1. Life Cycle Thinking
PROJECT :
TITLE :
The Role of Inventory Analysis
in New Zealand
CLIENT : MoRST / MED
PROJECT CODE : 5301-02
DATE : 29/08/08
AUTHOR : Timothy Allan
KEYWORDS : Life Cycle Inventory, Life Cycle Assessment, Life Cycle Thinking
DOCUMENT RELEASE : Confidential Public
DISCLAIMER : The views expressed in this publication are those of the
author and are not necessarily supported by the Ministry of Economic
Development or the Ministry of Research, Science and Technology.

2. Life Cycle Thinking
Figure 1. The Role of Inventory
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Business
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RS&T GHG
Development Accounting
Inventory
Data
Policy LCA
Government Assessment
Introduction
‘Life Cycle Thinking’ refers to the development and analysis of product systems
(which includes both products and services) by looking at the inputs and outputs
of materials over its life. Life Cycle Thinking is the over arching principal which
encompasses a wide range of approaches, methods and tools.
Currently there is a strong interest in the This report investigates the application of Life
government sector surrounding the concept Cycle Inventory (LCI) or Inventory Analysis
of ‘Eco-Verification’. Eco-Verification can be in the New Zealand context. It sought to
defined loosely as the research, creation and understand current activity and isolate key
communication of objective and quantitative issues and opportunities which could be used
metrics relating to the environmental impact by government, research and commercial
of products we produce. stakeholders.
These discussions have resulted in some key LCI has a number of key steps which impact
areas or gaps being defined. A particular gap on the creation of an effective data set
around Life Cycle Inventory (LCI) methods and that can be widely used. Some of these
parameters has been defined by the Ministry steps offer opportunities for a homogenous
of Research Science and Technology (MoRST) approach while others are too context specific
and the Ministry of Economic Development. and dependent on the goal and scope of a
particular study.
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3. Insights
There are a range of issues confronting Life Cycle Thinking in the New
Zealand context. Inventory plays a central role in the application of Life Cycle
Management (LCM) in business, as firms undertake LCA and GHG assessments,
in RS&T and in policy development by government.
Inventories require ongoing maintenance and research to retain their currency
and usefulness, indicating a more interactive approach needs to be taken to
creating, maintaining and using key datasets and research.
As an emergent discipline, capability is (PAS) 2050, developed through British
still developing in this country and needs Standards International (BSI), requires
a ‘national interest’ approach. This would constant monitoring at a national level to
ensure a consistent spread of practitioner- ensure New Zealand is able to contribute
focused education, and ensure efficient cohesively to, and proactively deal with, the
practices build up and retain the confidence of outcomes.
industry and business communities, as well
Taking a sector level approach to data
as consumers. There is also a wider case for
collection and creation can reduce the burden
education around what Life Cycle Thinking can
on individual companies, while providing
deliver for New Zealand firms and industries,
credible data to instigate emission mitigation
to help them ‘manage the expectations’ of
measures.
their stakeholders, customers, supply chain
partners, regulators and social stakeholders.
New approaches
Position of LCI It is likely that new methods such as
Economic Input Output Analysis (EIOA) are
LCI or ‘Inventory Analysis’ was developed
going to increase in importance as a viable
in the context of the Life Cycle Assessment
way to achieve life cycle thinking outcomes.
(LCA) framework. But it is now used by
other distinct fields such as greenhouse gas EIOA differs from LCA in that it is ‘top down’,
accounting, eco-labels, product development using general economic data instead of
and even governmental policy. Figure 1 detailed process data. EIOA offers some
presents one view of some of these key exciting potential to deliver similar results to
relationships. LCA but comes with some limitations through
its use of data averages and research-based
assumptions to define and allocate impacts.
Impact on SMEs
Understanding and developing skills in such
The creation and maintenance of data at
emerging methods is a valid priority to pursue
an individual company level can be very
alongside existing methods (such as LCA), and
difficult without specialised staff or guidance
would ensure New Zealand develops strategic
for existing staff in an enterprise. This is a
capacity and understanding in new areas.
particular hurdle for SMEs, who can be faced
with a disproportionate cost relative to their
business scale. The challenge becomes very Data
real and present for SMEs as the rollout of
Primary sector data in New Zealand has been
carbon labelling gains momentum in European
effectively researched and collected over an
markets.
extended period of time.
