Chalmers University of Technology
Environmental damage costs society enormous amounts of money – and often leaves future generations to foot the bill. Now, a new ISO standard will help companies valuate and manage the impact of their environmental damage, by providing a clear figure for the cost of their goods and services to the environment.
We know what goods and services cost us, but what does the environment pay? For many years now, this question has been the focus of several global companies and researchers at the Swedish Life Cycle Center, a competence centre hosted by Chalmers University of Technology, Sweden. For as long as 30 years, they have been using the so-called ‘EPS tool ‘ to place a monetary value on environmental damage.
Over the past three years, Bengt Steen, Professor Emeritus at Chalmers, has led the development of a new ISO standard for monetary valuation. The work has been in collaboration with AB Volvo, Essity, Nouryon (formerly Akzo Nobel Specialty Chemicals) and the IVL Swedish Environmental Institute. The initiative was taken by Swedish Life Cycle Center.
“One reason why sustainable development does not move fast enough is that it is not linked to the economy,” says Bengt Steen. “Experts speak one language, and business leaders another. The negative environmental effects often remain just figures on paper. But by translating environmental issues into a monetary value, it becomes much easier to present the whole picture to an organisation and influence their strategic decisions.”
Unlike many other tools, EPS weighs different types of environmental impacts, not just the effect on climate. For example, a given course of action may be beneficial for the climate but damaging for biodiversity or public health. With this approach, an overall picture is reached of what impact a product or service has on the environment, throughout its entire life cycle. A large variety of aspects are covered. Until now, this has been complex work, requiring a lot of manual input and expert knowledge.
“With this standard, we can remove several of the obstacles to increased usage of monetary valuation. In a few years, when users can routinely assess the total environmental damage cost for a given investment, supplier, product design and so on, environmental issues can occupy a more central place in the boardroom. Costs to the environment can be presented side by side with profits for the company,” says Bengt Steen.
Emma Ringström, Sustainability Manager at Nouryon, says that monetary valuation has given the company much valuable insight.
“We have made monetary valuation of a number of our value chains and included the results of this in our annual report. The analyses include financial, social, human and environmental capital, where environmental capital is partly calculated with life cycle assessment and with EPS as a valuation method. The tool has also been used to see which activities in the value chain have a large total environmental damage cost compared to profit, and therefore need to be prioritised to become more sustainable.”
Although tools such as EPS have existed for 30 years, and many companies like Nouryon use them to calculate their costs to the environment, Bengt Steen believes their development moves too slowly. There is no standardised framework, and few databases exist that enable their use in a uniform manner.
Therefore, in 2015, the idea of a new ISO standard was born within Swedish Life Cycle Center. Together with SIS – the Swedish Standards Institute – a proposal was written that now after just over three years of work, together with many internationally recognised experts, is launched.
“Few things yield such an impact as these type of heavyweight, international standards,” explains Bengt Steen. “When companies in the future can see where there are clear environmental benefits, investments are stimulated for a sustainable business.”
The ISO standard contains a guide for how monetary valuation should be made, defines terms and sets requirements for documentation. By extension, the standard is expected to lead to increased collaboration between experts of various kinds, as well as helping to create credible databases and software.
How to calculate a monetary valuation of environmental impacts:
With monetary valuation of environmental impacts, many different aspects are taken into consideration. These can include energy consumption, climate impact, material use and emissions into water, air and soil. During a product’s lifetime, the amount of emissions generated, and amount of resources expended can also be measured. These lead to many demonstrable environmental effects, such as reduced crop yields, lower fish stocks and shortened human life spans, due to floods and heat waves.
Finally, using generally accepted sources, such as the OECD’s estimate of people’s productivity value, and market prices for cereals, fish and meat, the cost of the impact can be ascertained. The end result is a concrete figure, calculated in Euros.
In some cases, the figure represents a real incurred cost for the company, in the form of taxation or fees. In other cases, the figure signals possible future economic liabilities, or is simply a sign that the product results in environmental damage that the company wants to avoid.
