LCAasaStrategicToolforDecisionMaking

Group2,SectionB,PGDM(GM)20162017
AniketMukherjee,AnirbanMukherjee,AmitBohra,AnkurSehgal,AnujGupta,AnshulAgarwal

Abstract:
ThisreportaimstoshowhowLifeCycleAssessmentcanbeusedasstrategictoolfordecisionmaking
inthemoderndaybusiness.Thegoalistoshowthatorganizations(bothforprofitandnotforprofit)
areincreasinglyusingLCAfortheirproductdevelopmentandbusinessstrategy.Thereportfocusses
ontwomajorindustriesElectronics(sinceewasteisgainingworldwideattentionrecently)and
Power(traditionally,oneofthelargestthreatstotheecology).Wehavestudiedtwoindustry
leaders(intermsofLCAadoption),AppleInc.(NASDAQAAPL)andTATAPower(NSE
TATAPOWER)tohighlightourclaim.ByassessinghowthesetwocompaniesadoptedLCAand
changedtheirbusinessandproductionstrategy,wehavetriedtosubstantiateourclaimthatLCAis
indeedbecomingoneofthedriversofmoderndaybusinesses.

Introduction:
SincetheadventoftheIndustrialRevolutionofthe18thCentury,
theworldhaswitnessedarapideconomicgrowthmajorlydueto
advancementsintheindustrialandmanufacturingsectors.This
growthledtoanunbridledconsumptionofnaturalresourcesand
dumpingofindustrialwastes.Fossilfuelssupplieswerethought
tobeinexhaustible,andbecauseoftheirimportanceintheearly
steamengines,useofcoalandnaturalgasincreasedatan
exponentialrate.
Source:http://www.thinglink.com/

Thewealthofaneconomy,measuredgenerallyintermsofGDP,aswellasthefundamental
indicatorsofhumanwellbeing,suchasimprovededucation,socialsecurity,advancedhealthcare
andincreasedpurchasingpowerofthesocietyfailedtocapturethedestructionofnatureandthe
imbalanceintheecologywhichhasbeenbroughtaboutbytheindiscriminateexploitationofnatural
resources,deforestation,displacementofnativepopulationandpollutionofallkindsbroughtonby
thesefactories(andtheirproducts).Infact,therateofCO2releasehasbeensoalarmingthatLee
Kump,ageologistatPennState,andAndyRidgwell,aclimatemodellerfromtheUniversityof
Bristol,observedinaspecialissueofthejournalOceanographydevotedtoacidificationthat[the
rateofCO2release]islikelytoleavealegacyoftheAnthropoceneasoneofthemostnotable,ifnot
cataclysmiceventsinthehistoryofourplanet.[*ThesixthextinctionElizabethKolbert]

LifeCycleAssessmentandSustainability:

LifeCycleAssessment(LCA)isatoolforthesystematicevaluationoftheenvironmentalaspectsofa
productorservicesystemthroughallstagesofitslifecycle.[UNEnvironmentProgram]

LCAaimstoanalysetheinteractionbetweenaproductandtheenvironment,fromthedesignand
developmentphaseoftheproduct[DFEDesigningforenvironment&Sourcingofrawmaterials]to

productmanufacturing[manufacturingprocessesfollowed]totherecyclinganddisposalofthe
productattheendofitsusefullife.

StepsinLCA:
ISO14040providesageneralstructureforperformingLifeCycleAnalysis

TargetandBoundaryDefinition.
InventoryAnalysis:(ISO14040:1997)Collectandverifydata.Calculatemassbalanceandenergy
balanceofprocesses.Classifyinputs,outputs,wastes.
ImpactonEnvironment(ISO14040:2006)
InferencefromLCA

LCAinStrategicDecisionMaking:
LCAcanbeemployedinstrategicdecisionmakingthroughthefollowingapproaches:
1.
2.
3.
4.
5.

LCAastoolforinnovation
LCAasatoolforCostReduction
LCAasatoolforRevenueGeneration
LCAasatoolforRiskMitigation
LCAasatoolforBrandenhancementandMarketingStrategy

Example:BluescopeSteel

ProposedSydneyOlympicStadium(2000)designswereevaluatedonthebasisofLifeCycle
Assessmentandcost.
EnvironmentFriendlymodelwaschosenoverconventionaldesign
Savings:30%primaryenergy,37%GHGemissions,13%water.

CaseStudy:AppleInc.

Withtherapidadvancementoftechnology,thereisaneverincreasingconcernregardingthe
manufacturinganddisposaloftechnologyproducts.Ifwetaketheexampleofmobilephones,we
canclearlyseethatthesaleshaveincreasedexponentiallybuttherecyclingrate,notsomuch.

Source:BusinessInsiderintelligence

Source:http://www.electronicstakeback.com/

ApplehastakensomesubstantialeffortsinadoptingLCAintheirproductionprocess.Someofwhich
arementionedbelow

1. UseofrawmaterialsAlltherawmaterialsthatgointothemakingofiPhonesaresourced
fromsustainablesources.Aluminium,amajorcomponentoftheiPhoneblock,issmelted
usinghydroelectricityratherthanfossilfuels.Themanufacturingprocessalsotakeuseof
scrapaluminium.CertainrawmaterialslikeBeryllium,Arsenic,MercuryandLeadhavebeen
discontinuedfromusage.

2. SourcingofrawmaterialsAllegationsofillicittradeofgold,traceabilitygaps,allegationsof
stolenmineralsandfundingofrebelshavepromotedresponsiblesourcingmeasuresin
ApplewithThirdPartyAuditPrograms.

3. InnovationinmanufacturingiPhonesaremanufacturedinawaythattheycanbetaken
apartbyrobots.~1.2millionphonesaretakenaparteveryyearbyrobots.

4. RecyclinganddisposalprogramsThephoneshavepackagesmadefromrecycledfibre.Not
onlydoesApplescourgelandfillsforusedphonesforsparepartsreplacements,butitalso
startedtheAppleRenewprogramwhichensuredthatcustomersbroughtintheirused
phonesforreuseorresponsiblerecycling.

OtherthantheseapproachesthatdirectlyimpactedthewayiPhonesarecreated,otherinnovative
ideassuchasfreeshippingonewastereturns,stresstestingproductsandcomponentsforlonger
shelflifeallofthesehavemadeasignificantcontributionnotonlytotheincreaseinrevenue
(decreasingcosts)aswellasbuildinganidea/brandofthecompany.Withmoreandmore
consumersbecomingawareoftheimpactofthesesustainabilitymeasures,Applehasmadeaniche
foritselfinthemarketbythinking,understanding,adoptingandfollowingtheDFEandLCAintheir
productlifecycle.

CaseStudy:CoalPowerPlants:Towardscleanerpowergeneration
Context:CEAsubmitsreporttopowerministryIndiatoreplace10180MWofexistingoldplantsby
supercriticalones.
LCAofCoalpowerplants
3stepsinvolved:

Mining:releaseofmethaneprimarysourceofpollution
TransportationofCoal:spillagecausesamajorenvironmentalimpact
ThermalPlantOperation:Combustionofcoalaccountsformajorconsumptionofcoaland
emissionsintheformofheat,CO2,SOx,Nox
WeadoptParetoprincipletofocusonthemajorstepofcoalconsumption:Operation

Comparisonofthreetechnologies:Subcritical,SupercriticalandUltraSuperCriticalshowsUSCasthe
mostfuelefficientfollowedbySuperCriticalTechnology.

Parameter

Unit

SubC

SuperC

USC

Capacity

MW

300

600

600

Lifetime

years

30

30

30

NetGeneratingEff

38

40.8

45.19

FullLoadHours

hr/year

5000

5000

5000

Emission

SubC

SuperC

USC

Pb
NH3
HF
PM
SO2
NOX

2.13E05
5.80E04
2.50E04
1.92E01
1.03E+00
5.40E01

2.00E05
4.94E04
2.13E04
1.77E01
9.67E01
5.04E01

1.97E05
4.75E04
2.05E04
1.66E01
9.03E01
4.71E01

StrategicAdvantage:

OperationalSuperC&USCsystemshaveacapacityof600MWorhigher,whichspreadsout
thecostperkWofpower.SubCplantsareofsmallercapacity500mw/250mworless.

WhileSupercriticalPlantshavehigherinitialinvestmentcost,operationalcostislessas
comparedtosubcriticalplants.Thisisduetohigherefficiencyandreducedfuel
consumption.

Overaperiodoftimefixedcostisdistributedamongstgeneration;withlowvariablecost
supercriticaltechnologyreducesthecostofgenerationdrastically.

Types
ODP(kgR11eq)
AP(kgS02eq)
HTP(kgDCPeq)
GWP(kgCO2eq)
SubC
1.62e06
1.41
3.72
970
SuperC
1.37e6
1.31
3.26
830
USC
1.31e6
1.24
3.14
800
ThusthefutureofcleanpowergenerationisSupercriticalandUltraSuperCriticalPowerplants.India
firstadoptedUltraMegapowerplantatMundra,GujaratbuiltbyTATAPower.
Conclusion:

LCAisbeingincreasinglyusedasatoolforstrategicandoperationaldecisionmaking.DatafromLCA
isoftenincorporatedinratingtools.LCAcanbelimitedduetouncertaintiesowingtouncertain
measurementofimpacts.Fuzzylogicandstatisticalapproachesarebeingincreasinglyusedtomake
LCAeffectiveinunderstandingoftheenvironmentandprioritisationofstrategy.

Sources:

https://www.theguardian.com/sustainablebusiness/technologystoppedevolutiondestroyingworld
http://www.ecology.com/2011/09/18/ecologicalimpactindustrialrevolution/
http://www.unep.org/resourceefficiency/Consumption/StandardsandLabels/MeasuringSustainability/LifeCycleAssessme
nt/tabid/101348/Default.aspx
https://www.presustainability.com/lcamethodology
http://images.apple.com/in/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
ThesixthextinctionElizabethKolbert
LIFECYCLEASSESSMENTANDINNOVATIONINLARGEFIRMSFransBerkhout(BusinessStrategyandtheEnvironment,
Vol.5,145155(1996))
FromLCAtoPSSMakingleapstowardssustainabilitybyapplyingproduct/servicesystemthinkinginproduct
developmentNikiBey,TimMcAloone
StructureandOutputmechanismsinDesignforEnvironment(DFE)toolsAndrewBirch,K.K.B.Hon,TimShort,Journal
ofCleanerProduction,Elsevier
UptodatelifecycleassessmentandcomparisonstudyofcleancoalpowergenerationtechnologiesinChinaXiaoye
Liang,ZhihuaWang,ZhijunZhou,ZhenyuHuang,JunhuZhou,KefaCenElsevier
LifeCycleAssessmentanalysisofsupercriticalcoalpowerplantsAndrzejZiebik,KrzysztofHoinka,MarcinLiszka
ReportonreplacementofOld&InefficientsubcriticalunitsbySuperCriticalUnitsTPP&DDivision,CEA
RoleofLCAindecisionmakinginthecontextofsustainabledevelopmentBeaconPathwayLimited