Canada's Opportunity: Adopting Life Cycle Approaches for Sustainable Development by NRTEE

life cycle approaches Ministerial

Reference CANADA’S OPPORTUNITY: ADOPTING LIFE CYCLE APPROACHES for sustainable development

A REPORT BY

THE NATIONAL ROUND TABLE ON THE ENVIRONMENT AND THE ECONOMY

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Life cycle approaches for sustainable development A Life Cycle Approach is a systematic way of looking at the life of a Product, technology, or process. By identifying and understanding the inputs and impact s that exist throughout life cycles, we are better able to measure and reduce associated costs to our economy and environment

© National Round Table on the Environment and the Economy, 2012 All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means — graphic, electronic or mechanical, including photocopying, recording, taping or information retrieval systems — without the prior written permission of the publisher. Library and Archives Canada Cataloguing in Publication National Round Table on the Environment and the Economy (Canada) Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

National Round Table on the Environment and the Economy 344 Slater Street, Suite 200 Ottawa, Ontario Canada K1R 7Y3 T 613 - 992-7189 F 613 - 992-7385 E info@nrtee-trnee.gc.ca W www.nrtee-trnee.ca

Issued also in French under title: Perspectives pour le Canada : adopter une approche axée sur le cycle de vie à l’appui du développement durable. Includes bibliographical references. Available also on the Internet. ISBN 978-1-100-20676-9 Cat. no.: En134-56/2012E-PDF 1. Sustainable development--Government policy--Canada. 2. Sustainable development--Canada. 3. Sustainable development--Decision making. I. Title. II. Title: Adopting life cycle approaches for sustainable development. HC120 E5 N37 2012

338.971’07

C2012-980107-0

Concept/Design: Quatuor Communication with the participation of Vixo Technologies Suggested citation: Canada. National Round Table on the Environment and the Economy. (2012). Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Disclaimer: The views expressed in this document do not necessarily represent those of the organizations with which individual Round Table members are associated or otherwise employed. The NRT strives for consensus but does not demand unanimity. The NRT’s deliberations included vigorous discussion and debate reflecting diversity of opinion.

Acknowledgements The National Round Table on the Environment and the Economy (NRT) would like to thank the many experts, stakeholders, consultants and government officials that informed the research and convening that helped shape this report. We would like to thank the members of the Expert Advisory Committee for their support and guidance throughout the project. Their advice on the scope of the research and report focus was invaluable. As part of our convening, we heard from more than 100 stakeholders from the Government of Canada, private sector, NGOs and academia in seven sessions. Many thanks to the people who took the time to participate in these sessions, whose insight were instrumental in shaping our research findings. We would like to thank the consultants who helped the NRT conduct this research. In particular, thanks go to Demeter Consulting, ICF Marbek and Stratos Inc. for their assistance with some of the stakeholder sessions and for their contributions to the research findings. Special thanks to Stefanie Bowles (Policy Horizons Canada), Kevin Brady (Demeter Consulting), Edouard Clément (Quantis) and David Smith (Sobeys Inc.) for reviewing a draft version of this report. The NRT would like to acknowledge the efforts of the secretariat staff in the research and convening that made this report possible. Many thanks go to Denise Edwards, administrative assistant, for the organization of many stakeholder and expert sessions. The communications team – Marie-Josée Lapointe, Tony Bégin, Edwin Smith, Richard Pilon and Nadra Meigag – provided support to the project and managed the design and production of the report. Finally, thank you to Hilary Davies, Sandeep Pandher, Liza Campbell and René Drolet for their significant contributions to the research, analysis and writing of the report.

Message from the Vice-Chair As Vice-Chair of the National Round Table on the Environment and the Economy, I am pleased to present Canada’s Opportunity: Adopting Life Cycle Approches for Sustainable Development. This report helps Canadians understand how Life Cycle Approaches can be used to maintain and enhance economic competitiveness and environmental stewardship. Life Cycle Approaches allow us to understand and act upon both economic and environmental risks and opportunities for Canada. The message is clear - we need to act now to avoid these risks and take advantage of these opportunities. Action is needed in both the public and private sectors to ensure Canada’s growth is sustainable.

Canada’s Opportunity: Adopting Life Cycle Approches for Sustainable Development sets out recommendations on ways Canada could advance the domestic use of Life Cycle Approaches to ensure it is economically and environmentally healthy for generations to come.

R.W. Slater, CM, PH.D. NRT Vice-Chair

Message From the President and CEO Life Cycle Approaches to sustainable development are increasingly becoming the gold standard for assessing the economic and environmental sustainability of a product or policy. They help companies identify cost savings and governments make better long-term policy decisions that integrate the environment and economy together. Canada’s competitors are taking them on board; we need too also. The NRT’s report, Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development, sets out the risks and opportunities presented by life-cycle approaches. We show how companies and governments are embedding Life Cycle Approaches in their operations and decisions. We identify clear risks to Canada’s competitiveness and environmental reputation if we don’t take steps to use Life Cycle Approaches for our own advantage. Increasingly, market access for our resources and goods will be at risk if we don’t act. We show how business and government can collaborate to enhance economic competitiveness and foster greater environmental stewardship. Finally, we set out priority actions we can and should take to move ourselves ahead. The Government of Canada asked the NRT to assess Life Cycle Approaches for sustainable development to assist them in their consideration of the issue. Our report provides a focused, cost-effective means of doing so, based on research and input from Canadian companies and experts.

David McLaughlin NRT President and Chief Executive Officer

About Us Through the development of innovative policy research and considered advice, our mission is to help Canada achieve sustainable development solutions that integrate environmental and economic considerations to ensure the lasting prosperity and well-being of our nation. Emerging from the famous Brundtland Report, Our Common Future, the NRT has become a model for convening diverse and competing interests around one table to create consensus ideas and viable suggestions for sustainable development. The NRT focuses on sustaining Canadaâ&#x20AC;&#x2122;s prosperity without borrowing resources from future generations or compromising their ability to live securely. The NRT is in the unique position of being an independent policy advisory agency that advises the federal government on sustainable development solutions. We raise awareness among Canadians and their governments about the challenges of sustainable development. We advocate for positive change. We strive to promote credible and impartial policy solutions that are in the best interest of all Canadians. We accomplish that mission by fostering sound, well-researched reports on priority issues and by offering advice to governments on how best to reconcile and integrate the often divergent challenges of economic prosperity and environmental conservation. The NRT brings together a group of distinguished sustainability leaders active in businesses, universities, environmentalism, labour, public policy, and community life from across Canada. Our members are appointed by the federal government for a mandate of up to three years. They meet in a round table format that offers a safe haven for discussion and encourages the unfettered exchange of ideas leading to consensus. We also reach out to expert organizations, industries, and individuals to assist us in conducting our work on behalf of Canadians. The NRTEE Act underlines the independent nature of the Round Table and its work. The NRT reports, at this time, to the Government of Canada and Parliament through the Minister of the Environment. The NRT maintains a secretariat, which commissions and analyzes the research required by its members in their work.

List of members NRT Vice-Chair Robert Slater Adjunct Professor Environmental Policy Carleton University Ottawa, Ontario

NRT Vice-Chair Mark Parent Former Nova Scotia Minister of Environment and Labour Canning, Nova Scotia

David John Bishop Partner McKercher LLP Regina, Saskatchewan

The Honourable Pauline Browes, P.C. Director Waterfront Regeneration Trust Toronto, Ontario

Dianne Cunningham Director Lawrence National Centre for Policy and Management University of Western Ontario London, Ontario

John V. Hachey Lachine, QuĂŠbec

Timothy R. Haig Director and Past President and CEO BIOX Corporation Oakville, Ontario

Christopher Hilkene President Clean Water Foundation Toronto, Ontario

Franklin Holtforster President and Chief Executive Officer MHPM Project Managers Inc. Ottawa, Ontario

Robert Kulhawy Executive Chairman Calco Environmental Group Calgary, Alberta

Donald MacKinnon President Power Workersâ&#x20AC;&#x2122; Union Toronto, Ontario

Robert Mills International Advisor, Globe International Senior Advisor, Plasco Energy Group Red Deer, Alberta

Richard Prokopanko Director Government Relations Rio Tinto Alcan Inc. Vancouver, British Columbia

NRT President and CEO David McLaughlin

National Round Table on THe environment and the economy

Our process is the way we work FINDING sustainable pathways

Research

Convene

Advise

We rigorously research and conduct high quality analysis on issues of sustainable development. Our thinking is original and thought provoking.

We convene opinion leaders and experts from across Canada around our table to share their knowledge and diverse perspectives. We stimulate debate and integrate polarities. We create a context for possibilities to emerge.

We generate ideas and provide realistic solutions to advise governments, Parliament and Canadians. We proceed with resolve and optimism to bring Canadaâ&#x20AC;&#x2122;s economy and environment closer together.

Table of Contents LIST OF FIGURES

LIST OF TABLES

LIST OF ABBREVIATIONS

EXECUTIVE SUMMARY

1.0 INTRODUCTION

1.1

CANADA NEEDS TO ADOPT LIFE CYCLE

APPROACHES TO SUSTAINABLE DEVELOPMENT

1.2

REPORT PURPOSE

1.3

REPORT STRUCTURE

1.4

NRT RESEARCH AND CONVENING APPROACH

Convening

Research

1.5 CONCLUSION

2.0 UNDERSTANDING LIFE CYCLE APPROACHES

2.1 WHAT ARE LIFE CYCLE APPROACHES AND WHY ARE THEY NEEDED?

2.2

A FRAMEWORK FOR LIFE CYCLE APPROACHES

Life cycle concepts

Life cycle programs

Life cycle tools

Life cycle data and information

2.3

EXAMPLES OF LIFE CYCLE APPROACHES

2.4 CONCLUSION

3.0 TRENDS IN LIFE CYCLE APPROACHES

3.1

DRIVERS FOR THE ADOPTION OF LIFE CYCLE APPROACHES

3.2

INTERNATIONAL USE OF LIFE CYCLE APPROACHES

Public sector

Private sector

International organizations

3.3

DOMESTIC USE OF LIFE CYCLE APPROACHES

Public sector (federal)

Public sector (provinces and territories)

Private sector

3.4 CONCLUSION

4.0 GAINS FROM LIFE CYCLE APPROACHES FOR GOVERNMENT AND BUSINESS

4.1

INTERNATIONAL COMPETITIVENESS

Trade restrictions

Lack of market access

4.2 PUBLIC SECTOR LEADERSHIP

Enhancing efficiencies in internal operations

Consideration of environmental and economic attributes in policy decisions

4.3 FIRM COMPETITIVENESS

Enhancing supply chain efficiencies

Enhancing internal operation efficiencies

4.4 CONCLUSION

5.0 PRIORITY AREAS FOR GOVERNMENT OF CANADA ACTION

5.1

CONDITIONS FOR THE SUCCESSFUL IMPLEMENTATION

OF LIFE CYCLE APPROACHES

Awareness of benefits

Capacity and expertise

Life cycle data and information

Common standards

5.2 PRIORITY AREAS FOR ACTION

Canada needs to develop capacity and expertise in Life Cycle Approaches

Canada needs to develop information resources that reflect the Canadian reality

Canada needs to play a proactive role in the development of national and international Life Cycle Approach standards