A simple example of environmental impact valuation:
Imagine a wooden chair, which is worn out and needs to be disposed of. The chair weighs 12 kg. There are two options:
- Throw the chair into a nearby rubbish bin, after which it ends up in landfill.
- Drive the chair to a heating plant 10 km away, where it will be burned, and used for local heating instead of fossil fuels.
In the first case, the cost of transport and the landfill is low – 0.40 Euros, and the emissions from the transport are largely negligible. But, the degradation of the wood in the landfill takes place under oxygen-poor conditions, resulting in 4 kg of methane being formed. This leaks into the atmosphere and contributes to the greenhouse effect. The environmental cost of methane emissions has been calculated at EUR 3.80/kg using the EPS methodology. In total, therefore, there is a conventional cost of 0.40 Euros, and an environmental damage cost of 4 X 3.80 = 15.20 Euros.
In the second case, the transport costs 5 Euros. The transport gives an emission of 3.8 kg carbon dioxide, but the thermal energy derived from the chair means that 6 kg of coal does not have to be burned for the heating plant to produce the heat needed. This results in a saving of about 20 kg of carbon dioxide emissions, and 6 kg of the finite natural resource, coal. With EPS, the environmental damage cost for carbon dioxide has been calculated at EUR 0.135/kg and the natural resource value of coal at EUR 0.161/kg. Therefore, this method of disposal results in a total conventional cost of 5 Euro, but a saving of environmental damage costs, an actual environmental gain, of 0.135 X (20 – 3.80) + 0.161 X 6 = 3.153 Euros.
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Link to the standard: https://www.iso.org/standard/43243.html
Who knew Leftism had its own mathematical proof?
ISO in my personal experience is a joke and scam run for the benefit of those working in the organization. Example
I was responsible for getting a number of departments at a medical device manufacturing plant ISO certified. Unable to get ANY of the required documentation completed for the thermo-forming department prior to the ISO visit. The department supervisor was a very young man of Philippine descent. The lead ISO inspector happened to be an older man of Philippine descent. On the day of the inspection I introduced the ISO inspector to the fine young supervisor and stated that I had a meeting to attend but that he was highly capable and would handle things. At the wrap up meeting the ISO inspector praised the thermo-forming department as the gold standard for the rest of the plant.
That’s how it happened people. This attempt at “standards” is pure coercion by our opponents.
Crispin:
This “standard” is warmed-over Social Cost of Carbon nonsense, and as such the way it’s derived is to hysterically exaggerate any “costs” that can be imagined and to disregard the benefits of more carbon dioxide. If a fair calculation were done, the benefits would be seen to dramatically outweigh the costs and then what would be the purpose of the “standard?”
“Standards” like this are inherently political, and produced by propagandists, so I don’t see how we should just accept them and hope for improvement. Letting the camel’s nose into your tent results in a camel in your tent, not a nice little kitty-cat.
Your support for the “responsible use of resources” sounds reasonable, but again, this whole standard is based on the lie that carbon dioxide contributed by us is bad. And of what relevance is the amount of plastic in a whale’s gut?
You claim to support “the continued drive to end poverty and starvation..;” but you seem to discount the force that has made this happen – mankind’s ability to use fossil fuels to create work product and value.
What are the benefits of more carbon dioxide in the atmosphere? If the planet becomes just a bit warmer (all that can reasonably be expected), then fewer people will die of cold exposure compared to heat exposure yearly; but plants will grow much better, be better able to withstand diseases, pests, and drought, and tolerate higher growth temperatures. This will not only benefit human-planted crops but other plants too, and because animals live off of plants, the whole biosphere will benefit. Plus, as Putin has said, we won’t need so many fur coats!
The Earth will really be “greened” instead of the fake and imaginary “greening” of the climate hoaxers.
My reply did not find the right place, Jeffrey. Please search for your name or mine.
environmental regulations costs society lots of money and lost productivity too.
the “Green New Deal” or “Giddy up Ma we got the lower 40 to do before sundown.”
