Energy and environmental concerns are intricately linked to the supply chains of various goods. Increased public awareness of such issues is reflected in the contemporary business environment as well as government legislation. Companies must not only comply with environmental regulations, but also contend with the need for increasingly green corporate practices in order to stay competitive in global markets. Thus, it is necessary to apply systematic techniques to quantify the environmental impacts of supply chains, and to identify opportunities for making improvements. This chapter discusses life cycle assessment principles and its application in the design and planning of industrial supply chains. A specific case study on the production of biofuels from agricultural crops is used to illustrate the key concepts.
TopBackground
The past few decades have seen increased concern for environmental issues by companies, governments, and the general public. This trend was first apparent in regulatory limits on industrial pollutant discharges, which in turn led to the development of end-of-pipe treatment technologies. These techniques focus on the treatment and safe disposal of residues, and are still in use today when regulatory compliance needs to be ensured. However, such activities do not generate any savings or revenues, and are thus understandably viewed by companies as cost centers. In recent years, there has been considerable interest in pollution prevention (P2) or cleaner production (CP), in addition to pollution control. P2 or CP entails the use of strategies which attempt to give inherently clean solutions in order to minimize the need to treat wastes and residues. There is often the associated benefit of reducing the consumption of raw materials and utilities, which potentially generates cost savings in addition to environmental benefits. Examples of strategies used to achieve P2 or CP include:
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Use of environment-friendly materials;
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Product or process modifications to improve efficiency and reduce attendant environmental releases;
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Optimal operation of processes to minimize consumption of energy or raw materials and generation of waste; and
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Implementing exchange of waste streams between process or plants to achieve industrial symbiosis.
Any P2 or CP strategies to be implemented must be evaluated using systematic procedures to assess the potential environmental benefits vis-à-vis investment costs. Such evaluations often implicitly require comparison of P2/CP options with each other, and with baseline technological choices. Normal profitability analysis techniques can be applied to deal with the economic considerations. On the other hand, systematic assessment methodologies must be applied to quantify the usage of natural resources, release of pollutants, and generation of environmental impacts of technology options being compared. One such methodology is known as life cycle assessment (LCA).
LCA is a methodology for assessing the cumulative material and energy flows and associated environmental impacts of industrial systems. In LCA, these flows and impacts are calculated on a cradle-to-grave basis, meaning that direct and indirect contributions over the entire supply chain are accounted for, as shown in Figure 1. The calculations are done relative to a unit of industrial output known as the functional unit, which serves as a basis for subsequent interpretation of environmental benefits. Furthermore, industrial activities generate multiple pollutants, which in turn result in different pathways for damaging the environment. LCA methodology takes into account these different environmental criteria. LCA can thus be used as a comprehensive and rigorous approach for evaluating different alternative P2/CP strategies.
Figure 1. A generic life cycle system (Adapted from SETAC, 1991)
Life cycle concepts are also essential in promoting the design of environment friendly products (Graedel & Allenby, 1996). For instance, manufacturers must consider not just environmental impacts arising directly from manufacture of such goods; the products must be designed to be environment friendly during use (for instance, by being energy efficient) and at the end of their useful lives (e.g., by being designed for ease of disassembly and recycling, or by being constructed out of materials that present no disposal difficulties). Legislation on extended producer responsibility (EPR) or product take-back, such as those specified for certain appliances in Japan or the European Union, are intended in part to encourage design of inherently clean products. Furthermore, such measures as the EU Directive for Setting Eco-Design Requirements for Energy-Using Products facilitate trading of manufactured goods across national borders. It is clear that environmental impacts occurring across the life cycle of a product will tend to be distributed geographically, and will also include time delays, and that the inherently distributed nature of these effects must be taken into account in the practice of green supply chain management.