1. Canada-U.S. Binational EIO-LCA Model Jonathan Norman Heather L. MacLean Department of Civil Engineering University of Toronto LCA of Oil Sands Technology – Kick-Off Meeting November 3, 2006 University of Calgary

2. Outline Environmental Input-Output Analysis Overview, limitations, applications Canadian and U.S. EIO-LCA models Rationale for Binational EIO models Canada-U.S. EIO-LCA model Applications Life-Cycle Assessment for Canadian oil sands

3. Motivation Quantify energy use & emissions associated with oil sands economic activity Economic Activity ↕ International Trade ↕ Energy Use/Emissions United States Canada

4. Input-Output Tables Systems of National Accounts Accounts for all transactions in an economy… Interindustry Demand Z Final Demand Y Outputs Inputs Total Output, X

5. Input-Output Analysis Uses IO tables to quantify interrelationships between industrial sectors (Leontief, 1941) ∆X = (I-A) -1 ∆Y ∆X = Change in Economic Output by sector ∆Y = Change in Consumer Demand (I-A) -1 = Leontief Inverse E = Total emissions across all sectors Accounts for direct and indirect effects of production EE = E

6. EIO-LCA Analysis Source: Bjorn et al. (2004) Motor vehicles Pollutants (CO 2, CH 4, etc.) Motor vehicle parts Other transport equipment Business services Primary iron and steel ENERGY Primary iron and steel Business services Other transport equipment Motor vehicle parts ENERGY Pollutants (CO 2, CH 4, etc.) Pollutants (CO 2, CH 4, etc.) Final Demand Direct Impacts Indirect Impacts...

7. U.S. & Canadian EIO-LCA models U.S. model created by Green Design Initiative – Carnegie Mellon University (1995) (www.eiolca.net)www.eiolca.net 1997 US Input-Output Table (491 sectors) Coupled to wide array of environmental data  Energy, Fuel use, Greenhouse Gases, much more. Canadian model originally created by U of T (2003) 1997 Candian Input-Output Table (117 sectors) Coupled to energy, fuel use and GHG data (compiled by Statistics Canada)

8. Comparing US and Canada Propane Coal Petroleum Products Electricity Natural Gas Agriculture Mining, Oil & GasManufacturing U.S.CanadaU.S. CanadaU.S. Canada Significant international differences in fuel use:

9. Comparing US and Canada MT CO 2 eq. per $US Million Greenhouse Gas Emissions Agriculture Mining & Utilities Light Manufacturing Primary Manufacturing Secondary Manufacturing Electricity & Natural Gas

10. Canada – U.S. Trade Canada’s economy is highly dependent on that of the U.S. ¼ to ⅓ of GDP in Canada associated with US Trade NAFTA Trade Block – over past 10 years trade has increased signifcantly. To improve accuracy EIO-LCA of major international projects like the oil sands must consider emissions and energy use in the U.S.

11. Canada-U.S. EIO-LCA Binational model links Canadian & U.S. EIO-LCA models via trade flows Captures Biregional Feedbacks: Demand Canada  Production Canada & Demand U.S. Imports  Production U.S.  Demand Can Imports  Production Canada ….etc. Result is total energy use and emissions across Canada & the U.S. for a particular economic activity.

12. Big Benefits for Canadian LCA Difference between bi-national EIO and Canadian EIO alone Agriculture Mining & Utilities Light Manufacturing Primary Manufacturing Secondary Manufacturing

13. Canada-U.S. EIO-LCA Analysis Limitations Simplified linear, static view Product mix issues Cradle-to-gate Data limitations Advantages Intersectoral detail System boundary is entire economy (Canada & U.S) Quick, transparent – often needed for ‘real-world’ policy Excellent first-round estimation for a snapshot in time

14. Application to Oil Sands LCA Advantages of Binational EIO-LCA allow it to be used effectively for comparison of different oil sands technology scenarios, considering: Total emissions across the supply chain Economy-wide Canada and U.S. emissions Binational EIO-LCA can be improved by using hybrid techniques that incorporate process-based LCA for crucial aspects of oil sands processes.

15. Thank You! Questions & Comments More Information: Jon Norman Department of Civil Engineering University of Toronto Tel: 416-327-8545 Fax: 416-978-3674 E-mail: jon.norman@utoronto.ca

16. North American EIO Model Based on a Chenery-Moses Multiregional Input-Output Framework (Chenery & Clark, 1959; Moses, 1955) Modified to account for Competitive Imports Separates out trade in the Canada/U.S. IO Tables Final demand = domestic demand + exports Economic output = domestic output + imports Import co-efficient: = Imports of commodity i Total domestic demand for commodity i

17. Linking Methodology Bi-national Canada-U.S. I/O Model = Final Demand International (I-A) -1 Total Output

18. Limitations & Advantages Limitations Same limitations as National EIO models, but also: Import proportionality assumption Data Limitations in terms of harmonization Key Advantages Accounts for trade effects ignored in national EIO Allows for North American-wide policy application: More accurate Life-Cycle Assessment Modeling cross-border impacts of production/consumption

19. US Energy Pull on Canada Energy Use Resulting from $1M U.S. Final Demand TJ/$US Million of U.S. Final Demand

20. Canadian Energy Pull on US Energy Use Resulting from $1M Canadian Final Demand TJ/$US Million of Cdn. Final Demand

21. Methodological Approach Environmental Input-Output (EIO) Analysis Popular modeling technique based on National Accounting methods used to determine GDP Applied effectively to estimate environmental/energy impacts associated with economic production since early 1970’s Our approach: Build new EIO models for Canada and US and link them through trade flows