“Keep pullin'”
The example of the chair shows the problem with this approach.
The environmental cost is NOT a function of the chair. Rather it is a function of how the chair will be used in the future.
As the example showed, two different futures result in two different costs for the chair, depending on how you dispose of the chair.
So how can you have one ISO standard for the monetary cost of the chair when this very simple example showed two different costs?
The simple answer is that the future cost is not tied to the chair.
It is dependent on how the chair might be used, which is not known at the time the standard is assigned.
Thus social costs are not true costs. A gallon of gasoline used to plant 100 trees has a different social cost than a gallon of gasoline used to cut down 100 trees.
The example of the chair shows the problem with this approach.
The environmental cost is NOT a function of the chair. Rather it is a function of how the chair will be used in the future.
As the example showed, two different futures result in two different costs for the chair, depending on how you dispose of the chair.
So how can you have one ISO standard for the monetary cost of the chair when this very simple example showed two different costs?
The simple answer is that the future cost is not tied to the chair.
It is dependent on how the chair might be used, which is not known at the time the standard is assigned.
Thus social costs are not true costs. A gallon of gasoline used to plant 100 trees has a different social cost than a gallon of gasoline used to cut down 100 trees.
Well stated ferd (and well worth say twice 🙂 )
If a “cost” is situationally dependent on things that happen independently long after a product is made, it’s not, in any real way, a cost of that product.
Not only does a gallon of gasoline used to plant 100 trees have a different social cost than a gallon of gasoline used to cut down 100 trees but both of those is a different social cost to a gallon of gasoline used to plant 50 trees and cut down 50 tress or any other scenarios you can dream up which means it’s not a social cost of the gasoline *at all* but rather a social cost of the actions of planting or cutting down trees regardless of the tools/fuels used to do so.
These stupid ISO environmental costs are simply new schemes for governments to steal more taxes from the private sector and to destroy capitalism.
The US private sector already spends $2 trillion/year in government regulation compliance costs, most of which are unnecessary and are a complete waste of money.
There are some prudent pollution standards derived using cost/benefit analysis, which are fine, but most are not.
Very few people realize that real air and water pollutants have been slashed 60~99% just since 1980:
https://www.epa.gov/air-trends/air-quality-national-summary
Any additional decrease in pollutants will have very minor benefits at gigantic costs.
Government and enviro-wacko hacks always fail to calculate the unseen costs when they steal money from the private sector which could have been inteligently invested in: R&D, new product development, new technologies, new life-saving drugs, starting new entire industries, which would lead to: higher employment, greater GDP growth, higher standards of living, less welfare spending, higher salaries, increased bank reserves, lower interest rates, etc., etc., etc.,
Let’s just continue using prudent pollution standards and product liability laws to handle environmental issues, and severely cut regulations whose costs exceed any meaningful benefits.
“prudent pollution standards and product liability laws”…… On a case by case basis. One-size-fits-all lawmaking is the road to disaster.
William-san:
Constitutionally, the Federal government does not have Article 1 Section 8 authority to set environmental laws and regulations, so under the 9th and 10th Amendments, States should set their own enviromental laws and regulations in accordance to their unique social and economic needs.
Does the effect that methane have been proven by experiment?
No – just more pure speculation based on erroneous assumptions, circular logic, group-think, confirmation bias, etc. ad nauseum. In other words, the usual AGW manure.
3M left a huge mess in St. Paul before they moved most of their manufacturing to Texas. Now they are Texas’ problem.
Unless I missed it, nowhere in this thread has anyone said anything about 3M.So do you care to elaborate on what your non sequitur has to do with anything?
Do you realize how potentially dangerous this is ? A standardized legal based on assumptions way to make money out of thin air . Obviously only one way application, from populations to states.
Further, any lifeform can be evaluated. Short form, can we afford the price of our lives ?
