialising carbon-free bus transport. The hydrogen also has to be produced in a carbon-neutral fuel cycle. Thus, learning and scale effects are equally important in areas such as solar energy or carbon sequestration. Investments in these technologies thus deserve a share of the future emission reduction. However, investments in fuel-cell technology could also induce change in different surrounding systems through positive feedback mechanisms. The production of hydrogen from multiple sources could be stimulated by the existence of a market for the hydrogen and transport demand could change due to the new options that the new technology makes possible. For a single actor it is difcult to support a complete new system including new propulsion technology and new fuel infrastructure. For radical change of interlinked systems one must accept that while being in an early learning phase the new system has to grow within the old system [64,65]. Hydrogen from natural gas is often viewed as a transition or bridging technology that allow for learning in hydrogen applications such as fuel cells. However, this also introduces the risk of getting stuck with the transition technology, that it becomes a dead end instead of a bridge, since positive feedback mechanism leads to technology lock in (for example due to sunk costs, political power of advocates and bounded rationality). What was once thought of as a stepping-stone becomes an island where technological development is stranded. In Section 4.2.4, the price elasticity of transport was discussed. It has been noticed that the long-term price elasticity is around three times larger than the short-term price elasticity [50]. The reasons for this are that long-term decisions are

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25000 Total FC buses 20000

Billion bus pkm per year

15000

10000

5000

0 2000

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2100

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Fig. 4. Future bus scenario with penetration of fuel cell buses (bus transport demand scenario is derived from Azar et al. [57] and Schafer and Victor [58]).

inuenced, such as the desirability for citizens to live near work if fuel costs are high and vice versa. If such long lasting structures (such as city plans) can be inuenced not only by prices but also by more technical aspects and the type of services a new transport technology can provide, very different futures can result from different investments (see Hulten et al. [66], Karlstrom et al. [67] and Elzen [68] for two inter esting approaches to address this issue). The possibility that a new technology bares the seeds of a radically different society, which was the case with the steam engine in the 18th century, the internal combustion engine in the beginning of 20th century or the transistor 50 years ago,19 creates a profound challenge for any assessment that claims to assess the environmental consequences of an investment in something new (see also footnote 18).

5. The relative importance of different effects over the technology life cycle The relative importance of the second and third order effects is likely to change over the life cycle of a technology. It has been observed that the diffusion of technologies (and many other phenomena) tends to follow an s-shaped curve (as in Fig. 5) [70]. The technology life cycle can thus be divided into different phases. (This life cycle should not be mixed up with the life cycle from cradle to grave of an object that is referred to in the concept of life-cycle assessment.) For a mature technology that has realised much of its learning or growth potential, positive feedback does little but defending the technology. In this case, negative feedback mechanisms, i.e. effects due to equilibrium adjustments, could be more important.20 For an emerging technology that still is in a formation phase, the direct environmental impact is small and negative feedback is lacking or does little to modify the small total impact of the technology. Instead the major environmental consequences of an investment stem from positive feedback mechanisms that could inuence the growth pattern and realise a future potential. This simple subdivision could work as a rule of thumb on where to focus in environmental assessments of investments such as consequential technology LCA. 6. Conclusion Life-cycle assessments are used to support decisions, not only decisions on incremental improvements of mature products but strategic decisions on technology choice. One result

4.3.4. Competing technologies and the sailing ship effect Finally, we acknowledge a consequence of an investment that is somewhat difcult to categorise but that could have a signicant impact. In history of technology it goes under the name the sailing ship effect. When the steam ships emerged the performance of sailing ships were improved. The effect is difcult to verify since there may be multiple causeeeffect chains leading to technology improvement [69]. However, if a new promising technology is demonstrated, it is likely that the development of the old technology is intensied. In this way, a few investments could have a large impact, not only through the creation of a radically new system in the long term but by inducing incremental improvements in the large eets of its incumbent competitors.

See for example Grubler [70] and Freeman and Luca [71] for analyses of technology clusters, techno-economic paradigms and four to ve consecutive industrial revolutions that created the industrial society.

19

20 A mature technology could, however, start to diffuse on new markets and thereby start to climb a new s-curve. Then, positive feedback on the user side will be important. The diffusion of a second car in the household could be an example of this. (We are thankful to Tomas Ekvall for pointing this out.)