The Government of Canada needs to apply Life Cycle Approaches internally to realize economic and environmental efficiencies

5.3 CONCLUSION

6.0 CONCLUSIONS AND RECOMMENDATIONS 6.1

MOVING AHEAD

100 101

102 104

6.2 RECOMMENDATIONS

105

6.3 GOVERNANCE FOR IMPLEMENTATION OF RECOMMENDATIONS

110

7.0 APPENDICES

114

APPENDIX 1: STAKEHOLDER PARTICIPATION

116

Members of the Expert Advisory Committee

116

Senior officials meeting

116

Public sector workshop

117

Private sector meeting

119

Policy responses meeting

120

Senior officials meeting

121

APPENDIX 2: GLOSSARY

122

APPENDIX 3: EXAMPLE OF A SPECIFIC LIFE CYCLE ASSESSMENT -

COMPARISON OF HAND DRYING OPTIONS

124

APPENDIX 4: SUMMARY OF CHALLENGES FACED

BY THE PUBLIC AND PRIVATE SECTORS

127

ENDNOTES 131 REFERENCES 133

List of Figures Figure 1

Product life cycle stages

Figure 2

Integrating Life Cycle Approaches in government policy and program development

Figure 3

A framework for Life Cycle Approaches 43

Figure 4

Illustration of the trends in Life Cycle Approaches presented in Chapter 3

Figure 5

Rationale for the uptake of Life Cycle Approaches in Canada

Figure 6

Life Cycle Thinking in assessing environmental effects of free trade agreements

Figure 7

Recommendations and key actions for the Government of Canada to respond to Life Cycle Approach-related risks and opportunities in Canada

106

Figure 8

Governance for implementation of recommendations

112

Figure 9

Suggested timeline for implementation

113

Figure 10

Life cycle system boundary and key reference flows for the conventional hand dryer

124

Figure 11

Relationship between LCI and impact assessment categories

125

Figure 12

Total life cycle impacts of four hand drying options

126

List of tables Table 1

Summary of Life Cycle Approaches case studies in report

Table 2

Examples of Government of Canada initiatives related to Life Cycle Approaches

Table 3

Life Cycle Approach-related risks and opportunities in the supply chain

Table 4

Summary of challenges identified during National Round Table on the Environment and the Economyâ&#x20AC;&#x2122;s research and convening

127

List of Abbreviations 10-YFP

10-year Framework of Programmes

BREEAM Building Research Establishmentâ&#x20AC;&#x2122;s

Environmental Assessment Method

CCME

Canadian Council of Ministers of the Environment

CEC

Commission for Environmental Cooperation

CFL

Compact Fluorescent Light bulb

CIRAIG Interuniversity Research Centre

LCI

Life Cycle Inventory

LCM

Life Cycle Management

LCSA

Life Cycle Sustainability Analysis

LCT

Life Cycle Thinking

LEED

Leadership in Energy and Environmental Design

MFA

Material Flow Analysis

NRC

National Research Council

for the Life Cycle of Products, Processes and Services

NRCan

Natural Resources Canada

NRT

DfE

Design for the Environment

National Round Table on the Environment and the Economy

DFAIT

O&M

Operations and Maintenance

Department of Foreign Affairs and International Trade

PCR

Product Category Rule

Environment Canada

PWGSC Public Works and Government

Services Canada

Cycle Assessment

REACH

EPA

Environmental Protection Agency

Registration, Evaluation, Authorisation and Restriction of Chemicals

EPDs

Environmental Product Declarations

RFS2

Renewable Fuel Standards

EPP

Environmentally Preferable Purchasing

SETAC

Society for Environmental Toxicology and Chemistry

SLCA

Social Life Cycle Assessment

SCP

Sustainable Consumption and Production

SMEs

Small and Medium Enterprises

TCA

Total Cost Accounting

UNEP

United Nations Environment Programme

EIO-LCA Economic Input - Output Life

EPR

Extended Producer Responsibility

European Union

GoC

Government of Canada

Industry Canada

ISO

International Organization for Standardization

LCA

Life Cycle Assessment

LCC

Life Cycle Costing

LCFS

Low Carbon Fuel Standard

WBCSD World Business Council for

Sustainable Development

WRI

World Resources Institute

Executive Summary

Today’s economy is global, interdependent, and complex. Nowhere is this more apparent than at the intersection of the economy and the environment. Environmental stewardship goes hand-in-hand with economic competitiveness. Using resources efficiently — from extraction to consumption — is no longer a simple matter of local decisions; it is increasingly a case of global standards. Canada is already affected by this development and will be increasingly affected in the future. As a trading nation, and a resource-rich country intent on exporting commodities, our economic welfare depends on open access to foreign markets and mutually-recognized international rules for trade and investment. With environmental concerns becoming an increasing determinant of the terms of trade, we need to build up our capacity and step up our expertise in integrating the environment and the economy in business and government decisionmaking — that means embracing Life Cycle Approaches to sustainable development. Life Cycle Approaches are analytical tools geared to support enhanced economic decision-making through a fuller accounting of associated environmental costs. They provide practitioners with much-needed tools that could play a critical role in elevating Canada as a global leader in sustainable development practices. Governments, companies, and organizations across the world are using Life Cycle Approaches to address current and emerging global economic and environmental issues. Canada used to be a leader in the development of Life Cycle Approaches and now needs to keep pace with the global trend. The increased importance of Life Cycle Approaches — domestically, regionally

and internationally — has real implications for both Canada’s private and public sectors. This report elaborates on the need for a systemic policy response from the federal government to meet this emerging reality and better prepare Canadian businesses to engage with it. It provides a tour d’horizon of Life Cycle Approach terms and trends, shows where business and government can gain from its application, and offers key priorities for action to move us forward. In preparing the report, the National Round Table on the Environment and the Economy (NRT) brought business leaders and experts together. We engaged officials across federal government departments. We sought international perspectives on life cycle developments. We commissioned original research on what this means to Canada’s private and public sectors. Finally, we distilled this into what Canada can and should do practically to both respond and lead in this area. Our recommendations are intended to help the Government of Canada (GoC) and other relevant stakeholders in three ways: •

Assessing the contribution of Life Cycle Approaches to economic prosperity and environmental sustainability in Canada,

•

Analyzing how decision makers need to consider Life Cycle Approaches when devel oping public policies designed to promote economic and environmental benefits for Canada, and,

•

Advising what role the GoC should play in facilitating successful implementation of Life Cycle Approaches and designing public policy response(s).

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Globally, Europe is leading the way in the adoption of Life Cycle Approaches within both the public and private sectors. Regionally, the United States, Canada’s neighbour and biggest trading partner, has seen increased adoption of Life Cycle Approaches in recent years. Domestically, the private sector is leading the way in Canada with respect to Life Cycle Approaches. The public and private sectors in Canada need to adopt Life Cycle Approaches to ensure better integration of environmental and economic goals. However, efforts in Canada related to Life Cycle Approaches are fragmented and lack an overall vision or framework to guide their application in a consistent manner. We need a common understanding of Life Cycle Approaches to move the conversation forward and, provide an accurate assessment of their strengths and limitations. The NRT has developed a framework for Life Cycle Approaches that categorizes them into four groups: concepts, programs, tools, and data and information. This framework provides a common understanding of the basis on which the GoC and others can base future dialogues about Life Cycle Approaches in Canada. The Canadian public and private sectors are exposed to clear economic and environmental risks and opportunities related to Life Cycle Approaches. Our analysis delineated three goals that could be better achieved through the application of Life Cycle Approaches: (1) international competitiveness, (2) public sector leadership, and, (3) firm competitiveness. Our report presents a contemporary analysis complemented by case studies to illustrate and substantiate these key risks and opportunities — within both the private and public sectors.

A continued passive attitude towards the adoption of Life Cycle Approaches creates risks that can have only detrimental impacts on Canada’s economic competitiveness. These will manifest themselves through non-tariff trade barriers imposed by foreign countries and restricted market access because of private sector supply-chain requirements — Canadian exports of commodities and manufactured goods will be affected. On the other hand, economic gains can result from adopting Life Cycle Approaches. These gains include better supply-chain performance, internal operation efficiencies, and increased institutional capacity that further enhance innovation. As Life Cycle Approaches also support environmental stewardship — by compelling firms to increase efficiencies in their production processes and internal operations, and consider environmental factors in their decision making — reduced environmental impacts will accrue across a multitude of attributes including air, water, toxics and waste. There are a number of conditions that need to be in place to advance the application of Life Cycle Approaches in Canada. We identified four key conditions relevant to both the public and private sectors in Canada: •

Capacity and expertise

•

Awareness of benefits

•

Life cycle data and information

•

Common standards

PRIORITY AREAS FOR ACTION Canada Needs to Develop CAPACITY AND EXPERTISE IN Life Cycle Aproaches A collaborative knowledge-sharing model should be created to provide an opportunity for practitioners from the private and public sectors to share knowledge and expertise with each other. In the public sector, training and guidance should be provided to people implementing Life Cycle Approaches (e.g., asset management, Regulatory Impact Analysis Statements, and Strategic Environmental Assessments) and senior decision makers. In the private sector, support needs to be given to small and medium enterprises (SMEs) that lack the capacity, expertise, and, in most cases, awareness of Life Cycle Approaches.

Canada Needs to Develop Information Resources that Reflect the Canadian Reality A Canadian Life Cycle Inventory Database should be created to provide access to important information for both the private and public sectors. The database would allow the private sector to respond to trade and market access requirements related to Life Cycle Approaches. The database would support the integration of Life Cycle Approaches into government internal operations and decision making.

Canada Needs to Play a Proactive Role in DevelopING National and International Life Cycle Approach Standards Canada should be involved in multilateral efforts to create standards for potential trade-restricting measures such as product footprint standards and eco-labels. The GoC should support and oversee the development of robust Product Category Rules (PCRs) by third parties. The GoC should participate in the management of a uniform labelling program or Environmental Product Declarations (EPDs) for multiple environmental attributes for a product or class of products that meets a designated standard.

The Government of Canada Needs to Apply Life Cycle Approaches Internally to Realize Economic and Environmental Efficiencies The GoC should functionally integrate its acquisition, maintenance, and disposal functions by developing budgeting and management practices that are more conducive to Life Cycle Approaches. The GoC should use performance information to conduct benchmarking and then build and bolster the business case for green procurement and for asset management based on Life Cycle Approaches in general.

