Ik Kim and Tak Hur Konkuk University, Korea An Attempt to Measuring Green Productivity 2 nd APO World Conference on Green Productivity 9-11 December Edsa Shangri-la, Manila, Philippines

Eco-efficiency  recognized as “one of the primary way in which business can contribute to the concept of sustainable development”.  Countries or companies engaging in the eco-efficiency revolution will become stronger in international competitiveness.  This recognition led to the development of Green Productivity (GP) program of the Asian Productivity Organization (APO) in I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

 Measurement of GP is important in order to evaluate the GP performance of a company or product.  Needs for GP Indicators which analyze both environmental and economic aspects in an integrated fashion. Green Productivity (GP) A strategy for enhancing productivity and environmental performance for overall socio-economic development I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

 The measurement framework of GP is discussed. GP Indicators ; GP Portfolio  A case study of polystyrene(PS) production system of a Korean company is provided to illustrate the applicability of the GP indicators. In this study I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions  GP Index  GP Ratio

Productivity; - Conventional Concept; the ratio of output to input - Recently; the efficiency with which outputs are produced GP is in line with Eco-efficiency !!! - Total productivity = Total output / Total input - Partial productivity = Total output / Partial input GP = Productivity / Environmental Impacts I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

What to measure? How to measure? - global level - national level - sectoral level - company level - factory level - each product level - material level - process level I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions GP Measurement

production rate - total no. of products/time - total mass of products/time mass of products/mass of raw materials price/cost profit/cost total sales/year total profit/year return of investment/year  Productivity at product level I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

 Green (denominator) environmental impact (ex) ecoindicator,… LC(CO2) LC(energy) LC(water consumption) total material consumption total material intensity total energy consumption total energy intensity land use ecological footprint I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

 SP : Selling Price  LCC : Life Cycle Cost  EI : Environmental Impact. - The economic value created from the input of life cycle cost divided by environmental impact GP Index = Productivity/Environmental Impact = SP($) / LCC($) EI - To measure and compare the level of GP for a product or service with currently competing equivalent products or services  GP Index I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

 GP Ratio - GP ratio is not defined as the ratio of the GP indices of the existing and new systems. - GP ratio is designed for internal managerial decision- making, considering both costs or profits over time and environmental impacts. - If GP is larger than one, a new system is better than the existing one from the perspective of GP. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

Green Productivity Portfolio;  The ratio of environmental impact between the current and alternative is plotted against the ratio of the productivity between the current and alternative. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions Ratio of Productivity = Ratio of Env. Impact =

 GP Portfolio I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions Ratio of Productivity Ratio of Env. Impact 1.0 I III II IV ; Current Process E P I II III IV : Environmental Performance : Productivity ; E (good), P(good) ; E (good), P(poor) ; E(poor), P (poor) ; E(poor), P(good)

1.Life Cycle Assessment 2.Total Cost Assessment 3.GP Indicators I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions III. Case Study

1. Life Cycle Assessment Goal of this study  understand the environmental aspects of the PS production in company A and identify the improvement opportunities.  assist decision-making between the improvement alternatives. Scope of this study  System boundaries - from crude oil extraction to PS resin production  Functional unit (Reference flow) - 1ton of PS product 1.1 Goal and Scope Definition I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

1.2 Life Cycle Inventory Analysis Preparing for data collection  Data collection boundary  Unit process - raw material unit - polymerization unit - devolation unit - pelletization unit - storage & packaging  Drawing up process tree I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions

1.3 Life Cycle Impact Assessment  according to the framework of ISO in order to identify significant environmental issues.  LCIA methodology - involves eight impact categories defined in the scope definition. - use the methodology developed from the Korean national LCA project. normalization reference weighting factor I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions

1.4 LCA results and Discussion I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions LCI results (unit process)

 For most emissions, the contribution of raw materials are much greater than the contributions of other unit process. Ranking of each unit process I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions Ranking Criteria ▪ A : contribution >50% ▪ B : 25% < contribution < 50% ▪ C : 10% < contribution < 25% ▪ D : 2.5%< contribution < 10% ▪ E : contribution < 2.5%

Characterize d value Normalizatio n reference Normalized value Weighting factor Weighted value RD2.32E E E E E-01 GW2.52E E E E E-02 OD4.54E E E E E-05 AC8.86E E E E E-02 EU7.01E E E E E-03 POC5.71E E E E E-03 HT1.09E E E E E-03 ET4.54E E E E E-03 Total4.20E-01  Resource depletion and global warming were the two dominant impact categories. LCIA results I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions

 The unit process of the raw material production was identified as the biggest source for resource depletion and global warming. LCIA results(by unit process) I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions

