�������� � � ��� � � ����� T t l C Total Cost Assessment Total Cost Assessment T t l C t A t A t t History, Methodology, Tools, History, Methodology, Tools, and a Case Study and a Case Study Lise Laurin, Melissa Hamilton – Earthshift Lise Laurin Melissa Hamilton Lise Laurin Melissa Hamilton Lise Laurin, Melissa Hamilton Earthshift Earthshift Earthshift Darlene Schuster Darlene Schuster - AIChE Institute for Sustainability AIChE Institute for Sustainability Greg Norris Greg Norris - - Sylvatica Sylvatica Sabrina Trupia Sabrina Trupia - - Vermont’s Alternative Energy Corporation Vermont’s Alternative Energy Corporation Prepared for ASME's IMECE 2005 Prepared for ASME's IMECE 2005
Outline Outline Outline Outline History History Method & Tools: Method & Tools: & Cost Types Cost Types Confronting Uncertainty Head Confronting Uncertainty Head Confronting Uncertainty Head On Confronting Uncertainty Head-On On On Scenario Analysis Scenario Analysis Workshop at the Core Workshop at the Core Workshop at the Core Workshop at the Core Case Study Case Study – – Biodiesel Refinery Biodiesel Refinery �������� � � ��� � � �����
Outline Outline Outline Outline History History Method & Tools: Method & Tools: & Cost Types Cost Types Confronting Uncertainty Head Confronting Uncertainty Head Confronting Uncertainty Head On Confronting Uncertainty Head-On On On Scenario Analysis Scenario Analysis Workshop at the Core Workshop at the Core Workshop at the Core Workshop at the Core Case Study Case Study – – Biodiesel Refinery Biodiesel Refinery �������� � � ��� � � �����
Total Cost Assessment— Total Cost Assessment w here it came from w here it came from Developed in 1991 by the Tellus Institute for the EPA Developed in 1991 by the Tellus Institute for the EPA and New Jersey Department of Environmental and New Jersey Department of Environmental Protection Protection Protection Protection Based on methods and programs developed by GE. Based on methods and programs developed by GE. “GE developed its new environmental project analysis method to “GE developed its new environmental project analysis method to better select and justify waste management investment decisions better select and justify waste management investment decisions better select and justify waste management investment decisions better select and justify waste management investment decisions that are environmentally sound and should reduce long that are environmentally sound and should reduce long- -term term liabilities “ liabilities “ Sequence of studies provided the theoretical S S Sequence of studies provided the theoretical f t di f t di id d th id d th th th ti ti l l background for Total Cost Assessment background for Total Cost Assessment �������� � � ��� � � �����
AIChE CWRT Project AIChE CWRT Project AIChE CWRT Project AIChE CWRT Project In 1997, AIChE Members wanted a sound TCA In 1997, AIChE Members wanted a sound TCA methodology methodology Embarked on a two Embarked on a two- -part project. part project. Part I: Survey of status and available methodologies Part I: Survey of status and available methodologies world world wide world world-wide wide wide Part II : Development of industry validated methodology Part II : Development of industry validated methodology Project Team Project Team AD Little AD Little Bristol Bristol- -Myers Squibb Myers Squibb DOE DOE Dow Dow Eastman Chemical Eastman Chemical Eastman Kodak Eastman Kodak Georgia Pacific Georgia Pacific IPPC of Business Round Table IPPC of Business Round Table Merck Merck Monsanto Monsanto Owens Corning Owens Corning Rohm and Haas Rohm and Haas SmithKline Beecham (Lead) SmithKline Beecham (Lead) Sylvatica Sylvatica �������� � � ��� � � �����
