Resource "criticality" in life cycle sustainability assessment – methodology for assessing geopolitical-related supply risks

While environmental life cycle assessment (LCA) methodology is relatively well developed, integration of socio-economic dimensions in LCA is comparatively weak. The term life cycle sustainability assessment (LCSA) has emerged... [ view full abstract ]

While environmental life cycle assessment (LCA) methodology is relatively well developed, integration of socio-economic dimensions in LCA is comparatively weak. The term life cycle sustainability assessment (LCSA) has emerged to extend the “life cycle” approach to incorporate socio-economic dimensions alongside the environmental dimension. We propose several advances in LCSA methodology for the “natural resources” area of protection (AoP), which, despite having a long history in environmental LCA, remains controversial. Some authors, including ourselves, argue that resource-related issues are largely socio-economic rather than environmental. Under the anthropocentric view, resources are valued not for mere existence but for the functional value provided by products (including goods and services) for which resources are employed.

While conventional approaches towards the “natural resources” AoP in LCA – such as the widely used Abiotic Depletion Potential method – tend to focus on physical depletion of resource availability in the long run, newer approaches for assessing resource “criticality” are typically concerned with risks of short run supply disruptions. Such “criticality” assessment methods are not designed to be compatible with the classical LCA framework; there is a lack of robust characterization models to express resource criticality in relation to a functional unit for a given product. The functional unit enables product level supply risk assessment – which is important for strategic decision-making – and is a construct that strongly reflects the anthropocentric view of resources. Moreover, LC(S)A requires construction of a life cycle inventory, which contains data that is equally relevant for assessing supply risk and environmental implications.

We propose a number of advancements towards integration of resource “criticality” in LCSA. First, based on a conceptual framework, a methodology for assessing Geopolitical Supply Risk (GPSR) is proposed and demonstrated with a widely cited LCA case study of a European manufactured electric vehicle (EV). A subsequent case study of polyacrylonitrile based carbon fibers illustrates a methodological extension for multi-stage global supply chains. We then present another extension of the methodology – a characterization model to link GPSR to a functional unit in LCSA. We update the previous EV case study to demonstrate the extension. Whereas we define “supply risk” as the multiple of probability of supply disruption and vulnerability to supply disruption, the previously proposed GPSR methodology only captures the probability dimension. Therefore, we suggest applying a basic economic concept – price elasticity of demand – to measure “substitutability” of inputs to a product system, and therefore the vulnerability of the product system to supply disruption of those inputs. Thus, we show the importance of integrating resource criticality considerations into LCSA to better inform management decisions at a product level.

This sequence of methodological development will be presented including new theoretical advances on the substitutability measure, and a novel LCSA case study on x-ray equipment with insights on resource criticality applied to the product-level.