Canadaâ&#x20AC;&#x2122;s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

RECOMMENDATIONS We need public policies that facilitate increased information sharing about the benefits of Life Cycle Approaches, provide guidance on best practices, and increase collaboration in data gathering, and analysis. The governmentâ&#x20AC;&#x2122;s response needs to focus on key life cycle issues and be staged over time. Short-term responses will counter immediate risks to international competitiveness in the areas of trade and market access. Longerterm responses will foster enhanced economic efficiencies and related environmental benefits of Life Cycle Approaches by increasing their adoption in the public and private sectors. In government, this includes increasing efficiencies in internal operations and integrating Life Cycle Approaches when making decisions about new policies. Increased efficiencies in internal operations and throughout the supply chain should be targeted in the private sector. As a first step, the government should work with the private sector to identify the current non-tariff trade barriers where Life Cycle Approaches could help address the situation. It should also initiate government-wide discussions to identify areas where costs savings and environmental gains could be achieved within the public service.

Recommendations and key actions for the Government of Canada

Goals International Competitiveness Public Sector Leadership Firm Competitiveness

recommendations Increase government knowledge of life cycle issues & act immediately to maintain access to foreign markets

Help Canadian companies acquire knowledget & information required to maintain access to foreign & domestic markets

Proactively engage at multiple levels on issues related to Life Cycle Approaches

Show leadership in the application of Life Cycle Approaches to internal operations & policy decision making

Key actions Build a stronger inter nal knowledge base on Life Cycle Approaches in key federal govern ment departments

Engage in discussions on creation & devel opment of Canadian Life Cycle Inventory database

Identify products & commodities most likely to be subject to restrictive standards based on Life Cycle Approaches

Identify government departments & agen cies with expertise & data relevant to data base development

Oversee system for third-party develop ment of Product Category Rules

Develop programs & initiatives to support small & medium enterprises’ use of Life Cycle Approaches

Identify priority commodities & products for Canada Engage in discussions with industry & inter national organizations on life cycle method ologies & provide related guidance for Canada Proactively engage in multilateral & bilateral discussions with key trade partners

Create a government centre of expertise to inform the application of life cycle-related activities across departments Engage in crossdepartmental dis cussions to review existing policies & practices that may impede the use of Life Cycle Thinking in decision making Develop training for senior government officials

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

The NRT recommends that the following specific actions be taken:

The GoC needs to increase its knowledge of issues related to life cycle approaches and act immediately to maintain access to markets in foreign jurisdictions.

The GoC needs to help Canadian companies acquire the knowledge and information required to respond to the demand for life cycle information and maintain market access.

Key actions:

Build a stronger internal knowledge base of Life Cycle Approaches in key federal government departments including Environment Canada, Department of Foreign Affairs and International Trade, Industry Canada, Finance Canada, Natural Resources Canada, and the Privy Council Office; Identify, in collaboration with industry, which products and commodities are likely to be subject to restrictive standards based on Life Cycle Approaches such as Environmental Product Declarations (EPDs) or content requirements; and Put in place a system where robust Product Category Rules (PCRs) are developed by third parties with the oversight of the federal government (“certify the certifier” principle).

Engage in a multi-stakeholder discussion about the creation and development of a Canadian Life Cycle Inventory (LCI) database accessible to governments, industry sectors, and firms; look at building on current efforts underway across the country, in particular, work being done in Québec by the Inter-university Research Centre for the Life Cycle of Products, Processes and Services (CIRAIG); Identify departments and agencies within the GoC with expertise and data relevant to the development of the database such as Statistics Canada, Natural Resources Canada and National Research Council; and Develop initiatives aimed at supporting SMEs that want to get involved in Life Cycle Approaches but lack the capacity and expertise.

Canada needs to proactively engage at multiple levels on life cycle-related issues. Key actions:

Identify where Canadian economic interests and Canadian companies are at risk, focusing on priority commodities, products, and sectors; this will enable the creation of targeted action plans; Engage in discussions with industry and international organizations to ensure that Life Cycle Assessment is applied consistently in a way that benefits Canada; the federal government should play a strong role by providing guidance and support for developing life cycle methodologies that can be adopted within an industry sector and then moved to inter national application; and,

Proactively engage in multilateral and bilateral discussions with key trade partners, partic ularly the United States and the European Union. This will reduce the risks of having Canadian goods and commodities subject to standards established by foreign interests that are not consistent with our own. The aim is to first, ensure Canadian economic interests are not penalized by foreign rules and regulations targeting or side-swiping our commodities and goods, and second to build a trading framework based on mutually-recognized life cycle science, data, and information.

Canadaâ&#x20AC;&#x2122;s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

The GoC needs to show leadership in the application of Life Cycle Approaches to its own internal operations and policy decision making. Key actions:

Create a designated centre of expertise within the GoC with a clear mandate to inform and potentially coordinate the application of life cycle activities across government departments; Engage in cross-departmental discussions to review existing policies and practices that may impede the use of Life Cycle Thinking in decision making; areas for discussion would include buildings and assets management, financial systems, and smart regulatory development; and Build knowledge and deliver training for government officials, including senior management and key officials in designated departments and central agencies, to move these initiatives forward with appropriate performance management incentives.

The GoC response to the above mentioned areas should be a concerted response with the private sector and involve other stakeholders such as nongovernmental organization and academics. The NRT recommends that the GoC establish a Life Cycle Approaches Task Force, which would address issues of direct and indirect relevance to the government. Direct issues include capacity building and coordination of Life Cycle Approaches related to GoC internal operations and decision making, while indirect issues mainly include liaison with and support to the private sector. It is recommended that the Task Force be established as a temporary measure, for a period of 24 to 36 months. The Task Force would liaise with and get advice from a multi-stakeholder External Advisory Panel that would oversee three Working Groups mandated to create and develop future partnership models as needed to develop a LCI database, standards, and SME capacity building.

1.1 Canada Needs to Adopt Life Cycle Approaches to Sustainable Development

1.5 Conclusion

1.3 1.2 Report Purpose

Report Structure

1.4 NRT Research and Convening Approach

1.0 Introduction This chapter provides the context for Life Cycle Approaches in Canada and around the world. It clarifies the purpose and structure of this report and describes the National Round Table on the Environment and the Economyâ&#x20AC;&#x2122;s (NRT) research and convening process that led to the report.

1.1 Canada Needs to Adopt Life Cycle Approaches to Sustainable Development Life Cycle Approaches are one of the core tools that can be used to advance sustainable development. Around the world, businesses, countries and international organizations are increasingly creating policies and programs that include aspects of Life Cycle Approaches to help integrate economic and environmental dimensions in the decision-making process. The need to apply tools like Life Cycle Approaches is growing as the number and severity of environmental and socio-economic pressures mount globally.

The NRT defines Life Cycle Approaches as a group of concepts, programs, tools, and data that involve identifying, understanding, and reducing inputs (economic or environmental) and their associated impacts generated throughout the entire life cycle of a product, technology, or process. Canada was a leader in conceptual and practical applications related to Life Cycle Approaches in the 1990s. At that time, the Government of Canada (GoC) promoted and provided guidance on the adoption of Life Cycle Management (LCM) in the private sector,1 created a publicly accessible Life Cycle Inventory (LCI) Database (called the Canadian Raw Material Database) and contributed to the creation of International Organization for Standardizationâ&#x20AC;&#x2122;s (ISO) Life Cycle Assessment (LCA) standards. Since this time, Canada has not actively adopted Life Cycle Approaches in a comprehensive manner and now needs to keep pace with the global trend. This lack of adoption of Life Cycle Approaches exposes Canada to economic risks, such as the inability to respond to formal regulatory demands of importing countries for life cycle-based labelling or life cyclebased product requirements. Canada is starting to encounter these risks with our largest trading partner, the United States (U.S.), and with European Union (EU) member states, in several sectors including oil and gas (e.g., fuel standards and directives), aerospace, electronics, and building and construction. Canada risks serious harm to its national economic interests by not proactively developing frameworks nor engaging in initiatives related to Life Cycle Approaches domestically and globally.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Already significant are the market requirements placed on Canadian firms by other firms requiring life cycle information as a condition of doing business. Businesses around the world are increasingly using Life Cycle Approaches to respond to these requirements and other related risks. Life Cycle Approaches also offers opportunities such as cost savings through reduced resource use. Businesses that respond to these opportunities and risks related to Life Cycle Approaches have an advantage over their competitors. Businesses that use Life Cycle Approaches for economic purposes also incur related environmental benefits, thus improving the overall health of the global environment. Life Cycle Approaches are a method to target the areas of greatest impact in the development of products, processes, or technologies — known as hot spots. It allows private firms to realize more immediate economic gains and enhances future planning capabilities by foreseeing areas of long-term economic and environmental concerns. This will become even more important as two anticipated changes materialize: (1) external costs of environmental impacts are likely to become more internalized within firm-level costs, and, (2) resource scarcity is likely to drive up costs of commodities and create supply-chain disruptions. Life Cycle Approaches have the ability to support firms in their business decision making by integrating cost-effective measures from product design along the supply chain right through to waste and disposal. Several economic and environmental drivers are increasing the adoption of Life Cycle Approaches across the world. Numerous countries are facing

ongoing serious economic crises and uncertainty threatening competitiveness and international trade. To remain globally competitive, private sector access to international and domestic markets is critical, as is innovation to attain a competitive advantage. Many governments are also operating in an environment of fiscal restraint, leading to increased scrutiny of spending with the goal of decreasing overall public sector spending. Decreasing regulatory burdens on firms is also a priority across many jurisdictions, and yet the importance of mitigating environmental and social risk is only increasing.

Life Cycle Approaches are one of the core tools that can be used to advance sustainable development. At the same time, other major drivers of change such as increased information flows and a growing global population are presenting new operating challenges. Long and complex value chains are becoming visible and identifiable as more and more information comes online. Demand for environmental and social risk mitigation is increasing as population pressures grow and as awareness of the human health consequences of environmental pollution increases. Recent estimates predict that the world’s population will rise 30% by 2050, resulting in a global population of approximately nine billion people.2 With this growth comes increasing consumption of goods and services. Most goods and services cause environmental degradation or depletion during their life cycle through raw material extraction, manufacturing, transportation, use and disposal. Pollution related to the production and consumption of goods and services is a major issue, which will increase as the world’s population

continues to grow and consume. Some question whether enough natural resources exist to meet this rise in demand. There is evidence that some country’s current demand is not sustainable in terms of consumption and production — and this includes Canada. In a 2007 study of 130 nations, Canada had the seventh largest Ecological Footprint,3 requiring approximately four Earth’s to sustain Canada’s consumption patterns.4 The environment may not be able to endure the impact of this increased consumption of goods. To respond to these global economic and environmental pressures, a number of countries and organizations have created policies and programs that include aspects of, or encourage the use of, Life Cycle Approaches. For example, the United Nation’s (UN) 10-year Framework of Programmes (10-YFP) on Sustainable Consumption and Production (SCP) * encourages the efficient and sustainable use of resources throughout the entire life cycle to reduce the amount of resources used, as well as the associated environmental impacts. The Marrakech Process is the global initiative that supports the expansion of this framework.5 Many countries, including

those in the EU, have created policies and programs to support this initiative. In 2011, the European Commission created the Resource-efficient Europe initiative, which provides a framework for the development of Resource Efficiency† policies.6 In this framework, the life cycle of resource use is considered in the decision-making process and priority setting. The Organisation for Economic Co-operation and Development (OECD) has looked extensively at Sustainable Materials Management (SMM),‡ which uses a Life Cycle Approach to reduce the environmental, economic and social impact of materials. Currently they are working on policies and instruments to promote the uptake of SMM globally.7

Life Cycle Approaches have the ability to support firms in their business decision making by integrating costeffective measures from product design along the supply chain right through to waste and disposal.