I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions The LCA Study Reduce the environmental impacts associated with the raw materials(SM) Alternative 1 Selection of the raw materials with the lowest environmental impact Alternative 2 Reduction of the amount of the raw materials by using a new agitation process (Baffle equipment) Alternative 3 Alternative 1 + Alternative 2

 Baffle equipment is a mixing system which is expected to enhance the mixing efficiency by minimizing the dead volume in the reactor. Alternative 2 I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions

I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions Production yield (Product/Raw Material) Production yield (Product/Raw Material) Electricity required Alternative 2

I. Introduction II. Green Productivity Indicator III. Case Study (LCA) IV. Conclusions Eco-indicator Values

Cost type and categories Cost typeCost category Conventional cost Capital equipment cost, material purchasing cost, labor cost, utilities cost, energy cost Hidden costWaste management cost, regulatory compliance cost, maintenance cost Contingent costRemediation cost, property damage cost, personal injury cost, etc. Image costRelationship with staff, workers and suppliers etc.  Conventional and hidden costs (Types I and II) were addressed throughout the entire life cycle of a product. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 2. Total Cost Assessment 2.1. Life Cycle Costing(LCC)

Cost typeCost category Cost factor(%) Unit cost ($/ton) Total cost (ton) Life cycle cost($) Capital Cost Conventional cost Factory construction Process change Sub-total Operating Cost Conventional cost Purchasing cost SM100 Chemical100 Storage cost Energy electricity100unit:kWh LNG100 Steam100 Naphtha100 Utility CW100 DW100 FW100 IA100 N2100 ProductionLabor Hidden cost Waste management Waste water100 Waste treatment100 Regulatory compliance Compensation23 allocated to PS Base fee23 Maintenance cost23 Sub-total7.49E+02 Total 749 Life Cycle Cost of PS 1 ton I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions

 TCA was conducted to assess if a new baffle process (Alternative 2) is better than the existing process from the economic perspective.  Financial calculation - The present costs incorporate the concept of decreasing monetary value over lifetime of the new baffle process. - Use the compound interest table to calculate the present cost of an annuity over ten years. (5% of interest rate : 7.72 of conversion factor) I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 2.2. Total Cost Assessment

Cost typeCost categoryCurrentAlternative 2 Capital Cost Conventional cost Factory construction Process change Sub-total Operating Cost Conventional cost Purchasing cost SM Chemical Storage cost Energy electricity LNG Steam Naphtha Utility CW DW FW IA N2 ProductionLabor Hidden cost Waste management Waste water Waste treatment Regulatory compliance Compensation Base fee Maintenance cost Sub-total7.49E E+02 Sub-total(10yr)5,7805,750 Total 5,7805,750 Present Costs 30USD/PS 1ton Net present value “Recommend to implement baffle process” I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions

 The introduction of a new baffle equipment (alternative 2) is expected to increase the profit by 21% over 10 years.  However, TCA results only consider the costs but do not consider the environmental aspects, even if both direct and indirect environmental costs are considered. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions TCA Results

3.1. GP Index  This index value can be used to estimate the GP of a product and compare it with other competing equivalent products. SP/LCC EI ($890/$749) 4.20E-01 GP Index ===2.83 I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 3. GP Indicators

 Since GP ratio is larger than one, a new system is better than the existing one from the perspective of GP. GP ratio can be applied to select one alternative out of a list of contenders in order to improve GP of the existing systems. I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions 3.2. GP Ratio Env. Impact Ratio Productivity Ratio GP Ratio Alternative Alternative Alternative

3.3 GP Portfolio I. Introduction II. Green Productivity Indicator III. Case Study (TCA) IV. Conclusions Ratio of Productivity Ratio of Env. Impact 1.0 III II IV I-1 I : Current system : Alt 1 (SM change) : Alt 2 (Baffle Equipment) : Alt 2’ (after 10yrs) : Alt 3 (Alt 1 + Alt 2) : Alt 3’ (after 10yrs)

IV. Conclusions  The measurement framework of GP was discussed. - GP Indicators (GP Index & GP Ratio) and GP Portfolio analyze both the environmental and economic factors in an integrated fashion.  The LCA results show that the environmental impacts of the PS production are improved through the reduction of the amount of the raw materials.  The TCA results show that the solution to the environmental problem is not costly but beneficial. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions

 GP index can be used for the measurement of GP and GP ratio can be used for its improvement.  GP Portfolio makes it easy to see the effect of alternatives from both environmental and economic perspectives.  Effort to develop, apply and promote GP or Eco-efficiency will encourage business to become more competitive, more innovative and more environmentally responsible as well as contribute much toward the sustainability of our society. I. Introduction II. Green Productivity Indicator III. Case Study IV. Conclusions