Environmental life cycle costing

Responding to the need for clarification and benchmarks, Environmental Life Cycle Costing provides the fundamental basis on which to establish a definitive methodology. Clearly defining environmental LCC, this book balances scientific and economic points of view and thoroughly addresses the management perspective.

Demonstrates the Process From Problem Definition to Analysis, to Presentation

The book focuses on environmental LCC but also analyzes conventional LCC and societal LCC, providing case studies for each. It presents the link between life cycle costing and life cycle assessment and then explores public, private, and societal options. The book also explains all components of the method using the cross-cutting example of a washing machine. It also provides categorizations that permit the method to be adapted or streamlined as a function of the time available to the practitioner. Case study boxes demonstrate the process for carrying out an LCC, from problem definition to analysis and ultimate presentation to the decision maker.

Experts Integrate Conventional Thinking with Emerging Ideas

Environmental LCC summarizes all costs associated with the life cycle of a product regardless of who bears those costs. It includes present and future money flows as well as those to be internalized in the decision relevant future. A collaboration of experts at the forefront of research, this book ties conventional thinking on life cycle costs into emerging theory and practice by including environmental and social cost analyses and linking LCC to the environmental and social pillars of sustainability.

Kerstin Lichtenvort and Gerald Rebitzer and Gjalt Huppes and Andreas Ciroth and Stefan Seuring and Wulf-Peter Schmidt and Edeltraud Gunther and Holger Hoppe and Thomas Swarr and David HunkelerGjalt Huppes and Andreas Ciroth and Kerstin Lichtenvort and Gerald Rebitzer and Wulf-Peter Schmidt and Stefan SeuringGerald Rebitzer and Shinichiro NakamuraBengt Steen and Holger Hoppe and David Hunkeler and Kerstin Lichtenvort and Wulf-Peter Schmidt and Ernst SpindlerThomas Swarr and David HunkelerAndreas Ciroth and Karli Verghese and Christian TrescherAndreas Ciroth and Carl-Otto Gensch and Edeltraud Gunther and Holger Hoppe and David Hunkeler and Gjalt Huppes and Kerstin Lichtenvort and Kjerstin Ludvig and Bruno Notarnicola and Andrea Pelzeter and Martina Prox and Gerald Rebitzer and Ina Rudenauer and Karli VergheseDavid Hunkeler and Kerstin Lichtenvort and Gerald RebitzerWalter Klopffer