Sustainable Consumption and Production (SCP) is the use of services and related products, which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of future generations (United Nations Environment Programme 2011).

†

The European Commission defines Resource Efficiency as “using the Earth’s natural resources in a sustainable manner” (European Commission 2012b).

‡

The OECD defines Sustainable Materials Management as “an approach to promote sustainable materials use, integrating actions targeted at reducing negative environmental impacts and preserving natural capital throughout the life-cycle of materials, taking into account economic efficiency and social equity” (Organisation for Economic Co-operation and Development ND).

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

1.2 Report Purpose

1.3 Report Structure

This report has been prepared in response to a request from the Minister of the Environment, on behalf of the GoC, for advice on Life Cycle Approaches from an economic competitiveness and environmental stewardship perspective. Three questions were identified in the Ministerial request:

The rest of the report is presented as follows:

Chapter 2 provides an overview of the concepts, programs, tools, and data and information included in Life Cycle Approaches with a framework for understanding their roles, as well as key definitions and related terminology for Life Cycle Approaches.

1. “What would be the implications of applying this kind of approach?” (i.e., Life Cycle Approaches to enhance environmental sustainability)

Chapter 3 highlights the use of Life Cycle Approaches at the international and domestic levels, in both the public and private sectors, which are of most relevance to Canada.

2. “Is the Life Cycle Approach a useful technique for integrating economic and environmental costs so as to recognize the real value of environmental goods and services?”

Chapter 4 explores the environmental and economic risks and opportunities related to the uptake of Life Cycle Approaches and provides a rationale for their use in the Canadian public and private sectors.

3. “Is there a way to advance a Life Cycle Approach to environment[al] stewardship in Canada that supports economic competitiveness?” The NRT is pleased to present this report that addresses these questions and includes recommen dations designed to create the conditions for progress for Life Cycle Approaches both in the Canadian private sector and within the federal government. Our report will help the GoC understand how Life Cycle Approaches could contribute to long-term sustainability in Canada, determine what role the government could play to facilitate successful implementation of Life Cycle Approaches, and recognize in what context Life Cycle Approaches could lead to short- and long-term benefits.

Chapter 5 explores the conditions for successful adoption of Life Cycle Approaches by the private and public sectors in Canada, and identifies priority areas for government action. Chapter 6 presents recommendations for the Government of Canada to support the increased adoption of Life Cycle Approaches in the public and private sectors, which will enhance economic competitiveness and environmental stewardship.

1.4 NRT Research and Convening Approach The NRT sought input on this project through a multi-stakeholder research and convening process that informed the analysis, findings, and recommended policy pathway. This process included strategic guidance from an Expert Advisory Committee, stakeholder engagement, and internal and external research.

Convening Bilateral meetings, round table sessions, workshops and individual consultations with knowledgeable stakeholders all helped inform the report. The NRT convened more than 100 experts and stakeholders over seven sessions to guide the research for this report. The experts and stakeholders were from several fields, including academia, the federal government, the private sector, and non-governmental organizations (NGOs). Stakeholders initially helped ensure that the direction of the research was relevant based on their perspective of key issues and developments related to Life Cycle Approaches within their sector. For example, bilateral meetings were held with pertinent government departments early on to ensure the NRT was aware of current government use of Life Cycle Approaches. Several round table sessions and workshops followed to further explore the use of

Life Cycle Approaches within the public and private sectors and to validate the preliminary research findings. A number of convening events were then held to provide an opportunity for stakeholders to comment on our findings and to contribute to our recommendations. This included a round table with senior government officials (Assistant Deputy Ministers and Director Generals), at both the beginning and conclusion of the project. An Expert Advisory Committee provided strategic guidance for the research and convening process through in-person large-group meetings and individual discussions with the NRT. Membership in the Expert Advisory Committee was varied and represented industry, Government of Canada, NGOs, academics, and consultants with expertise related to Life Cycle Approaches. Policy options and directions were also discussed with them. A complete list of members is found in Appendix 1.

Research The NRT commissioned external research for this project. This research explored the drivers, risks, opportunities, and challenges related to the uptake of Life Cycle Approaches in Canada. It investigated these issues in the context of the private sector and presented recommendations on how the Government of Canada could support the uptake of Life Cycle Approaches by Canadian businesses. It also explored these issues related to internal federal operations and decision-making processes and identified recommendations for Government of Canada action within key departments.

Canadaâ&#x20AC;&#x2122;s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

1.5 Conclusion Life Cycle Approaches are being incorporated by organizations, governments, and companies across the world to address current and growing global economic and environmental issues. Canada was a leader in the use of these approaches a decade and a half ago and now needs to keep pace with this growing global trend. The public and private sectors in Canada will increasingly need to adopt Life Cycle Approaches to ensure that the country is economically competitive and environmentally sustainable. Through this project, the NRT has identified clear risks to the Canadian economy if companies and govÂernments do not consider Life Cycle Approaches as a vital sustainable development tool. In particular, trade and market access risks can already be observed. The private sector takes these very seriously. Addressing these risks should be a priority for the federal government. An enhanced uptake of Life Cycle Approaches by the private and the public sector will increase operational efficiencies, leading to cost savings and environmental gains for governments and companies. Better environmental stewardship can lead to improved economic competitiveness.

2.4 Conclusion

2.1 What are Life Cycle Approaches and why are they needed?

2.2 A Framework for Life Cycle Approaches

2.3 Examples of Life Cycle Approaches

2.0 Understanding Life Cycle Approaches This chapter provides an overview of the spectrum of Life Cycle Approaches, as well as a description of key terminology used in the report. A complete list of terms and definitions is located in Appendix 2. The strengths and limitations of Life Cycle Approaches are also discussed.

2.1 What are Life Cycle Approaches and why are they needed? The NRT defines Life Cycle Approaches as a group of concepts, programs, tools, and data that involve identifying, understanding and reducing inputs (economic or environmental) and their associated impacts generated throughout the entire life cycle of a product, technology, or process. Life Cycle Approaches are part of a toolkit for sustainable development. In making decisions, multiple complementary tools should be used to ensure a fully informed judgement. Traditionally, Life Cycle Approaches have focused on environmental inputs and impacts. However, economic and social inputs and impacts can also be examined to understand how a product, technology, or process addresses particular objectives. Figure 1 illustrates the main life cycle stages of a product. At every stage, environmental inputs such as raw materials and energy, economic inputs such as the cost of materials, and social inputs such as employment, may be required. A variety of impacts in the form of outputs may also be generated at each stage. These include environmental outputs such as carbon emissions and waste water, economic outputs such as profit and the cost of waste disposal, and social outputs such as the fair treatment of employees. For the purposes of this report, only environmental and economic inputs and impacts will be discussed.

Figure 1. Product life cycle stages Natural Resources Incineration and Landfilling

Disposal

Extraction of Raw Materials

Inputs

Recovery Recycling of Materials and Components

Design and Production

Source: Adapted from United Nations Environment Programme No Date (a)

• Environmental • Economic • Social

Impacts

Reuse

Use and Maintenance

At each stage, consider…

Packaging and Distribution

• Environmental • Economic • Social

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Life Cycle Approaches have the potential to inform policy and program decision making, as described in the text box below.

Integration of Life Cycle Approaches into Policy and Program Decision Making

As shown in Figure 2, Life Cycle Approaches could be used in policy and program decision making at four key steps: Step 3 – Policy Development, Step 4 – Policy Approval, Step 5 – Program Development and Step 6 – Policy Implementation. Application of Life Cycle Approaches at these important intervention points could lead to enhanced economic efficiency, environmental stewardship, and social benefits for Canada.

The figure demonstrates the life cycle of the federal government policy-making processes and identifies where adjustments could be made to ensure the process is effective and efficient and has built-in accountabilities. It also shows that Life Cycle Approaches can be used to better understand the implications of the intended policy on the products, commodities, or processes that may be affected by the policy.

Figure 2. Integrating Life Cycle Approaches in Government Policy and Program Development

STEP 2 POLICY DIAGNOSTIC Stakeholder Consultations

STEP 1

STEP 3 POLICY DEVELOPMENT

DECISION TO DEVELOP POLICY

Strategic Environmental Assessement

Political / Depart mental Decision

Regulatory Impact Analysis Statement

INPUT ANALYSIS ECONOMIC, SOCIAL, ENVIRONMENTAL

IMPACT ANALYSIS ECONOMIC, SOCIAL, ENVIRONMENTAL

STEP 7 POLICY & PROGRAM REVIEW Program Delivery Evaluation Frameworks

THROUGHOUT LIFECYCLE OF THE PRODUCT(S) OR PROCESS(ES) AFFECTED BY THE POLICY

STEP 4 POLICY APPROVAL Consideration of choices and tradeoffs

STEP 6

STEP 5

POLICY IMPLE MENTATION

PROGRAM dEVELOPMENT

Performance Measurement

Treasury Board Submission

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Step 3 – Policy Development and Step 4 – Policy Approval: The Government of Canada (GoC) has two existing tools at its disposal to generate better-informed decision making during the policy development stage – Strategic Environmental Assessments (SEAs) and Regulatory Impact Analysis Statements (RIAS). A RIAS is triggered during policy development that is regulatory in nature; a similar process could be undertaken for non-regulatory policy decision making as well. SEAs and RIAS are usually undertaken at different steps. In the context of policy development for Life Cycle Approaches, both the SEA and RIAS would be undertaken simultaneously, early in the process (Step 3). These two tools would be used to analyze the economic, environmental and social inputs needed for the policy to be implemented and would be used to predict the environmental, economic and social impacts that might result from its implementation. This would enable the Minister and Deputy Minister at Step 4 (Policy Approval) to have complete and relevant information before developing any new policy and taking it to Cabinet for approval.

Step 5 – Program Development and Step 6 – Policy Implementation: Performance measurement indicators need to be created to track the progress of policy implementation in the public sector. These indicators would measure the success of the policy in terms of economic, environmental, and social attributes unique to each policy initiative. These would be established during Step 3 (Policy Development) and would be dependent on various inputs and impacts as identified by the SEA and RIAS. The analysis from the earlier steps would inform later stages such as Step 5 (Program Development) and Step 6 (Policy Implementation). In the implementation phase, the initial policy goals (as set in the planning stages) would be reconciled with the realization of these goals. The four steps would be embedded in a comprehensive manner so the analysis, integration and performance measurement all interconnect.

