1 Input-Output Approach for Life Cycle Analysis Govinda R Timilsina Senior Research Director Canadian Energy Research Institute Calgary, Canada ISEEE Project Meeting 03 November 2006

2 Structure of CEIA Model Projection of investment & value of output Alberta I-O Model Impacts on Alberta economy (GDP, employment, demand for goods & services, government revenues) Shares of indirect and induced demand in Alberta supplied by other provinces (import shares) Increased demand for labor, goods and services in Ontario, Quebec and the Rest of Canada I-O Models of ON, QC and Rest of Canada Impacts on other provincial economies (GDP, employment, government revenues) Allocation of investment and outputs to goods, labor and other operating surplus Increased demand for labor, goods and services in Alberta Jurisdictional sources of the purchase of labor, goods & services I-O models for other provinces

3 Input Data: Investment & Production

4 Expenditure Share in the Oil Sand Sector (%)

5 Jurisdictional Shares of Oil Sand Purchases (%)

6 I-O Module (Goods &Sector)

7 Definition of Sectors/Industries

8 Definition of Sectors/Industries (Continue)

9 Import Shares (Data for year 2000)

1010 Actual I-O Model Formula  GOChange (or increase) in gross output BThe input coefficient matrix. NMatrix of domestic shares in the total supply of a commodity. DMatrix of sectoral shares in the total commodity production;  FChange (or increase) in final demand of a commodity

1 I-O Models Runs Alberta Ontario Rest of Canada Rest of the World (Alberta I-O as Proxy)

1212 Emission Estimation V (p, s, r) = e (p, s, r) x  X (s, r) Where, V (p,s,r) = Emissions of pollutant type p from sector s in region r due to the policy or activity e (p,s,r) = Emission of pollutant type p per unit of output (measured in monitory value) from sector s in region r  X (s, r) = Change in output of sector s in region r due to the policy or activity

1313 Precautionary Notes Over or underestimation of indirect emissions CEIA model has an aggregate manufacturing sector. The mix of manufacturing goods needed by the oil sands industry would be different from that of aggregate manufacturing sector. Since emission coefficients are different for different industries (even different within an industry across technologies), emission estimation based on a energy coefficient defined for an aggregate manufacturing industry would not be precise. Potential distortions in emission coefficients Emission coefficients expressed in terms of monitory value of output could be misleading due to the price effect. For example, emission coefficient of oil sector (tCO2 per dollar value of crude oil) calculated with an oil price of $70/bbl would be twice as low as that calculated with the oil price of $35/bbl. Hence, emission coefficients should be calibrated carefully. Incapable of capturing economic and technological dynamics Both I-O coefficients and emissions coefficients are static. Other standard limitations of I-O approach Fixed economic structure, assumption of unlimited supply of resources etc.

1414 Thank You Contact Address Dr. Govinda R Timilsina Senior Research Director Canadian Energy research Institute #150, 3512 – 33 Street NW, Calgary, AB, Canada T2L 2A6 Tel: Fax: