No. 5 January 1994

The SEI/UNEP Fuel Cycle Analysis Project

by Michael Lazarus, Stockholm Environment Institute - Boston Center

The Stockholm Environment Institute (SEI) and the UNEP Collaborating Centre are conducting a one-year project to identify key issues relevant to full fuel cycle analysis in developing countries, and to develop appropriate analytical methods to include these considerations in energy policy decisions. In three country case studies, we will investigate how the inclusion of upstream and downstream environmental impacts, often ignored in traditional energy analysis, might affect the comparative advantage of a set of energy options. In particular, we intend to focus on the comparison of biomass and fossil resource options for producing both electricity and final fuels (e.g. alcohol fuels).

The methodology will be implemented as part of the Long-range Energy Alternatives Planning (LEAP) system and the associated Environmental Data Base (EDB), and will enable the comparison of environmental loadings associated with alternative projects as well as full integrated scenarios. The final output of the project - a report, a workshop, and expanded LEAP/EDB software that includes fuel cycle aspects is targeted directly for developing country government and NGO planners and researchers, while the case studies will serve as laboratories for evaluating the usefulness and desirability of this expanded approach.

This project is the second phase of an ongoing UNEP/SEI collaborative effort to develop and disseminate methods for bringing environmental considerations to bear on energy development in developing countries. In Phase 1, we developed a comprehensive Environmental Data Base (EDB). This interactive database contains extensive quantitative information on the environmental loadings associated with a wide range of energy production and consumption technologies. We also linked this database with SEI's computerized energy planning software, LEAP, so that the environmental loadings of specific energy scenarios could be compared. Now installed in over 30 countries, the combined LEAP/EDB system is being actively used in numerous energy-environment studies.

Phase 2 will highlight several specific issues raised by existing LEAP/EDB users, including concerns (1) that emissions-oriented analysis, particularly in relation to greenhouse gases, may de-emphasize important local environment problems; (2) that data and approaches for many important fuel cycle stages (particularly biomass resource extraction) are lacking; and (3) that efficient approaches to incorporating a wide range of environmental issues in energy analysis remain elusive. The Phase 2 project aims to move a step in the direction of addressing these concerns.

Incorporating environmental considerations

There are at least four stages to incorporating environmental considerations in energy decisions: identification, quantification, valuation, and implementation. The first step, identification, is essentially a scoping exercise: What are the possible types of impacts, both immediate and long-term, both on-site and distant, that might occur? Environmental analyses of energy use often focus exclusively on the air pollutant emissions (e.g. SOx, NOx, CO2) associated with fuel conversion and combustion. However, these are only two of many stages in the "fuel cycle".

Significant environmental impacts can also be associated with energy resource exploration, extraction, facility construction, transportation, distribution, storage, waste disposal, and facility decommissioning. Similarly, the impacts of hydroelectric development and biomass resource use, which are highly site-specific and difficult to quantify, are often under-emphasized. The SEI/UNEP fuel cycle project will thus focus on identifying of potential fuel cycle impacts that might otherwise be overlooked.

The project will also emphasize limited quantification of these impacts. Within the quantification process, there are several key steps. We will focus on the first, and least uncertain of these steps: estimating direct on-site impact and loadings. By this, we mean the air and water emissions, waste generation, and local land use and ecosystem impacts associated with the provision of a particular final fuel, including the loadings and impacts from all major stages required to deliver the fuel to its final user.

This level of analysis does not indicate the final damage that might occur from the energy activity. Damage estimation - years of lost life expectancy, species lost, etc. - requires modelling the transport, exposure, and response relationships that govern the fate and final impact of initial loadings. While damage analysis is a desirable objective, and is being pursued in a number of concurrent fuel cycle research efforts, it requires far greater analytical effort and data availability, and the results may be highly site-dependent.