The main strengths of Life Cycle Approaches are that they are based on a systems approach and provide the perspective of multiple indicators. Life Cycle Approaches help identify areas of focus to reduce inputs and impacts, and provide a basis through which governments and businesses can compare different options to achieve desired input and impact reductions. By including and considering multiple inputs and impacts over the life cycle, the holistic impact of a product, technology, or process can be better understood, thus enabling effective mitigation of the associated risks. This includes understanding the entirety of the risk and identifying the actors that are involved. Social and environmental impacts are often overlooked as they are harder to quantify than

their economic counterparts; however, the use of Life Cycle Approaches facilitates their inclusion. Life Cycle Approaches enable governments and businesses to identify hot spots – that is, areas with the greatest impact – and thus target their efforts more efficiently. They also prevent organisations from making a decision that reduces the impact of one stage of the life cycle (e.g., manufacturing) while increasing the impact at another stage (e.g., disposal). Decision makers can use these approaches to increase their awareness of the potential impacts of their options by considering multiple impacts over the entire life cycle and thus make choices with better awareness of these trade-offs.

The scope of information – that is, the type of impacts or stages of the life cycle – included in the Life Cycle Approach can affect the strength of the result. The consideration of a single environmental impact, such as GHG emissions, nullifies the ability of Life Cycle Approaches to identify trade-offs related to different environmental impacts such as water use or electricity and, their cumulative impact.§ This concern has been voiced about schemes that involve carbon footprinting.8 The consideration of only select aspects of the life cycle such as production or end-of-life is limiting, as it reduces the capacity to avoid unintentionally shifting the burden from one stage to another, which is a key objective of Life Cycle Approaches.9

The main strengths of Life Cycle Approaches are that they are based on a systems approach and provide the perspective of multiple indicators. A broad range of concepts, programs, tools, and data and information described below have been created that can be used to incorporate Life Cycle Approaches into the decision-making process. Life Cycle Approaches can be applied at a variety of stages, including material, product, technology, project or service levels. The project level is important for improving the footprint of resource extraction, as is the case in the use of Life Cycle Assessment in the oil and gas and mining sectors. However, adding this perspective may be confusing if it is not done to consistent and accepted standards. The manner in which the findings or results of Life Cycle Approaches are used is also important.

2.2 A Framework for Life Cycle Approaches Life Cycle Approaches include a wide variety of concepts, programs, tools, and data that range from qualitative (e.g., Life Cycle Thinking [LCT]) to quantitative (e.g., Life Cycle Assessment [LCA]) and from conceptual to pragmatic. Conceptual approaches are those that are more visionary, such as LCT, whereas pragmatic approaches are more tangible activities such as LCA. Some focus on resources and environmental features and others incorporate financial aspects (e.g., Life Cycle Costing [LCC]) and social information (e.g., Social Life Cycle Assessment [SLCA]). The focus of the approach also varies – that of products (e.g., Design for Environment) or that of materials and resources (e.g., sustainable supply-chain management). Several of these are well established, including (Environmental) Life Cycle Assessment (LCA), Environmental Product Declarations (EPDs), ecolabelling and Design for Environment (DfE), with supporting standards or guidelines and a large amount of application. Others are emerging or less developed and are not supported by international standards, as is the case with SLCA. Some Life Cycle Approaches, such as LCA, can be resource intensive. However, there is a shift underway that is allowing Life Cycle Approaches to be applied in more cost-effective and timely ways while still affording the benefits mentioned above.

The benefit of only using one metric (e.g., carbon) is that it reduces the burden of information on companies and allows for easy comparison.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

This group of concepts, programs, tools, and data and information are collectively described in this report as “taking a Life Cycle Approach,” and are illustrated in the NRT’s Life Cycle Approach

Framework (see Figure 3). The framework contains key terminology; however, it is not meant to be a comprehensive list of Life Cycle Approaches.

Concepts • Life Cycle Thinking (LCT)

Programs

Qualitative

Figure 3. A framework for Life Cycle Approaches

• Ecolabelling • Life Cycle Management (LCM) • Extended Producer Responsibility (EPR) • Sustainable Supply Chain Management • Green / Sustainable Procurement • Environmental Product Declarations (EPDs) • Design for Environment (DfE) / Ecodesign

Tools • Life Cycle Costing (LCC) • Material Flow Analysis (MFA) • Total Cost Accounting (TCA) • (Environmental) Life Cycle Assessment (LCA) • Social Life Cycle Assessment (SLCA) • Life Cycle Sustainability Analysis (LCSA) • Economic Input / Output Life Cycle Assessment (EIO-LCA)

• Life Cycle Inventory (LCI) Databases and Datasets • Guidelines and Standards • Case Studies • Best Practices • Software

Quantitative

Data and Information

This section describes this framework, including the relationships among the different components and provides definitions for some of the most common approaches included in each.

Life Cycle Concepts Concepts are the principles that guide and inspire the analytic and practical applications of Life Cycle Approaches.10 They involve thinking that considers all stages of the life cycle of a product or service and guide the application of programs and tools, which are supported by data and information. Life Cycle Thinking (LCT) is the primary concept; it seeks to identify possible improvements to goods and services in the form of lower environmental impacts and reduced use of resources across all life cycle stages.11 Concepts can be used to aid the decision-making process, or they can be used to provide a framework for developing and implementing a suite of Life Cycle Approaches. Qualitative data and information often help support and inform the use of LCT. The application of these concepts helps governments and businesses pinpoint existing tools or identify supporting programs they need to develop.

Life Cycle Programs Life cycle programs are used to put concepts such as LCT into practice.12 The application of Life Cycle Approach programs can confer significant economic and environmental benefits. For example, design decisions affect the entire life cycle of a product, including the type of materials used, the weight and size of the product, the energy required for transport, packaging requirements, consumer use, and recycling possibilities. Some estimates indicate that the design phase accounts for approximately 80% of all product-related environmental impacts.13

By considering the environmental impacts of all life cycle stages in the design phase, considerable reductions in environmental impacts can be made. A life cycle program, such as DfE, does just this by focusing on “improving environmental impacts over a product life cycle by incorporating environmental considerations into product design.” 14

Life Cycle Approaches include a wide variety of concepts, programs, tools, and data that range from qualitative (e.g., Life Cycle Thinking [LCT]) to quantitative (e.g., Life Cycle Assessment [LCA]) and from conceptual to pragmatic. Other examples of programs include ecolabelling, Green / Sustainable Procurement, Extended Producer Responsibility (EPR), LCM, Sustainable Supply Chain Management and EPDs. Programs can serve multiple functions. They can communicate the environmental impacts of a product, process, or system to customers (both individuals and businesses) in the form of ecolabels and EPDs. They can also be used to support the interventions of governments, as in the case of EPR, and those of businesses, as exem plified by DfE. EPR is the extension of a producer’s responsibility for a product to the post-consumer stage of a product’s life cycle.15 The responsibility can be physical (e.g., take back used computers to ensure proper disposal) or financial (e.g., pay another company to accept used goods). When done successfully, the end-of-life management costs of a product are incorporated into its retail and wholesale price, shifting the related expenses from taxpayers to producers and consumers. Frequently this reduces the environmental footprint of a product, as producers are provided with an incentive to modify their product’s design to decrease the amount and toxicity of its end-of-life waste and increase ease of product disassembly, among other factors.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Programs are often based on tools, such as Life Cycle Assessment (LCA) and are supported by data and information. Ecolabels provide one such example. These product labels communicate the environ mental impacts of a product, which may be based on results from an LCA (see next section for details on LCA). The impacts can cover the entire life cycle, or they can target one stage of the life cycle (e.g., EnerGuide targets the use phase). LCAs can include multiple impacts or can refer to only a single impact, such as carbon (e.g., carbon footprint). The International Organization for Standardization (ISO) provides guidance on ecolabels (ISO 14020 series). There are three types of ecolabels under these standards, but of these three, only one (Type III) is based on a full LCA.16 EPDs provide an example of a Type III ecolabel. They are a globally recognized third-party verified product declaration based on the ISO 14025 standard. These declarations provide quantified environmental information on the environmental impacts for all stages of a product’s life cycle to help businesses and consumers compare the impacts of similar products. The development of EPDs are guided by Product Category Rules (PCRs), which establish the requirements of an LCA specific to a particular product group and are certified by Program Operators.

Life Cycle Tools Tools support Life Cycle Approaches by modelling and analyzing data over the life cycle of a product.

They provide economic and environmental information used to inform decision making. Examples of commonly used tools include LCA, LCC, Material Flow Analysis (MFA), Economic Input-Output Life Cycle Assessment (EIO-LCA), Life Cycle Sustainability Analysis (LCSA), and Total Cost Accounting (TCA). One of the most prevalent tools used by governments and businesses around the world is Life Cycle Assessment (LCA). This quantitative tool measures the potential environmental impacts of a product or service throughout its entire life cycle, from the extraction of raw materials to disposal. The objective is to mitigate the environmental impact of a product or service by guiding the decision-making process.17 By identifying environmental inputs and impacts, decision makers will have more information on which to base their choices and will be more aware of the effects of these choices. LCAs can result in economic benefits by identifying and targeting reductions in energy and raw-material intensive activities. LCA, including its methodology, is guided by the ISO 14040 series of standards and includes four phases. First, the goal and scope, including the boundaries** of the study, is defined. Second, all of the inputs and outputs for a given product system throughout its life cycle are identified (often at the unit process level), compiled, and quantified in a Life Cycle Inventory (LCI). This information can be calculated through a dedicated assessment or can be taken from an existing LCI database. Third, the results of the inventory analysis are interpreted in terms of

Boundaries determine what processes of the product, commodity or service being assessed are included in the scope of the study. Several types exist, including boundaries between technology and nature (e.g., what stages in the life cycle to include), geographical areas, time horizon (e.g., present vs. future impacts) and boundaries between the current life cycle and boundaries of other related systems (DANTES Project 2006).