+10 and that is strategy behind making their goals a legal/contractual/regulatory requirement. Avoids political road blocks like a second Trump term.
3.80 euro per kg of escaped methane.
≠==========
So a $1 plate of baked beans represents $20 of escaped methane.
And a $5 bale of hay fed to cattle, $500 worth of escaped methane.
And what about termites? $ 10 trillion in escaped methane every year. High time they paid their fair share of carbon taxes.
And what about carbon credits? If we wipeout termites, do we get a carbon credit for theethane the termites would have released?
Rather than getting rid of cattle, it looks like the more sustainable action would be global termite eradication.
The $100 trillion in savings from termite eradication globally is almost exactly the cost of the Green New Deal. Voilà, problem solved. Wipe out termites to pay for the GND.
Termite eradication would save $10 trillion every year, which is the $100 trillion required to implement the GND over the 10 years we have left before the world ends.
After that, the $10 trillion every year can be used to retire the national debt, eradicate disease, end poverty worldwide, and pretty much solve any problem we can think of.
This clearly shows that the sustainable solution to the worlds problems is global termite eradication (GTE). Its either the termites or humans that are going to have to go.
Most politicians see the way forward as taxing humans out of existence. High time we moved the political crosshairs off humans and onto termites. Who will miss them when they are gone?
Hey, this is just for termites, right? Just think of how much money we can save exterminating OTHER species.
It’s clearly time to start making a list of species we can do without. Green Environmentalism demands it.
~¿~
Don’t worry, Hilton will save us all from armageddon:
https://www.cnn.com/2019/03/18/business/hilton-soap/index.html?utm_term=image&utm_content=2019-03-18T18%3A56%3A23&utm_medium=social&utm_source=twCNN
Plus the curly hairs in the recycled soap make scrubbing easier.
Ewww
“The end result is a concrete figure, calculated in Euros.”
This word “concrete.” I do not think it means what they think it means.
What if the methane generated by the chair is captured and used as fuel?
This standard is a hopelessly corrupt attempt to justify cod environmental practices…
“The environmental cost of methane emissions has been calculated at EUR 3.80/kg using the EPS methodology. In total, therefore, there is a conventional cost of 0.40 Euros, and an environmental damage cost of 4 X 3.80 = 15.20 Euros.”
Let’s do some basic math that Liberals cannot seem to perform.
– In the US, most gas compnaies bill customers by “therms”. 1 therm – 100cf
– 100cf (cubic feet) of Natural Gas = 2.4 kg mass. Natural gas is 95% methane, then this = 2.28 kg x EUR 3.8/kg = EUR 8.66 = $9.97 USD. So using this ISO, it’s $10 environmental cost per 100cf of natural gas.
In the US, the December 2018 average price per 100 cubic feet (cf) of Nat Gas was $0.963 per100cf.
(ref: $9.63/1,000 cf from EIA webpage: https://www.eia.gov/dnav/ng/NG_PRI_SUM_DCU_NUS_M.htm )
So my gas price is about $1 USD per 100cf. Add on $10/cf for envrionmental cast. My residential gas would now be 11 -fold higher.
Looking at my SW Gas bill for December: I see that from Dec 14, 2018 to January 17, 2019, my usage was 111 therms = 111 cf. My usage cost was $116 for that period.
If we apply this ISO, then my bill would have been (11 x $116 =) $1,276 just for those 34 days in Dec-Jan.
Time to break out the Yellow Vests.
Errata: should read “Add on $10 / 100 cf for environmental cost.”
‘Imagine a wooden chair, which is worn out’
Imagine that the chair is not broken – How long was that chair used for before becoming ‘worn out’?
Imagine that chair was broken and unrepairable – What other uses could that wood be used for, besides burning or burying it?
Seems to be a very poor example….
ISO – another useful service taken over by the loonies?
“We’ve published 22567 International Standards … ” This one, ISO 14008:2019, costs CHF138. ~$US139, $A195.96. I think I’ll pass.