List of Figures	p. xiii
List of Tables	p. xv
About the Editors	p. xvii
Contributors	p. xix
Preface: About This Book	p. xxi
A Dialog, over Coffee, about Life Cycle Costing	p. xxiii
Executive Summary	p. xxviii
0.1 Three Categories of Life Cycle Costing	p. xxvii
0.2 System Boundaries in Environmental Life Cycle Costing	p. xxviii
0.3 Example Calculations in Environmental Life Cycle Costing	p. xxx
Chapter 1 Introduction: History of Life Cycle Costing, Its Categorization, and Its Basic Framework	p. 1
1.1 History and Development of Conventional LCC	p. 1
1.2 Types of LCC	p. 4
1.2.1 Conventional Life Cycle Costing	p. 6
1.2.2 Environmental Life Cycle Costing	p. 7
1.2.3 Societal Life Cycle Costing	p. 8
1.3 Two Key Limitations of LCC to Be Tackled by Environmental LCC	p. 9
1.3.1 Need for Different Perspectives	p. 9
1.3.2 Life Cycle Costing Planning versus Life Cycle Costing Analysis	p. 11
1.4 The Requirement and General Framework for Environmental Life Cycle Costing	p. 12
1.4.1 Goal and Scope Definition	p. 12
1.4.2 Information Gathering	p. 13
1.4.3 Interpretation and Identification of Hotspots	p. 15
1.4.4 Sensitivity Analysis and Discussion	p. 16
Chapter 2 Modelling for Life Cycle Costing	p. 17
2.1 Introduction	p. 17
2.2 Cost Models	p. 18
2.3 Cost Categories	p. 19
2.3.1 Cost, Revenue, and Benefits	p. 19
2.3.2 Market Prices and Value Added	p. 20
2.3.3 Four Levels of Cost Categories	p. 21
2.3.4 Cost Estimation	p. 24
2.4 Cost Bearers	p. 25
2.5 Uncertainties and Inconsistencies in Cost Data	p. 28
2.5.1 Definitions of Cost Collection Methods	p. 28
2.5.2 Geographical Differences and Exchange Rates	p. 29
2.5.3 Confidential Information	p. 29
2.6 Cost Aggregation	p. 29
2.6.1 Discounting	p. 30
2.6.1.1 Long-Term Discounting of Costs and Environmental Impacts in Societal LCC	p. 31
Chapter 3 Environmental Life Cycle Costing	p. 35
3.1 Objectives of Environmental LCC	p. 35
3.2 System Boundaries and Scope	p. 36
3.2.1 Market Structure, Environmental Taxes, and Subsidies	p. 36
3.2.2 Product Life Cycle from Economic and Environmental Perspectives	p. 37
3.2.3 Scope of Environmental LCC	p. 39
3.2.4 What Environmental LCC Is Not	p. 40
3.3 Calculating Life Cycle Costs Based on the Process LCI of LCA	p. 41
3.3.1 General Procedure	p. 41
3.3.2 Specific Methodological Issues: Similarities and Differences between LCA and LCC	p. 42
3.3.2.1 Definition of Functional Unit and Reference Flows	p. 42
3.3.2.2 Definition of Unit Processes, Data Aggregation, and Data Availability	p. 42
3.3.2.3 Allocation in Environmental LCC	p. 43
3.3.3 Use of Discounted Cash Flow	p. 44
3.3.4 Data Compilation and Aggregation	p. 44
3.3.5 Interpretation of Environmental LCC Results	p. 48
3.4 Environmental LCC in Relation to Conventional and Societal LCC	p. 49
3.5 Calculating Life Cycle Costs Based on Hybrid LCA	p. 51
3.5.1 Input-Output Methodology	p. 51
3.5.1.1 Costs and Prices in Input-Output Analysis	p. 51
3.5.1.2 Introducing the Use Cost	p. 52
3.5.1.3 Introducing the End-of-Life Cost	p. 52
3.5.1.4 Internalizing External Costs	p. 53
3.5.2 Numerical Example of I-O-Based LCC for the Washing Machine	p. 54
3.5.2.1 I-O Data for the Washing Machine Case	p. 54
3.5.2.2 I-O Results for the Washing Machine Case	p. 54
Chapter 4 Integrating External Effects into Life Cycle Costing	p. 59
4.1 Introduction	p. 59
4.2 Definition, Identification, and Categorization of Externalities	p. 60
4.2.1 Selection of External Cost Categories for Inclusion	p. 60
4.2.2 Categorization of Externalities	p. 61
4.2.3 Consideration of 3rd Parties and Possible Sanctions	p. 62
4.2.4 History and Ethics	p. 62
4.2.5 Environmental Impacts	p. 63
4.2.6 Social Impacts	p. 63
4.2.7 External Economic Impacts	p. 64
4.3 Monetization	p. 64
4.3.1 Some Quantitative Examples of Monetized Impacts	p. 66
4.3.1.1 Damage Cost	p. 66
4.3.1.2 Prevention Cost	p. 67
4.3.2 Monetization of Social Impacts	p. 68
4.4 Internalizing Externalities	p. 69
4.4.1 Sustainability's Potential Impact on Profitability and Shareholder Value	p. 73
4.4.2 Revenue	p. 75
4.4.3 Operational Efficiency	p. 75
4.4.4 Access to Capital	p. 76
Chapter 5 Life Cycle Costing in Life Cycle Management	p. 77
5.1 Corporate Perspective	p. 77
5.2 Integrating LCC into Management	p. 78
5.2.1 Long-Term Costs	p. 78
5.2.2 Indicators and Their Normalization	p. 80
5.2.3 Indicator Validation and Supply Chain Issues	p. 81
5.2.4 Presentation of LCC Results	p. 82