The development of carbon labelling schemes
This was originally collected up to the
such as the Publicly Available Specification
farm gate, but has progressively moved
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4. to incorporate data from processing and compelled to provide current data on an
distribution to the end consumer as concern ongoing basis for the common benefit.
about climate change has tracked through
There is an opening for industry to contribute
supply chains.
aggregated (sector-body level) data and find
Practitioners have noted that some research ways to fund such an initiative alongside
has become outdated and may need to be research partners. If these datasets are made
replaced in key sectors where New Zealand more freely available this would directly
industry needs to maintain its momentum in reduce the cost to undertake LCI and LCA
impact mitigation to secure its world market. work, thereby reducing the barriers to entry
Research can underpin decisions made in for smaller firms.
the LCI process and is as important as data
The format of common or publicly available
collection. Defining what key research areas
databases should be kept open through the
need to retain their currency is considered an
use of the most prevalent interchange format,
important aspect of the ongoing maintenance
XML.
of inventories.
This data would need common data collection
There are a wide range of research projects
information (ISO14048) to indicate which
and initiatives currently underway in the
parameters are essential to reference in the
private and public sector. These are often
creation and use of pooled datasets.
not communicated effectively to a wider
group of expert stakeholders and therefore An example of this approach exists in the
do not promote and encourage easy access Australian Life Cycle Inventory (AUSLCI)
to the findings or lessons learned. Making initiative whose aims are to “provide a
this information transparently and centrally national, publicly-accessible database with
available through an online community would easy access to authoritative, comprehensive
provide an effective body of knowledge and and transparent environmental information
discussion on key topics. on a wide range of Australian products and
services over their entire life cycle. It will be
It is probable that at least some, if not all, of
an invaluable tool for those involved in LCA,
these projects use common data (for instance
as it will also define and develop consistent
energy and vehicle emissions factors) that
guidelines, principles and methodologies for
could be useful to others. At present, there
the collection of LCI data, along with protocols
is no unified approach to the cross-sector
for LCA processes for different sectors. ”
creation and maintenance of important
datasets, which leaves the way open for One of the key drivers for the establishment
inefficient behaviours such as duplication, of the AUSLCI project was the need to create
variation and inconsistency of interpretation of a common approach that would give industry
the same data. and consumer confidence to the application
and use of LCA data.
Establishing a unified register of all New
Zealand specific LCI databases and There is evidence that the New Zealand
maintaining up-to-date knowledge of building sector is moving in this direction with
their status is likely to foster sharing and the support of the Department of Building and
collaboration. Housing.
A unified NZ LCI dataset register could AUSLCI has provided New Zealand an
document both private and public datasets invitation to join the programme, a proposal
without compromising confidentiality. This which would warrant consideration by key
would promote the commercial exchange of stakeholders. Such a decision would require
information between related industries and consultation around the small community of
sectors. practitioners in this country to avoid a risk of
creating divisions among them.
Critical sectors on which many other
industries depend (e.g. energy) could be
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5. A leading practitioner (Alcorn, 2008) has ability to undertake and maintain complex
suggested that Statistics New Zealand could datasets to ensure integrity of downstream
collect data on key environmental metrics. assessments. In addition it shifts the cost
This could be a mechanism in some sectors of education onto research providers,
to reduce the individual cost of data collection practitioners and ultimately their industrial
and might open the way for increased uptake clients, which further exacerbates the existing
of LCA and other analytical methods, such as resource constraint and the squeeze on
carbon foot printing. sectors and firms.