Methodology Tested by Methodology Tested by Industry Industry Dow Chemical Dow Chemical “This is an incredibly useful tool for Dow and for the industry “This is an incredibly useful tool for Dow and for the industry — — helping us to understand the costs of making products and giving helping us to understand the costs of making products and giving p g p g g p g p g g g g us additional information to make better business decisions from us additional information to make better business decisions from the beginning.” the beginning.” Monsanto Monsanto Monsanto Monsanto GlaxoSmithKline GlaxoSmithKline “TCA’s greatest contribution to GSK is likely to be at the corporate “TCA’s greatest contribution to GSK is likely to be at the corporate TCA s greatest contribution to GSK is likely to be at the corporate TCA s greatest contribution to GSK is likely to be at the corporate policy/strategy level.” “TCA will be applied to R&D LCI/A tools policy/strategy level.” “TCA will be applied to R&D LCI/A tools under development.” under development.” Eastman Chemical Eastman Chemical Eastman Chemical Eastman Chemical �������� � � ��� � � �����
Methodology Launch and Methodology Launch and Post Post- -launch history launch history Methodology and Manual Tools Launched in Methodology and Manual Tools Launched in July 1999 July 1999 TCAce commissioned and completed in 1999 TCAce commissioned and completed in 1999 TCAce commercialized for consultant use in TCAce commercialized for consultant use in 2004. 2004. The methodology is in use by numerous The methodology is in use by numerous organizations, especially in Canada, with organizations, especially in Canada, with i i ti ti i ll i i ll i C C d d ith ith widespread adoption in British Columbia. widespread adoption in British Columbia. �������� � � ��� � � �����
Outline Outline Outline Outline History History Method & Tools: Method & Tools: Method & Tools: Method & Tools: Cost Types Cost Types Confronting Uncertainty Head C C Confronting Uncertainty Head-On f f ti ti U U t i t H t i t H d d O On Scenario Analysis Scenario Analysis Workshop at the Core Workshop at the Core Case Study Case Study – – Biodiesel Refinery Biodiesel Refinery �������� � � ��� � � �����
Five Cost Types Five Cost Types Distinguished Distinguished Type I: Type I: Direct Direct Type II: Type II: yp yp Indirect Indirect Type III: Type III: Contingent Liability Contingent Liability Type IV: Type IV: Type IV: Type IV: Intangibles Intangibles Intangibles Intangibles Type V: Type V: External External �������� � � ��� � � �����
Cost Types Cost Types Cost Types Cost Types Cost Type Description Examples I. Direct costs Manufacturing site costs Capital investment, operating, labor, materials, and waste disposal costs II. Indirect costs Corporate and Reporting costs, regulatory costs, and manufacturing overhead f t i h d monitoring costs it i t III. Future and Potential fines, penalties Clean-up, personal injury, and contingent liability and future liabilities property damage lawsuits; industrial costs costs accident costs. accident costs IV. Intangible Difficult-to-measure but Cost to maintain customer loyalty, internal costs real costs borne by the worker morale, union relations, and (Company-paid) (Company paid) company company community relations. community relations. V. External costs Costs borne by society Effect of operations on housing costs, (Not currently paid degradation of habitat, effect of by the company) y p y) pollution on human health p �������� � � ��� � � �����
Total Cost Assessment Total Cost Assessment— How do you do it? How do you do it? Step 1 Step 1 – – define goal and scope define goal and scope Step 2 Step 2 – p streamline the analysis streamline the analysis y Step 3 Step 3 – – identify potential risks identify potential risks Step 4 Step 4 Step 4 – Step 4 conduct financial inventory conduct financial inventory conduct financial inventory conduct financial inventory Step 5 Step 5 – – conduct impact assessment conduct impact assessment Step 6 Step 6 – – feedback to decision feedback to decision- -making making loop loop �������� � � ��� � � �����
TCAce Adds to the TCAce Adds to the Robustness of the Method Robustness of the Method Robustness of the Method Robustness of the Method Scenario Builder for Accidents/Liabilities, Accidents/Liabilities Possibilities, “Intangible” Outcomes, etc. C Corporate t LCA Cost Integrate Functional Unit Results: Analysis & Annual / Production & Annual / Production System per Perspectives Results: functional per year or per year or unit unit Modeling, M/C Analysis per unit of production Results Reporting & Results Reporting & Cause/Factor Exploration �������� � � ��� � � �����
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