5.2.5 Interfaces to Sustainable Development, IPP, and Social Aspects	p. 82
5.2.6 Environment and SMEs	p. 84
5.3 Continuous Product Improvement	p. 85
5.3.1 LCC and LCIA in EcoDesign	p. 85
5.3.2 Evaluation Techniques, Complementary Tools, and Trade-Offs	p. 87
5.3.3 Discussion of the Case Studies from a Corporate Perspective	p. 90
Chapter 6 A Survey of Current Life Cycle Costing Studies	p. 91
6.1 Intention	p. 91
6.2 Relation of This Chapter to the Other Chapters	p. 92
6.3 Parameters and Settings of LCC Studies in Practice	p. 92
6.4 Sampling Procedure of Studies for the Survey	p. 94
6.5 Summary of Results	p. 94
6.5.1 Overview of the Statistics	p. 95
6.5.2 Costs Considered, and Not Considered, in the Case Studies	p. 98
6.5.3 Data Sources and Calculation Method Used	p. 100
6.5.4 Uncertainty and Discount Rate	p. 100
6.5.5 Selected Goal and Scope, Approaches, and Result Patterns from the Survey	p. 102
6.5.5.1 Use Cases per LCC/LCA Method	p. 102
6.5.5.2 Total Life Cycle Costs, and the Method of Cost Estimation, per Type of LC Approach	p. 104
6.5.5.3 Duration of Life Cycle Considered and Duration of Study, by the Type of LCC	p. 105
6.5.5.4 Life Cycle Duration and LCC Discount Rate	p. 106
6.5.5.5 Addressees of the Studies per Type of Application	p. 107
6.5.5.6 Source of the Approach per Type of Study	p. 107
6.6 Outlook: Toward an LCC Case Study Library	p. 108
6.7 Analysis of the Survey's Results	p. 108
6.8 Conclusions and Questions	p. 109
6.8.1 Time-Related Questions	p. 109
6.8.2 Result-Related Questions	p. 109
6.8.3 Functional Unit-Related Questions	p. 110
6.8.4 Tentative Answers	p. 110
Chapter 7 Life Cycle Costing Case Studies	p. 113
7.1 Introduction	p. 113
7.2 Organic versus Conventional Extra-Virgin Olive Oil	p. 118
7.2.1 Summary	p. 118
7.2.2 Definition of the Case Study	p. 118
7.2.3 Entry Gate and Drivers	p. 118
7.2.4 Implementation	p. 118
7.2.5 Overview of Tools Used	p. 120
7.3 Wastewater Treatment	p. 121
7.3.1 Summary	p. 121
7.3.2 Definition of the Case Study	p. 121
7.3.3 Entry Gate and Drivers	p. 124
7.3.4 Implementation	p. 125
7.3.5 Overview of Tools Used	p. 126
7.4 A Comparison of Energy Saving and Incandescent Light Bulbs	p. 126
7.4.1 Summary	p. 126
7.4.2 Definition of the Case Study	p. 126
7.4.3 Entry Gate and Drivers	p. 127
7.4.4 Implementation	p. 127
7.4.5 Overview of the Tools Used	p. 128
7.5 Double-Deck Carriage Floor (BAHNKREIS Project)	p. 129
7.5.1 Summary	p. 129
7.5.2 Definition of the Case Study	p. 129
7.5.3 Entry Gate and Drivers	p. 130
7.5.4 Implementation	p. 131
7.5.5 Overview of the Tools Used	p. 132
7.6 Washing Machine	p. 132
7.6.1 Summary	p. 132
7.6.2 Definition of the Case Study	p. 134
7.6.3 Entry Gate and Drivers	p. 136
7.6.4 Implementation	p. 138
7.6.5 Overview of Tools Used	p. 139
7.7 Hypothetical Case: A High-Capacity Glass Cable Network for Data Transmission	p. 139
7.7.1 Summary	p. 139
7.7.2 Definition of the Case Study	p. 139
7.7.3 Entry Gates and Drivers	p. 140
7.7.4 Implementation	p. 142
7.7.5 Overview of the Tools Used	p. 143
7.8 Passenger Car	p. 143
7.8.1 Summary	p. 143
7.8.2 Definition of the Case Study	p. 143
7.8.3 Entry Gate and Drivers	p. 147
7.8.4 Implementation	p. 148
7.8.5 Overview of Tools Used	p. 148
7.9 Life Cycle Costs of Real Estate	p. 148
7.9.1 Summary	p. 148
7.9.2 Definition of the Case Study	p. 148
7.9.3 Entry Gate and Drivers	p. 151
7.9.4 Implementation	p. 151
7.9.5 Overview of Tools Used	p. 151
Chapter 8 Conclusions	p. 153
8.1 Three Types of Life Cycle Costing	p. 153
8.1.1 Conventional LCC	p. 153
8.1.2 Environmental LCC	p. 154
8.1.3 Societal LCC	p. 154
8.2 Temporal Aspects and Discounting of LCC Results	p. 155
8.3 Learnings from Applied LCC Carried Out to Date	p. 155
8.4 State of the Art and Rules of Thumb in Carrying Out Life Cycle Costing	p. 156
Chapter 9 Outlook: Role of Environmental Life Cycle Costing in Sustainability Assessment	p. 157
9.1 Sustainability	p. 157
9.2 Status of Development	p. 158
9.2.1 Life Cycle Assessment (LCA)	p. 158
9.2.2 Life Cycle Costing (LCC)	p. 160
9.2.3 Societal Life Cycle Assessment (SLCA)	p. 160
9.3 Discussion	p. 161
Appendices	p. 163
Appendix to Case Study Boxes: Washing Machines and Private Laundry in Europe, North American, and Asia and Japan	p. 163
Appendix to Chapter 4: Social Impacts	p. 165
Appendix to Chapter 6: Survey Form: For the Investigation of LCC Parameters	p. 168
Glossary	p. 173
References	p. 175
Index	p. 185

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