Other data collected and maintained by The absence of any formal tertiary education
Statistics New Zealand, such as economic on LCA or analytical environmental
input/output tables, could also be reviewed assessment or management (with the
and improved (Andrew, 2008) to deliver more exception of the University of Auckland’s
advanced information to those using EIOA and ICSER unit) provides little incentive for
hybrid processes. students in science or engineering fields
to pursue post graduate study in Life Cycle
To align effectively with government policy
Thinking.
and RS&T spending, it is crucial that the
environmental data needed for new high The ‘Life Cycle Management (LCM) initiative’,
growth industries is identified. Without this led by Sarah McLaren at Landcare Research,
step, there could be a risk that their entry aims to address this lack of capability and
into new markets is frustrated, particularly in capacity by taking six masters students,
emerging and high technology sectors. training them and then embedding them in six
exporting companies. In effect up this up-skills
Leadership the companies in Life Cycle Management. If
successful this concept could be extended
The formation and maintenance of a ‘Life to incorporate a wider range of companies to
Cycle Thinking’ leadership group drawn from accelerate uptake further.
key stakeholders including top practitioners,
The community of practitioners in New
government and business would provide
Zealand appears to be grouped into
an effective platform to ensure continual
commercial (private) and research (public)
improvement.
arenas. The linkages and collaborations in
It would provide a platform for the discussion the public research domain are relatively
of issues and opportunities that exist in the effective, but the linkages between public
national and international context. This group research and private consulting appear to
could also provide more consensus and be relatively weak. Creating the impetus
leadership than presently exists. for life cycle ‘thinkers’ from all sectors and
practitioner groups to get together would
Capacity & Capability increase knowledge exchange and assist in
the formation of functional links between the
There is limited LCA capability in New sectors, likely leading to increased uptake.
Zealand.
This report has investigated a wide range of
A few practitioners have a comprehensive applications and found leading practitioners
understanding of the whole LCA method and operating in interesting, innovative, and
the wider related issues that were raised in productive ways. However, their impact on
this study. New Zealand industry and on development of
This group tends to advise the wider peer the discipline is hampered by a lack of unity.
group of practitioners about best practice The suggested actions outlined in Figure 2
and structure for various studies. This are some of the steps that could contribute
creates a bottleneck for rolling out any to building up a stronger and more vital New
substantial studies that need to be undertaken Zealand approach to Life Cycle Thinking that is
concurrently. It is also a risk to New Zealand’s tailored to our context.
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6. Figure 2. Suggested Actions
National LCI register and common format
Assuming that a data collection policy was instituted, create a national register with consistent data
descriptions and requiring data in an open XML format. This would be an effective tool to build a
clearer picture of where gaps are and therefore would help to target new research accurately.
Data collection policy
Defining the information that needs to be specified for data collection instituted with government
endorsement. This might follow the ISO/TS 14048 outline which already exists.
Code of practice
A government-endorsed code of practice to develop consistency in application. This would provide
businesses with confidence that they are employing a practitioner who is using the most current,
appropriate and efficient approaches for the New Zealand context.
LCI Co-Funding
Co-funding LCI development would provide practitioners with the ability to reduce the cost burden to
companies. This could also be made conditional on the practitioners submitting their aggregated data
to a national register and contributing to a wider pool.
Tertiary & Continuing Professional Education
A clear imperative which requires urgent action is the implementation of teaching at a tertiary
undergraduate and post-graduate level to educate and train new practitioners and build capability in
this strategic area. (Such as the Landcare Research LCM programme).
Establishment of Advisory groups
On Life Cycle Thinking (Incorporating LCA and LCM and other areas), Inventory Analysis, and
Impact Assessment, to ensure specific advice on these three critical areas. These groups should be
facilitated in such a manner as to involve key practitioners without creating unnecessary work for
them.
Establishment of a structured community
To support wider discussion, presentation and learning about life cycle thinking and its application
within New Zealand.
Investigation
This research looked at a number of areas that influence or impact upon LCI
within New Zealand. The results are detailed in the following pages.
LCA Process study to ensure that the correct aspects of
the life cycle are considered along with the
Life Cycle Assessment (LCA) is included appropriate impacts to provide balanced and
here as the LCI Process was created and objective assessment.
defined in the context of the LCA Framework.
