Climate Economics Seminar: Incorporating Price Effects into Lifecycle Analysis
Date(s): March 5, 2008 (1 pm)
Location: Room 4144, EPA West
Presenter: Mark Delucchi (Institute of Transportation Studies, U.C. Davis)
Description: Professor Delucchi's talk argued that no existing models of lifecycle carbon dioxide-equivalent greenhouse-gas (LC-CO2E-GHG) emissions from transportation fuels account for the interaction of policy, the production of new fuels, prices, production and consumption, and finally GHG emissions. In the real world, the production of biomass and biofuels and the substitution of biofuels for petroleum will affect the prices of a wide range of commodities, from gasoline and coal to fertilizer and steel. A change in the price of a commodity will affect the production and consumption of that commodity, of course, but also will affect the price and hence production and consumption of substitutes for and complements of the commodity, products derived from the commodity, and inputs used to make the commodity. So, for example, an increase in use of biofuels in the U. S. can lead to an increase in the use of home heating oil, via the effect of biofuel substitution for gasoline on oil prices. The increase in heating oil will be partly a substitution of oil for other sources of heat, and partly a net increase in heating. Both of these affect GHG emissions and climate change. A general equilibrium model of the world economy, including government sectors, is needed to trace out all of the relevant economic effects of a particular biofuel policy or assumed market outcome.
There are at least four different ways to combine life-cycle analysis (LCA) and general-equilibrium analysis: build a combined model from scratch; connect an existing LCA and an existing general equilibrium model in a meta-modeling framework; add technological detail, input-output linkages, and emission factors to an equilibrium model; or add price-production-GHG relationships to an LCA model. The focus of this talk will mainly be on the last alternative.
Working Paper related to seminar:
Delucchi, Mark A. (2005) Incorporating the Effect of Price Changes on CO2-Equivalent Emissions From Alternative-Fuel Lifecycles: Scoping the Issues. (PDF, 647 kb) ITS-Davis.October 2005. Publication No. UCD-ITS-RR-05-19.
Presentation Slides (PDF) (113 kb, About PDF)