their environmental impacts (e.g., climate change, resource use, human health, ecosystem quality, freshwater use). Finally, the environmental impacts from the entire life cycle are examined to identify hot spots or compared to other products, processes or technologies to determine the best option. The results can be represented with a single score, but there is debate about the accuracy of weighting factors required to reach this. Appendix 3 contains an example of LCAs that were conducted to compare the environmental impacts of several hand-drying options (e.g, paper towel vs. blown air), which illustrate the steps required to conduct an LCA. Life Cycle Costing (LCC) is an economic tool that calculates the total cost of a product, process, or activity over its life span.18 This information can then be used to make decisions about about the design and development of a product, process, or activity. For example, the use of LCC can help quantify the costs of buying, using, maintaining, and disposing of a car. With this information, the buyer can identify which car will be cheaper throughout its entire life cycle, not just at any one stage, such as the purchase or use phase. LCC only considers internal monetary costs, which are costs passed on to the consumer. Another emerging application of LCC is in the funding of public infrastructure projects by governments. Traditional planning practices have exclusively focused on the design and construction costs of projects whereas the majority of the costs during the life cycle of the infrastructure occur during

the operations and maintenance (O&M) phase. Taking into account the full life cycle costs of an infrastructure project – design, build, operation, and maintenance – will lead to a higher level of service from the infrastructure, provide more efficient use of government funds, and mitigate undue environ mental impacts related to O&M. If capital and O&M budgets are not linked, savings realized at one phase may cause increased costs in another – hence the need to minimize the combined life cycle cost (capital and O&M) for an infrastructure project. By doing this, governments can deliver on infrastructure projects that align with community desires, minimize the environmental impact, and ensure the least possible economic cost over the life cycle of the infrastructure. Total Cost Accounting (TCA) is similar to LCC, except that it includes both internal and external costs. External costs are those that are borne by society and are not paid directly by the consumer.19 Environmental costs such as air or water pollution resulting from the use of the product or process fall into the category of external costs. Data is needed to use these tools. For example, to perform an LCA, LCI data is required. This is environmental data that represents the inputs and outputs for a given product system over its life cycle. Quantitative environmental and economic data are commonly used; however, qualitative and social data are also important.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Life Cycle Data and Information Life cycle data and information provides the foun dation for the adoption of Life Cycle Approach concepts, programs and tools. Both quantitative and qualitative environmental, social and economic data and information is used. Sources vary from industry, academia and government and range from publicly available LCI databases to case studies and best practices. Quantitative data is most often used and is frequently guided by standards. For example, LCA requires LCI data and is guided by ISO standards. Qualitative information, such as best practices and case studies, is frequently used to inform the development of Life Cycle Approach programs or to help make decisions using LCT or LCM. There is a need for affordable, high quality data that is geographically relevant to enable robust, defensible and meaningful analysis using LCA. LCI data is the most commonly used data as it is needed to conduct an LCA of a commodity or good. The data reflects the input and output material and energy flows associated with each step in a process or production of a good or commodity. For example, an LCA of an aluminum can may involve linking numerous LCI data sets to illustrate the full life cycle impacts of the can’s production, use, and disposal (i.e., from raw material extraction, production, transportation, and use to end-of-life disposal). LCI data can be generated by the person conducting the LCA, which is often a costly and time-consuming process.

Alternatively, data from multiple sources can be compiled and housed in an LCI database, allowing access to cheaper and timely data. Globally, juris dictions are developing their own databases that are available for public and private sector use. Chapter 5 includes a further discussion on why geographically based databases are important.

Life cycle data and information provides the foundation for the adoption of Life Cycle Approach concepts, programs and tools.

2.3 Examples of Life Cycle Approaches Case studies are included throughout the report to illustrate the variety of ways in which Life Cycle Approaches are used in the private and public sectors. A summary of the case studies is presented in Table 1 (next page). The table shows the following: the name of the initiative, type of Life Cycle Approach used, associated risk or opportunity for Canada, main sectors affected, implementing entity, and the location of the case study in the report. The categories used to classify the associated risk or opportunity to Canada are elaborated on in Chapter 4.

Table 1. Summary of Life Cycle Approaches case studies in report Name of Initiative

Type of Life Cycle Approach Used

Associated Risk or Opportunity for Canada

Main Sectors Affected

Implementing Entity

La Grenelle 2 Act

Carbon Footprinting, Environmental Product Declarations (EPDs)

Trade Restrictions

General Manufacturing

Government of France

3.2

Empreinte Carbone Québec

Carbon Footprinting

Trade Restrictions

General Manufacturing

Ministère du Développement économique, de l’Innovation et de l’Exportation (MDEIE), Pro vince of Québec

3.3

Strategic Decision Making Model

Economic InputOutput Life Cycle Assessment (EIO-LCA)

Enhanced Supply Chain and Internal Operation Efficiencies

Retail

Canadian Tire (Canada)

3.3

Green Guide to Specification

Life Cycle Assessment (LCA)

Lack of Market Access

Building and Construction

Building Research Establishment’s Environmental Assessment Method (BREEAM) (U.K.)

3.3

Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standards (RFS2)

Life Cycle Assessment (LCA)

Trade Restrictions

Oil and Gas

California and U.S. Environmental Protection Agency (EPA)

4.2

Program Operator for Environmental Product Declarations (EPDs) on Wood Products

Environmental Product Declarations (EPDs)

Lack of Market Access and Trade Restrictions

Forestry

FPInnovations (Canada)

4.2

Policy on the Management of Real Property

Life Cycle Thinking (LCT), Life Cycle Costing (LCC)

Public Sector Leadership, Enhanced Efficiencies in Internal Operations, Reduced Environmental Impacts

Building and Construction

Public Works and Government Services Canada (PWGSC)

4.3

Product Sustainability Index

Life Cycle Assessment (LCA), Life Cycle Inventory (LCI) Database, Ecolabels

Enhanced Supply Chain and Internal Operation Efficiencies, Reduced Environmental Impacts

Retail

Walmart (international)

4.4

Eco-efficiency

Eco-efficiency Analysis and Product Label

Enhanced Internal Operation Efficiencies, Reduced Environmental Impacts

Chemical Manufacturing

BASF (international)

4.4

Bio-fibers Research Project

Life Cycle Assessment (LCA)

Consideration of Environmental Attributes in Policy Decisions

Public Sector and Energy

Environment Canada

5.2

Case Study Location (Section)

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

2.4 Conclusion The systems’ perspective provided by Life Cycle Approaches, which takes into account environmental, social, and financial considerations, is needed for better decision making in the 21st century – in both industry and government. Life Cycle Approaches cover a wide-spectrum of applications. They include different concepts, programs, tools, and data designed to meet a variety of needs and uses. The NRT’s Life Cycle Approach framework provides a common understanding on which to base a life cyclerelated dialogue and enhance uptake in Canada. Multiple linkages and relationships exist between the various types of Life Cycle Approaches, but it is clear that life cycle data and information provide the foundation for the adoption of Life Cycle Approach concepts, programs, tools, and data and information. Understanding what Life Cycle Approaches are and where they can be most usefully applied is the first step to assessing their benefit to business and government.

3.2 3.1 Drivers for the Adoption of Life Cycle Approaches

International Use of Life Cycle Approaches

3.4 Conclusion

3.3 Domestic Use of Life Cycle Approaches

3.0 Trends in Life Cycle Approaches This chapter describes the international and domestic use of Life Cycle Approaches by the public sector, private sector, international organizations, non-governmental organi足 zation (NGOs) and academia (see Figure 4). The examples included below were chosen based on their relevance to Canada because of their economic and environmental implications, or to illustrate best practices that could be incorporated into future Government of Canada (GoC) policies and programs. Examples of current policies and programs that inco足r足 porate aspects of Life Cycle Approaches are also included. They illustrate the sporadic nature of its use but also show that the GoC has a place from which to start should it chose to pursue Life Cycle Approaches in a more deliberate and coordinated fashion. We will elaborate on some of these examples in later chapters of the report.

Figure 4. Illustration of trends in Life Cycle Approaches presented in Chapter 3

USE OF LIFE CYCLE APPROACHES

INTERNATIONAL TRENDS

DOMESTIC TRENDS

PUBLIC SECTOR

PUBLIC SECTOR (FEDERAL)

PRIVATE SECTOR

PUBLIC SECTOR (P/T)

INTERNATIONAL ORGANIZATIONS

PRIVATE SECTOR

3.1 Drivers for the Adoption of Life Cycle Approaches Life Cycle Approaches are increasingly used around the world with the European Union (EU), United Nations (UN), Society for Environmental Toxicology and Chemistry (SETAC), multi-sectoral industry groups (e.g., the Sustainability Consortium) and multinational companies leading the way. Several international and multicountry initiatives have driven this adoption, and Canada needs to keep pace with this global trend. Both specific and high-level drivers are increasing the adoption of Life Cycle Approaches across the world. High-level drivers include issues discussed in Chapter 1, such as population growth, resource conservation, and ecosystem impacts of production.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Specific drivers include market factors, trade issues and regulations. Market factors encompass the growing demand from many sectors, including the electronic, retail, apparel and green building sectors, for life cycle data and information along their supply chains. Firms and suppliers are increasingly expected to incorporate or demonstrate sustainability in their own production and consumption of goods and services. Trade issues include effective application of new trade barriers from jurisdictions with life cycle requirements on products sold in their country, province or state. Regulatory drivers comprise such things as the incorporation of life cycle information in government policy formation and procurement. More details regarding these drivers will be provided in Chapter 4.

3.2 International Use of Life Cycle Approaches Public Sector The EU and its member states are leading the way in the use of Life Cycle Approaches in public policies and programs, although many other countries around the world have adopted aspects of this approach, including Japan and the United States (U.S.). Governments in fast-growing countries, such as China and India, are also encouraging the use of Life Cycle Approaches.20

The European Commission has numerous initiatives that promote the use of Life Cycle Approaches in government and industry. Key among these initiatives are the Integrated Product Policy and the European Platform on Life Cycle Assessment (LCA). The objective of the European Platform on LCA is to promote the uptake of Life Cycle Thinking (LCT) in the private and public sectors through addressing the need for more consistent and reliable LCA data.21 To produce more consistent, comparable and reliable results, the Platform created the European Reference Life Cycle Database (ELCD), as well as several handbooks that provide further guidance on the use of the ISO LCA methodology. The Platform released the first edition of the guidance documents in 2010 called the International Reference Life Cycle Data System (ILCD) Handbook.22 Launched in 2001, the Integrated Product Policy is a toolbox of policy instruments based on Life Cycle Approaches that can be used to reduce the environmental impact of a product on both the demand and supply sides. Examples of instruments on the supply side include regulatory and voluntary prohibitions and phase-outs, product performance requirements, funding of research and development, eco-design competitions/awards, and standardization. On the demand side, examples of instruments include consumer information, ecolabels, product profiles, product guidelines, information centres, indirect taxation, public purchasing, and deposit/ refund schemes. To increase the effectiveness of the Integrated Product Policy, the European Commission identified products with the greatest potential for environmental improvement and used this information to develop and apply the instruments.23

A separate policy initiative was established – the European Compliance Assistance Program for SMEs: Small, Clean and Competitive – to help small and medium enterprises†† (SMEs) comply with environmental policies and legislation, including the Integrated Product Policy. This policy was established in recognition of both the difficulties that SMEs often face, such as a lack of awareness of compliance requirements, and the opportunities related to environmental performance improvements. The program

France’s La Grenelle 2 Act

In July 2010, France enacted La Grenelle 2 Act – article 228 of this act provides the framework for an EPD program in the country. An experimental trial of the program was launched in 2011, led by the Ministry for Sustainable Development (MEEDDM) with collaboration from the French Office of Fair

††

provides assistance in several areas, including funding, capacity building and technical support.24 EU member states are also creating policies and programs that include Life Cycle Approaches. One such example is France’s La Grenelle 2 Act, as illustrated in the case study below. In its current pilot phase, this act encourages the use of LCA to create Environmental Product Declarations (EPDs) that detail carbon impact of products sold in France.