The Life Cycle Assessment process is defined
It is therefore useful to discuss the LCA
as the investigation and valuation of the
framework and the position of LCI in this.
environmental impacts of a product or service
Life Cycle Assessment (LCA) is a framework caused or necessitated by its existence.
or methodology for the quantitative The process has evolved through a lengthy
environmental assessment of product gestation period with the current methodology
systems. It is a structured approach that is being finalised in the 2006 ISO 14040 and
defined in ISO 14040 standards. It establishes 14044 standards.
the context, goal, scope and intent of a
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7. Figure 3. Life Cycle Assessment Framework
Goal & Scope
Direct Applications
• Product development
& improvement
• Strategic planning
Inventory
Interpretation • Public policy making
Analysis
(LCI) • Marketing
• Benchmarking
• EcoLabels & product
declarations
8)
99
Impact
1:1
Assessment
04
(LCIA)
14
O
(IS
rd
n da
A Sta
LC
The ISO standards prescribe the LCA process (such as Global Warming Potential).
and methodology through the following two
Interpretation: Analysing the information
standards:
and determining whether the aims of the
ISO/DIS 14040: Principles and study can or have been met.
Framework
Life Cycle Inventory (LCI) refers to the
ISO/DIS 14044: Requirements and inventory analysis phase of Life Cycle
Guidelines Assessment. LCI is a base step and
is an essential part of any quantitative
These standards provide practitioners with
environmental assessment. The LCI is a mass
a wide range of choices which influence the
and energy balance of environmental flows
shape or efficacy of any targeted LCA study.
(Baumann & Tillman) and as such forms the
A standard LCA is defined as being formed cornerstone of eco-verification.
through a four-step process:
The LCI phase is primarily concerned with the
Goal & Scope Definition: Determining capturing, research, creation and modelling
what the aims are and whether these of Inventory data related to the inputs and
can be delivered in the given scope. outputs of processes and product systems.
There is a separate ISO standard for LCI data
Inventory Analysis (LCI): Modelling the
documentation ISO/TS 14048. This format is a
flow of the life cycle and collecting any
standard for LCA data;
underlying data that is required.
“This Technical Specification provides the
Life Cycle Impact Assessment (LCIA):
requirements and a structure for a data
characterising the impacts and evaluating
documentation format, to be used for
against the defined impact categories
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8. Figure 4. LCA Type
Participants
LCA Type
Change oriented
Accounting
Stand Alone
transparent and unambiguous documentation identifying areas that can be mitigated but
and exchange of Life Cycle Assessment (LCA) are not product development oriented or
and Life Cycle Inventory (LCI) data, thus integrated into the product development
permitting consistent documentation of data, process.
reporting of data collection, data calculation
Figure 4 illustrating LCA type is also useful
and data quality, by specifying and structuring
in highlighting the number of experienced
relevant information”.
practitioners from the total pool surveyed. Six
This study had a focus on the ‘Inventory practitioners actively practised across all three
analysis’ or LCI part of the process. A wide types indicating a good level of experience
range of parameters that influence or are and depth in the application of LCA.
part of the LCI process were considered
and discussed with participants of the study.
Please refer to the main report for a complete
System Boundary
list of parameters considered. The ‘system boundary’ is largely defined in
to the goal and scope of an LCA study. What
processes are selected for consideration and
LCA Type analysis depend largely on the intentions and
To more effectively understand the nature aims of the environmental assessment.
and purpose of the LCI work currently being
For example a farmer would primarily be
undertaken these were grouped into LCA
interested in considering the impacts up to
types. The three classifications used were:
the farm gate (i.e. one tonne of greasy wool)
Stand alone: Single and exploratory, used and the impact to produce this, while the
to describe a single product. apparel manufacturer would have to take this
through processing, fabric and distribution to
Accounting: Comparative and
the end consumer.
retrospective.
Due to its relationship with the goal and
Change oriented: Comparative and
scope of a study the system boundary is
prospective.
context specific and cannot be harmonised.