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market penetration

Emerging

Mature

Negative feedback

Positive feedback

time
Fig. 5. The technology life cycle and the relative importance of positive and negative feedback mechanisms.

of a recent and inuential well-to-wheel study [35] was spread in the following wording: Using hydrogen as a road transport fuel will increase Europes greenhouse gas emissions rather than cut them, according to new collaborative research by the Brusselsbased association of European oil companies, Concawe, and its automotive industry counterpart, Eucar. (International oil daily, 2004). This ambitious well-to-wheel study could thus be used to argue that fuel cell vehicles and hydrogen fuel is not a way to reduce greenhouse gas emissions in the transport sector but the opposite. However, the study has a short time horizon from a climate change perspective and attributional and consequential perspectives are mixed. This opens up for somewhat misleading interpretations as the one in the quote. In this paper we argue that LCAs aiming to support strategic decisions on technology choice, in particular in the area of greenhouse gas emissions, need to apply a methodology that is adapted to the problem and include long-term effects. For attributional (or state-oriented) LCAs this implies that future states could be more relevant than the current situation as basis for analysis. For consequential (or change-oriented) LCAs, or for any environmental assessment of the effects of an investment, an implication is that new classes of consequences need to be included. In this article we list and discuss different causeeeffect chains that could be taken into account in a consequential assessment. We make a distinction between rst order direct effects described by physical relationships, second order effects due to equilibrium shifts controlled by price mechanisms and negative feedback in surrounding systems and third order effects due to learning and structural change, i.e. effects magnied by positive feedback. We argue that the third order effects are more important for emerging technologies while second order effects could be more important for mature technologies. The effects due to constraints and negative feedback lead to a marginal shift of equilibrium which results in a moderation of the rst order LCA result and the effect is reversible.21 In
21 We also suggest that one could include marginal effects related to limited stocks of resources (see Section 4.2.2).

contrast, positive feedback mechanisms have the power to change systems radically. As a consequence, they can have a larger effect on the result of the assessment. To illustrate this point, a methodology based on scenarios and an experience curve is used to quantify the potential future reduction of CO2 emissions that could be allocated to an investment in a fuel cell bus today. The technology learning effect of an investment now in fuel cell buses was estimated at 50 ton CO2/vkm, a staggering number if compared to the short-term rst order direct emission reduction of 360 gCO2eq./vkm for a switch from advanced diesel to fuel cells fuelled by hydrogen from natural gas. Even if the probability factor is only 1% the long-term technology learning effect is still more than 1000 times larger than the short-term effect. The magnitude of the estimated value resides on a number of assumptions. The future emission reduction potential is large, the potential cost is low enough to be competitive, the cost reduction with increased scale and learning is fast enough (the experience curve is steep), the scope of learning of the investment is broad and the investment is taken early in the technologys life cycle. Different technologies and investments will score differently according to these criteria. Even if this calculation of emission reductions resulting from positive feedback effects is somewhat speculative the main lesson is that environmental assessments of emerging technologies that only take into account short-term effects could be grossly misleading. Unfortunately, the most relevant aspects are not always synonymous to the aspects that are easiest to quantify and for which validated data are available. The environmental effects of investments in emerging technologies are inherently uncertain. If one refrains from including large but uncertain aspects, and only include what can be found in the beam of light, one should consider not doing the study at all, or at least be very clear about the limited conclusions that can be drawn from the study. A constructive approach is to conduct attributional LCAs based on relevant future states or scenarios of consecutive states to guide the direction of actions. To assess decisions directly, a consequential perspective is needed. However, if consequential LCA is to be of any value for strategic technology choice, in particular in the area of GHG emissions, it should not only include effects resulting from marginal change of the current system but also marginal contributions to radical system change. Sometimes there is a trade-off between the two effects. Then it could be wise to remember that if you are going to build a skyscraper you start by digging a hole.

Acknowledgements The nancial support of the Swedish Foundation for Strategic Environmental Research, MISTRA, the Competence Centre for Environmental Assessment of Product and Material Systems (CPM), Chalmers Environmental Initiative, Goteborg and Energy Ltd. Research Foundation are gratefully acknowledged. We also wish to thank Roland Clift, Tomas Ekvall and two anonymous reviewers for valuable remarks.

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