Trading, Consumer Affairs and Fraud Control (DGCCRF).25 Methodological support for the program, including detailed guidance on how to conduct LCAs of the products via Product Category Rules (PCRs), is provided by a joint platform created by the Association Française de Normalisation (AFNOR), the French national organization for standardization, and L’Agence de l’environnement et de la maîtrise de l’énergie (ADEME), a French public agency responsible for environment and energy control. The ADEME created a publicly accessible Life Cycle Inventory database that companies participating in the pilot can access.26

SMEs are companies that have 1-499 employees.

Approximately 170 companies representing close to 1000 products volunteered to participate in this year-long pilot project that started on July 1, 2011.27 The participating companies will include carbon footprint labels on their products to inform consumers of the carbon impact of their purchase over its life cycle. The French government will evaluate the program at the end of the experimental period in 2012.28 A potential outcome of the experiment is that the government will require carbon labelling on products produced in or exported into France 29 and may eventually require products sold in France to obtain more comprehensive EPDs.30

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

The U.S. has several initiatives related to Life Cycle Approaches, including the Life Cycle Inventory (LCI) database and the Environmentally Preferable Purchasing (EPP) Program. The National Renewable Energy Lab houses the Life Cycle Inventory (LCI) database, which was established in 2003 with assistance from the Athena Institute. The database provides publicly available, U.S.-based LCI data that is critically reviewed. A number of government and NGOs contribute to the database.31

The EU and its member states are leading the way in the use of Life Cycle Approaches in public policies and programs, although many other countries around the world have adopted aspects of this approach, including Japan and the United States (U.S.). The EPP Program is another example of a U.S. initiative related to Life Cycle Approaches. Created in 1993 through an Executive Order and administered by the Environmental Protection Agency (EPA), the program is designed to assist federal agencies comply with green purchasing requirements and catalyze market demand for green products and services. One of the guiding principles of the program is the consideration of multiple environmental attributes of a product or service from a life cycle perspective. The potential impact of this program is significant as the U.S. federal government is one of the world’s largest consumers of goods and services (approximately $350 billion per year).32 Two life cycle-based fuel standards have also been created by governments in the U.S. – the EPA’s Renewable Fuel Standard (RFS2) and California’s Low Carbon Fuel Standard (LCFS). These standards are discussed in more detail in Chapter 4.

Private Sector Several global networks exist that focus solely, or in part, on advancing the use of Life Cycle Approaches in the industrial sector. Most notable are the Sustainability Consortium and the Consumer Goods Forum. Formed in 2009, the Sustainability Consortium focuses on measuring and reporting product sustainability over the life cycle through the creation of standards and tools.33 The development of a Sustainability Measurement and Reporting System is the focus of much of the Consortium’s work, which will provide guidance on the collection and dissemination of LCA-based information of a product over its supply chain.34 Membership in the Consortium includes large multinationals such as Walmart, DELL, Kimberly-Clark, 3M and Kellogg’s. Several government agencies (e.g., U.S. EPA) and NGOs (e.g., World Wildlife Fund) are also members. The Consortium is co-managed by the University of Arkansas and the University of Arizona. It demonstrates growing private sector interest in this field. The Consumer Goods Forum represents over 650 retailers, manufacturers, service providers globally (worth over EUR 2.5 trillion in annual sales).35 Their Product Sustainability Measurement Working Group focuses on standardizing product LCA measurement approaches. The forum collaborates with the Sustainability Consortium and several European initiatives on this. Many members of the forum have operations in Canada, including those on their Global Sustainability Steering Committee such as Sobeys, Walmart, Unilever, Nestle, Coke, Pepsi, Kraft, Kellogg’s, Proctor & Gamble, Danone, General Mills and Sara Lee. Decisions made on the use of LCA at this forum may have repercussions for Canada because of the Canadian operations of the multinational member companies.

The Green Product Roundtable is a North American multi-stakeholder group led by the Keystone Center for Science and Public Policy. Its members include representatives from retailers, manufacturers, purchasers, certifiers, NGOs, and local, state and federal governments. Their work focuses on improving information on green products by linking life cycle impacts to product attributes, standards, and eco-labels.36

Several global networks exist that focus solely, or in part, on advancing the use of Life Cycle Approaches in the industrial sector.

International Organizations Several international organizations have been global leaders in the creation of initiatives related to Life Cycle Approaches. Of particular note is the UNEP-SETAC Life Cycle Initiative, which was launched in 2002 to enable users around the world to put LCT into effective practice.37 Canada was involved, through Natural Resources Canada (NRCan), in several aspects of this initiative. NRCan assisted by organizing international workshops on topics related to LCA models for metals, sustainable production, and use and recycling of natural resources. NRCan also participated in the Apeldoorn Declaration 38 and the Clearwater Consensus, which gave direction to the Initiative on the quantification of metal toxicity. 39 Phase two of the initiative is currently underway, which is linked to activities in UNEP’s 10 Year Framework of Programmes (10-YFP) on Sustainable Consumption and Production (SCP). Projects in four areas have been initiated to date. The first project area is Life Cycle Management (LCM) in

business and industry. This includes work on carbon footprinting and enhancing SMEs capability to use LCM. The carbon footprinting work is being done in collaboration with the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI), who are working on GHG-related product standards described in more detail below. The second project area is Life Cycle Approaches for capability development. This focuses on promoting and facilitating the use of Life Cycle Approaches in developing countries. Life Cycle Approaches for methodologies and data is the third project area, which focuses on consistency in LCI databases, as well as enhanced accessibility and quality of data. The last project area, Life Cycle Approaches for resources and impacts, focuses on developing guidance for inclusion of water, biodiversity and ecosystem services in Life Cycle Approaches.40 Efforts by international business NGOs, such as WBCSD, are focused on extending Life Cycle Approaches beyond carbon. WBCSD has been promoting Life Cycle Approaches since its inception, which is inherent in its work on eco-efficiency. Life cycle concepts and tools are included in many of its publications, such as the eco-efficiency learning module, which references Design for Environment (DfE) and LCA.41 The International Organization for Standardization (ISO) was one of the first organizations to advance LCA with the development of the first LCA-related standards in the 1990s. The ISO 14040/44 standards outline the principles, framework, requirements and guidelines for LCA, including LCI. These standards neither include a detailed methodology, nor provide direction on the use of the resulting LCA data.42 Since this time, ISO has developed several more

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

standards, including the ISO 14020 series on Environmental Labels and Declarations. These standards include guiding principles for the development and use of Type III environmental declaration programs (e.g., EPDs).43 EPDs are LCA-based labels that list multiple environmental inputs and impacts for products incurred throughout their life cycle. Two product footprint standards are currently under development. The Carbon Footprints of Products (ISO 14067) standard will quantify and allow for communication of GHG emissions associated with goods and services.44 It is expected to be published in 2012. The Water Footprint (ISO 14046) will outline requirements and guidelines for the use of water metrics for products, processes or organizations.45 In addition to ISO, a number of other international standards are being developed to track and report on single environmental impacts, such as GHG emissions, over the life cycle of a product. A recent example is the GHG Protocol Product Life Cycle Accounting and Reporting Standard launched by the WBCSD and the WRI in October 2011. The standard provides requirements and guidance for companies and other organizations to quantify and publicly report GHG emissions and removals associated with a specific product.46

3.3 Domestic Use of Life Cycle Approaches Public Sector (Federal) The Government of Canada (GoC) had a robust and active program to develop life cycle data and promote

LCT in the 1990s. This program arose in response to the Canadian Council of Ministers of the Environment’s (CCME) National Packaging Protocol, which required industry and government to work together to reduce packaging waste going to landfill.47 In trying to solve this problem, policy makers use the tools available to them at that time to reduce the impacts of products on the environment; hence, they developed data on materials and focused on DfE and LCA. In the last decade, Canada has not actively pursued the development and implementation of policies and programs based on Life Cycle Approaches in a coordinated manner nor to the same extent of leading countries. Canada needs to keep pace with this global trend. Few current federal initiatives clearly state that they use a Life Cycle Approach. Within the GoC, there is no framework that guides decision makers in incorporating Life Cycle Approaches into policy, program design or communications. The result is a catch-all of diverse activities that includes some elements of Life Cycle Approaches but does not reflect “true” Life Cycle Approaches that involve the entire life cycle of a product or service or consider multiple environmental effects. Examples of some of the most relevant initiatives are described in the following section and summarized in Table 2. Please note that this is not an exhaustive list of all Life Cycle Approachrelated activities in the federal government.

In the last decade, Canada has not actively pursued the development and implementation of policies and programs based on Life Cycle Approaches in a coordinated manner nor to the same extent of leading countries.

Table 2. Examples of Government of Canada initiatives related to Life Cycle Approaches Responsible Authority

Initiative

Type of Life Cycle Approach

Details

Status

Government of Canada

Federal Sustainable Development Strategy (FSDS)

Life Cycle Thinking (LCT), Extended Producer Responsibility (EPR)

Suggests LCT and EPR be used to reduce the impact and production of hazardous wastes; and, LCA be used in accommodation and building management to LEED standard

FSDS released in 2010, currently being implemented

Canadian Council of Ministers of the Environment

Canada-wide Action Plan for Extended Producer Responsibility

EPR

To increase the use and consistency of EPR programs in Canada starting with priority products (e.g., electronics)

Released in 2009, ongoing

Canada-wide Strategy for Sus tainable Packing

EPR

Part of larger plan for EPR with intent to increase consistency of packing-focused EPR programs across country

Released in 2009, ongoing

Canadian Raw Materials Database

Life Cycle Inventory (LCI) database

To provide Canadian LCI data to Canadian companies to support efforts to improve product performance

No longer active

Environmental Choice Program

Ecolabel

Certified products covering multiple environmental attributes based on life cycle criteria under the EcoLogo environmental label (ISO Type 1 ecolabel)

EC initiated program in 1988, now managed by TerraChoice owned by Underwriters Laboratories

Bio-fibres Research Project

Life Cycle Assessment (LCA)

An R&D project using LCAs to investigate energy generation from bio-fibres relative to coal over 100 years; multiple environmental impacts along the product life cycle are being assessed

Launched in 2010, ongoing

Environmental Life Cycle Management: A Guide for Better Business Decisions

Life Cycle Management (LCM)

A document to guide and promote the adoption of LCM in the private sector

Document released in 1997

Environment Canada and Health Canada

Chemicals Management Plan

Life Cycle Thinking (LCT)

Examines the life cycle impacts of targeted chemicals, through tools such as risk assessment and risk management

Launched in 2006, ongoing

Industry Canada

Design for Environment: Innovating to Compete‡‡

Design for Environment (DfE)