The prevalent types of LCA study being It may however be possible to create a
undertaken are stand alone or accounting consistent ‘approach’ amongst New Zealand
based, therefore retrospective and practitioners.
comparative. These are being used for
Figure 5. Allocation Type
Participants
Not used 4
Allocation Type
System Expansion 7
Economic Ouput 7
Physical 10
Other 7
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9. Figure 6. Impact Assessment Categories
Participants
Toxilogical Impacts
Human
Health
Non-Toxilogical Impacts
Impacts to Work Environment
Resources
Water
Land
Energy & Materials
Global Warming Potential
Consequences
Ozone Depletion
Ecological
Eutrophication
Photo-Oxidant Formation
Ecotoxilogical Impacts
Habitat Alterations
Allocation most practitioners utilise the ISO preferred
method of Physical allocation with the
‘Allocation’ is defined as “partitioning the input more advanced practitioners using system
or output flows of a process to the product expansion to discover additional relevant
system under study” (ISO14040 1997). Put in details.
simpler terms many products are linked and
share processes and resources. This means
that the impact or the burden of the impact
Impact Categories
needs to be allocated between different The definition of impact categories falls
products and processes. under the ‘impact assessment’ (LCIA) phase
of the LCA process. Technically it does not
‘Allocation’ provides a framework to do this.
have a bearing on the data collected, but the
An example might be a log which is split into a
decisions made during the goal and scope
percentage allocated to milled graded timber
phase about what impact categories are used
and another percentage allocated physically
are of interest to this study. It is during this
(by mass) to pulp and paper production.
phase that inputs and outputs are related to
Allocation is one of the most difficult areas the environmental impact they have (i.e. CO2
in LCA methodology. It complicates the data would be attributed to Global Warming).
collection process and can greatly increase
The ISO classification (illustrated in Figure
the threshold of data required in the given
6) of impact categories provides three broad
system. Most practitioners surveyed adhere
categories or groupings; human health,
to the ISO standard prescription for the
resources and ecological consequences.
procedure of allocation procedure which
In the New Zealand context there is an
specifies system expansion as the preferred
overriding focus on Global Warming Potential
method, with physical the next preferred, and
and Energy and Materials, with only
economic the least preferred.
experienced practitioners working in other
Allocation is an important consideration for impact categories. There are exceptions,
inventory analysis due to its potential impact such as eutrophication which is an important
on New Zealand industry. Figure 5 illustrates consideration in pastoral farming.
9

10. Figure 7 Tools
.
Participants
Calculation Methods
Simapro
Gabi
Everdee
Excel
Method
Participants noted that the restriction of Excel is used across the board for the collation
impact categories through the focus on and documentation of data in the inventory
energy and green house gas (GHG) emissions process. It is also used in relatively advanced
has impacted on the data collected. This was applications, as various research organisations
jointly attributed to budget and the current have their own formulas and custom
focus and pressure around climate change. spreadsheets for working carbon emissions.
This may potentially lead to a reduction in
Some research organisations also used
quality and coverage of the data sets being
Excel as a tool to prepare the inventory
created, and could limit their potential
information prior to insertion in an LCA tool.
application in other areas.
Experienced practitioners using Excel cited
Experienced practitioners have stated the transparency as a key benefit.
that the restriction of impact assessment
Other practitioners said they did not have a
categories should not affect the integrity of
requirement to conduct a full LCA so were
data collected, as all critical inputs and outputs
content with using spreadsheet tools and
should be collected. It would therefore be
formulas for completion of data collection and
important to further define what data is being
inventory analysis.
omitted and what steps could be taken to
address this issue. The other two tools recorded in use were;
Everdee, a free tool created through the
Uptake of Tools EcoSMEs initiative in the EU, and the
Landcare CarboNZero programme which has
Development of the LCA methodology has developed its own tool with a built-in GHG
resulted in the creation of software tools protocol.
which enable dynamic modelling of systems.
The intermittent nature of LCA work in recent
These tools allow the performance of years appears to have been an impediment
calculations and visualisations, making the to the uptake of more advanced life cycle
process easier and more streamlined. engineering tools. This is likely to change with
The adoption of these tools in New Zealand is increasing demand and the requirement for
patchy, with a range of practitioners still using standardisation.
self-generated Excel spreadsheets, mainly
due to the intermittent nature of LCA projects Data collection
and the capital cost of software purchase (not
The inventory analysis stage relies on the
necessarily that they resist uptake).