Similarly, the valuation and implementation processes are largely beyond the scope of our present project, but are essential to final decision-making. The valuation process involves placing a weight, in monetary or other terms, on specific damages (e.g. the dollar value of a lost human life or species) or on another, more easily determined indicator, such as on-site loadings (e.g. tons SOx emitted, hectares of land degraded). A variety of approaches have been proposed, and several recently implemented, most notably in state-level electric sector planning in the U.S. As part of the project, we will provide the capability to assign monetary values to on-site loadings, review some of the values developed using the various control and damage cost methodologies in specific situations, and, possibly, test out and discuss the applicability of these approaches within the case studies.

Building on other efforts

To avoid duplication and maximize project impact, we are building on other efforts in three ways. First, we will expand an existing methodological framework, LEAP/EDB, that has already been used for energy-environment analysis in over 30 countries. As a result, the fuel cycle impacts will be integrated within an analytical framework capable of modelling the full energy system, and thereby capture important interactions with demand forecasts, electric system dispatch, and traditional cost-benefit analysis. Furthermore, the results of this project will be easily accessible to the large number of government agencies and NGOs that currently use LEAP/EDB.

Second, we will draw from current research on integrated damage modelling (Tellus, 1993) and on quantifying fuel cycle impacts at specific case study sites (U.S./E.C. Fuel Cycle Study). We will also coordinate with other relevant efforts, such as the World Bank's Environmental Manual project (electricity only) and international greenhouse gas studies that cover selected aspects of total fuel cycle analysis.

Finally, case studies will be conducted in relation to specific energy studies already underway, in order to stimulate fuller consideration of environmental impacts and to maximize the likelihood of eventual policy impact. Case study selection is guided by the need for a broad coverage of regions (Africa, Latin America, and Asia) and major fuel-cycles (biomass, fossil fuel, and other). Case studies in Venezuela and Sri Lanka have already been established, and preparatory missions by UCC and SEI-B staff have been undertaken. A third possible study (in Africa) is currently being evaluated.

Key project activities:

Specific Case Studies will consider the implication of broader fuel cycle environmental analysis in developing countries. While the issues raised in each study will be shaped by the concerns of local study participants, a few questions are likely to emerge in each:

What precisely is fuel cycle analysis? And what are the appropriate boundaries to consider? For instance, should the impacts of resource extraction be considered for imported fuels? Should secondary impacts, such as the energy and environmental implications of the materials (steel, cement, etc.) required for facility construction, be included?

How do the effects of the less frequently considered fuel cycle stages -such as transport and resource extraction - compare with the effects of fuel combustion and conversion?

How does the comparison among fossil fuels (natural gas, oil, and coal) and between fossil and biomass resources change as total fuel cycle environmental impacts are considered? Do site-specific considerations dominate these comparisons or can the results be generalized?

How should more uncertain and difficult-to-quantify loadings and impacts be considered along side the more easily measured air pollutant emissions?

And finally, how can environmental loading and impact estimates be systematically incorporated in each country's planning process? What are the options for tackling the "apples and oranges" dilemma: i.e. that incommensurate impacts (e.g. human health vs. ecosystem impacts) lack a common denominator?

The Analytical Tool, based on the current LEAP/EDB system and lessons learned from the case studies, will enable a rapid, comparative evaluation of alternative projects or scenarios based on full fuel cycle impacts. It will include an expanded data base of fuel cycle impacts. It will also emphasize biomass energy, since fuel cycle analysis of this resource is both less evolved and particularly relevant to many developing countries. At the completion of the project the tool will be made available to government agencies and NGOs conducting energy and environmental analysis.

A Synthesis and Review Workshop will bring together case study participants near the completion of the project to identify common findings of the case studies, to assess the applicability of the analytical approach, and to develop priority areas for further research.

For further information on LEAP/EDB and the Fuel Cycle Analysis project contact:

Michael Lazarus
Stockholm Environment Institute - Boston Center
Tellus Institute
11 Arlington Street
Boston MA 02116-3411, USA
tel. 1 617 266 5400
fax. 1 617 266 8303


Gordon Mackenzie, UNEP Centre, Risoe

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