I have worked with some, eg ISO 32000-1 (specification for pdf files), ISO 1496 (freight containers). Did some work towards establishing ISO 9001 compliance (quality management). Some 9001 documents were actually useful. Best one I read was for a quarry operation. Ran to about 20 pages. Every employee could read it . On the other hand, in some organisations, you needed a supermarket trolley to carry the paper copy.
Here is part of the description of ISO 14008 from their website.
“In this document, monetary valuation is a way of expressing value in a common unit, for use in comparisons and trade-offs between different environmental issues and between environmental and other issues. The monetary value to be determined includes some or all values reflected in the concept of total economic value. An anthropocentric perspective is taken, which asserts that natural environment has value in so far as it gives utility (well-being) to humans. The monetary values referred to in this document are economic values applied in trade-offs between alternative resource allocations, and not absolute values.
This document does not include costing or accounting, although some valuation methods have the term “cost” in their name. This document does not include the development of models linking environmental aspects to environmental impacts.”
Thought it might be helpful.
With rainbows and fairy dust you can accomplish almost anything!
As Robin Williams said in Dead Poets Society about a quantifiable measure of poetry…….Excrement!
I just ask where is the benefits of the goods.
Some years ago I managed a joint venture with Akzo Zout Chimie, then based at Hengelo on the Dutch-German border. Akzo was a huge global corporation that grew from mining salt and making chlorine and a whole host of downstream products. Later, Akzo joined with Nobel, which had grown from its production of dynamite to make Nouryon, a corporation noted above as involved with the creation of this draft ISO. As I read Akzo (chlorine) and Nobel (Dynamite) I began to wonder.
I wondered if the involvement of Nouryon was reflecting little more than virtue signalling to say we might be producing chlorine that Greenpeace wants banned and we might be making dynamite that many people would like to see banned, at least in warfare, but we are responsible corporate citizens who will spend some of our profits to assist Chalmers University of Technology in their efforts to tell other people how they should run their lives, preferably in permanent prostration before the God of the environment.
Over the years and from a distance, I thought that I was witnessing Akzo promoting softly-feely types to top positions, while bypassing the strong and capable. This did not look like a good way to go. Then, later, I saw the same happening in many corporations, coincident with a global rise in virtue signalling about the environment, an large increase in the numbers of people employed to tell others how to conduct their lives when before they just made physical products and not mental ones and a large increase on major corporate decisions of the worst king, namely those with the seeds of their own destruction (and ours) like closing nuclear plants and building windmills.
There used to be many windmills around Hengelo, but they were replaced by fossil fuel plants for electricity generation until the last 2 decades or so. Then I recalled that the Dutch-German region around Hengelo was close to where I place the geographical center of the extreme environmental activism movement. Just look at the Germanic author names in IPCC reports and wonder if there is an epicenter there. There might not be, but by some indirect criteria like these it sure looks that way.
Whatever happened to strong, capable corporate leadership in major global corporations? These days we seem to have soft white hands wringing wet handkerchiefs, instead of strong chiefs wringing wet green necks. This combination of Chalmers University of Technology with these corporations is yet another expression of dreadfully poor science, riddled with assumptions taken for granted and following a series of socio-political ideals.
Science does not need socio-political diversions. Geoff
While the idea of creating a workable “Standard” for the effects of
environmental matters, a bit like the old ASA rating for the film cameras,
the point that is not mentioned is this.
Politicians are interested in only one thing, that is to get re-elected. If s
something in their opinion will help them do that, its used. So in his case will adopting such a standard help them.
Somehow I don’t think so, they will stick with a sure winner, the emotion of Green things, nothing else comes close.
MJE VK5 ELL
Sustainability101 ISO style-
https://www.msn.com/en-au/money/company-news/sydney-startup-fulcrum3d-bags-dollar1-million-to-trial-renewable-energy-forecasting-tech/ar-BBUZqnN
You don’t even have to make any renewable energy.
Eurekalert!
Nuf said.