‘bottom up’ collection of process data from
Both GABI and SimaPro are advanced LCA the production, consumption and disposal
software tools with a range of available of products and services. It is reliant on the
databases for different industries. A greater quality of research data and hinges on the
number of participants used SimaPro, availability of usable data to form an accurate
although GABI has only recently started to be picture of the system being assessed.
taken up in Australasia, and may develop a The credibility of any LCA results rests
greater following over time. substantially on the data’s quality.
10

11. Most of the work in generating data in New homogenous datasets, as well as using
Zealand has been biased toward the primary modified international databases of materials
sector. As a result, there is a growing body of and processes where required.
information up to and past the farm gate to
Datasets that were created ranged from
processing.
highly detailed studies (direct measurement),
As markets have become more interested to studies which are based solely on research
in climate change, studies are increasingly papers. One particular study went as far as
considering the whole supply chain including collating all material and energy used in the
distribution, use and end of life. construction of the plant and using that in the
final assessment of the product (the capital
The evidence gathered in this study
cost of producing the goods). Most studies
shows that manufacturing and value-
would not consider the cost of capital.
added industries have little New Zealand-
specific data to reference. At the same Modified datasets and existing datasets are
time these manufacturing sectors have primarily international (originating from the
increased offshore production which has EU or the USA), that are generally linked to,
led to difficulties in procuring environmental or embedded in, LCA software tools. These
information from extended supply chains databases, such as Ecoinvent, contain a wide
(McLaren, 2008). variety of materials and processes which
enable modelling at a schematic level and
Data quality and availability appear to be
in some cases offer detailed levels at which
variable, with some studies from basic
there is parity in application and context.
literature research (which may be of uncertain
age and provenance).
Most practitioners cite data quality as a
Data availability
serious issue, both in terms of availability Many datasets are classed as private, which
and accuracy for New Zealand’s context. In prevents them from being openly exchanged
addition, they expressed real concerns about or used for the benefit of other companies.
the cost of data collection and maintenance, There are a number of data exchange formats
which were seen as a recurrent hurdle cost to available. The most widely used exchange file
both SMEs and even to larger enterprises. format is XML (extended mark-up language).
This hurdle is due in part to the requirement This supports a fast and easy exchange of LCI
for continuous data collection that requires data into different software packages, such as
technically-sophisticated methods or devices GABI or SimaPro.
and specialised staff. Research organisations often retain the right
to use aggregated data for other applications
Dataset creation (in their projects). This type of practice would
appear to work against wider transparency,
There are a range of approaches taken by
discourage openness, and generally
most participants which could be broadly
encourage a competitive approach.
categorised as:
Some data is published, and is therefore
Created Datasets: researched
partly available in aggregated form (although
and created for the environmental
not accessible at a detailed application level)
assessment
and some data is made available on specific
Modified Datasets: existing datasets request.
modified for a particular application
Currently there is no central repository for
Existing Datasets: using existing data collection and therefore no easy way to
datasets for a particular application determine if a study has been conducted in
the area or if there is other useful data in New
Most of the advanced practitioners have
Zealand that could be used in other studies.
been, or are, involved in the creation of
11

12. Currently there is strong interest in the government sector around the concept
of ‘Eco-Verification’, which is, in broad terms, the enabling, quantifying and
substantiating of improved environmental performance by industries.
The Ministry of Economic Development and the Ministry of Research, Science
and Technology commissioned this publication from authors Locus Research
in 2008 to learn more about the activities of New Zealand Life Cycle Inventory
(LCI) practitioners, the LCI approaches and methods in common use, and their
key parameters.
This report investigates the application of LCI in the New Zealand context to
provide evidence about current activities, and to isolate potentially significant
issues and opportunities, so that all parties can advance Eco Verification activity
more effectively.
Research undertaken by Locus Research (2008)
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