To review the trends and use of DfE in Canadian industries to help Canadian business become more competitive domestically and internationally

Report released in 2009

Environment Canada

‡‡

Publication in partnership with Canadian Manufacturers and Exporters, and the Design Exchange.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Responsible Authority

Initiative

Type of Life Cycle Approach

Details

Status

Natural Resources Canada

GHGenius

LCA

Models GHG emissions of current and future transportation fuels over life cycle

Ongoing in collaboration with other departments and industry associations

Public Works and Government Services Canada

Green Procurement Policy

Green Procurement

Considers the environmental aspects and potential impacts and costs, associated with the life cycle of goods and services being acquired

Established in 2006, ongoing

Treasury Board Secretariat

Policy on the Management of Real Property

LCT, Life Cycle Costing (LCC)

To ensure real property is managed in a sustainable and financially responsible manner, throughout its life cycle and is informed by findings from a performance assessment of life cycle costs and benefits

Established in 2006, ongoing

National Research Council

National Flagship Program on Industrial Biomaterials – supported by Life Cycle Impact Assessment team

LCA

LCA used to help inform industry on ways to decrease the environmental impacts of products along value chain

Established in 2011, ongoing

Environment Canada (EC) had some strong activity related to Life Cycle Approaches from the late-1980s to the mid-1990s. Examples of previous federal efforts include creating an LCI database (the Canadian Raw Materials Database), promoting and providing guidance on the adoption of Life Cycle Management (LCM) in the private sector, contributing to projects related to Life Cycle Approaches with international organizations such as UNEP and ISO, and developing tools for industry and consumers such as the EcoLogo environmental label. The Canadian Raw Materials Database was meant to provide Canadian LCI data for Canadian companies to support their voluntary efforts to improve their products’ environmental performance.48 Developed in the late 1990s and made publicly available in 2001, the database contained free LCI cradle-to-gate (i.e., from resource extraction to factory gate) data for basic materials

(e.g., steel, aluminum, plastics, glass, paper and lumber) that was provided by industry associations and contractors. The database is housed at the University of Waterloo, but the data is no longer current and thus not usable.49 In 1997, under its mandate to provide pollution prevention guidance to the private sector, EC published Environmental Life Cycle Management: A Guide for Better Business Decisions. This guidance was designed to help the private sector adapt and respond to pressures in their environment in order to stay in business and remain profitable. According to EC, “Life Cycle Management (LCM) is about minimizing environmental burdens throughout the life cycle of a product or service. The life cycle includes all activities that go into making, using and disposing of a product. Adopting a life cycle perspective helps

ensure that a company’s choices are environmentally sound. Companies implementing life cycle management may also benefit from competitive advantages, including cost reductions and enhanced public image.” 50 In 1988, EC also started the Environmental Choice Program which certified products based on life cycle criteria under the EcoLogo environmental label (ISO Type 1 ecolabel). Management of the label has since changed and is now implemented by TerraChoice (owned by Underwriters Laboratories (UL)), a global independent safety science company. The program currently covers over 120 product categories and more than 7,000 certified products.51 Multiple attributes (e.g., energy use, water use, toxic chemicals, carbon emissions, recyclability) of a product across its life cycle are considered in the program. As part of its Product Design and Development program, Industry Canada partnered with the Canadian Manufacturers and Exporters (CME) and the Design Exchange (DX) to review the use of DfE in Canadian industries. In 2009, the findings were summarized in a report, Design for Environment: Innovating to Compete.52 The report identified the trends and benefits related to the use of DfE, in order to help Canadian businesses become more economically competitive domestically and internationally.53 The main benefits of using DfE are access to international markets, increased sales and product differentiation. Businesses also use DfE to comply with regulations and to respond to consumer demand for greener products. However, SMEs face barriers to DfE uptake including financial cost, lack of expertise and lack of knowledge of benefits.54

Natural Resources Canada (NRCan) has focused primarily on GHG emissions through the development of a tool called GHGenius, a model that focuses on the LCA (from raw material acquisition to end use) of current and future fuels for transportation applications. The tool identifies the amount of GHGs generated by a wide variety of conventional and alternative fuels and technologies, the amount of energy used and provided, and the cost effectiveness of the entire life cycle. LCA data for this tool is collected from GoC departments (e.g., Statistics Canada, NRCan, EC), the National Energy Board and indus try associations. The tool is capable of assessing the cost-effectiveness of different strategies taking into consideration the LCA and fuel and vehicle costs. This enables a comparison of vehicle-related GHG reduction strategies with fuel strategies.55 Since 2007, NRCan has participated in UNEP’s International Resource Panel. The panel provides information to decision makers on the sustainable use of natural resources through consideration of their environmental impacts over the full life cycle.56 NRCan has contributed directly to some of the panel’s work, including issues related to the recycling rates of metals. Further, in collaboration with several departments such as EC, Department of Fisheries and Oceans (DFO), and Department of Foreign Affairs and International Trade (DFAIT), NRCan also develops the GoC’s input and direction to the panel’s broader work and research. This includes work on decoupling natural resource use and environmental impacts from economic growth, the environmental impacts of products and materials, assessing biofuels, global metals flows and water efficiency.57

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

The Federal Sustainable Development Strategy (FSDS), released in October 2010, includes several references to Life Cycle Approaches.58 First, that LCT and EPR should be used to reduce the impact and production of hazardous wastes on the environment and human health.§§ Second, that Life Cycle Approaches, including LCA, should be used in accommodation and building management to reach a level of high environmental performance (e.g., Leadership in Energy and Environmental Design – LEED - certification). Public Works and Government Services Canada (PWGSC) is responsible for implementing the Government of Canada’s Green Procurement Policy, which was established in 2006. The policy seeks to demonstrate environmental leadership and stimulate innovation among Canadian businesses to make environmentally preferred goods and services more broadly available. It does so by considering the environmental aspects and potential impacts and costs associated with the life cycle of goods and services being acquired. Green procurement is now embedded as a key factor in commodity management activities worth over $5 billion in Canada.59 The Treasury Board Secretariat (TBS) is responsible for the Policy on the Management of Real Property, which includes references to Life Cycle Approaches (see text box in Chapter 4 for more details).60

§§

The National Research Council (NRC) has been working on LCA as part of a national Flagship Program on Industrial Biomaterials. The program is targeting the value chain from seed to polymer and composite product.61 LCA is being used to help inform the industry on ways it can decrease the environmental impact of products that are being developed. This work is being carried out by the Life Cycle Impact Assessment (LCIA) team at the NRC.62

Public Sector (Provinces and Territories) A number of initiatives related to Life Cycle Approaches are taking place in provinces and territories, with Québec leading the way. Many of these initiatives relate to Extended Producer Responsibility (EPR), as well as the measurement and reduction of GHG emissions. This section describes some of these initiatives, but it is not meant to be an exhaustive list. The Government of Québec is leading the provinces and territories in promoting Life Cycle Approaches. Bill 118, the Sustainable Development Act, requires that departmental sustainable development strategies address the life cycle of products or services through the development of tools or models.63 The Government of Québec is also developing a carbon footprint program, called Empreinte Carbone Québec, that seeks to quantify and disclose the GHG emissions of products in the Québec marketplace. It is also funding the development of a LCI database (see text box on the next page).64

In the implementation strategies for Theme I: Addressing Climate Change and Air Quality, the FSDS states: “Apply life-cycle thinking, sustainable materials management and environmentally sound management of wastes principles to promote sustainable consumption and minimize the impacts of products and wastes on the environment and human health,” and “Work with provincial and territorial authorities to promote waste minimization and diversion, such as the implementation of the Canada-wide Action Plan on Extended Producer Responsibility” (Environment Canada 2010).

Québec’s Carbon Footprint Program - Empreinte Carbone Québec

As announced on February 27, 2012, the Québec government has selected the Interuniversity Research Centre for the Life Cycle of Products, Processes, and Services (CIRIAG) to lead a pilot project of the Empreinte Carbone Québec, which is the first step in an overall government program.65 Once fully launched, the program is anticipated to contribute to Québec’s GHG reduction target of 20% below 1990 levels by 2020.66 The Québec government has earmarked approximately $24 million to help companies develop product carbon

footprints and market the final products.67 The low-GHG profile of Québec’s electricity grid, which is largely hydroelectric, offers an opportunity to differentiate and promote products made in Québec as low carbon. With this program, the province also aims to help companies reduce costs, and maintain trade and market access. Businesses will be able to cut costs along their supply chains by identifying hot spots where emissions from energy use and transportation are significant. They will also be prepared for other life cycle initiatives established by countries and large buyers such as Walmart and Dell, which are increasingly requesting life cycle information.68 A key challenge is ensuring the Québec system is harmonized with other efforts underway in North America and around the world. Harmonization is

The focus of most provincial and territorial initiatives related to Life Cycle Approaches has been on extending the responsibility of a product’s producer to include the disposal of the product and its packaging (known as Extended Producer Responsibility [EPR]).

important to ensure that the product footprints developed in that province are recognized elsewhere; however, the absence of an already established framework creates a challenge. While the Québec program is focused on GHG emissions, the government has provided partial funding for a $1.5 million project to develop a provincial LCI database.69 Researchers at CIRAIG are in the process of adapting the Swiss Ecoinvent LCI database to a Québec context as part of this effort. They have conducted screening exercises to identify sectors and processes that require Québec-specific data collection.70 Although the Québec program focuses on GHG emissions, CIRAIG’s data will enable assessment of environmental impacts across multiple categories.71 CIRAIG is a partner with the UNEP-SETAC Life Cycle Initiative and the European Platform on Life Cycle Assessment.

The Canadian Council of Ministers of the Environment (CCME) released the Canada-wide Action Plan for Extended Producer Responsibility in 2009.72 This plan aims to increase the use and consistency of EPR programs across the country, and initially targets a number of priority products (e.g., packaging, automotive products, electronics, etc.).

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Individual provinces and territories will implement the plan through the creation of their own tailored EPR programs. In 2009, the CCME also released a Canada-wide Strategy for Sustainable Packaging.73 This strategy is part of the larger plan for EPR and was created to address the significant contribution of packaging to the Canadian waste stream. The purpose of this strategy is to increase the consistency of packaging-focused EPR programs across the country, as well as to support the use of more sustainable packaging by all related actors. Other provincial and territorial initiatives related to Life Cycle Approaches focus mainly on GHG emission reductions through the use of LCA. For example, the Alberta Energy Research Institute’s (AERI [now part of Alberta Innovates - Energy and Environment Solutions]) Life Cycle Analysis Initiative used LCA to evaluate GHG emissions of various forms of oil production. As part of this research, a comparison was done of North American and imported crudes against the backdrop of California’s Low Carbon Fuel Standard (LCFS) and potential impacts on the Canadian oil sector.74 The Manitoba government is using LCA to help determine how and where it can improve energy efficiency in agriculture and in doing so, reduce GHG emissions. The Manitoba Agriculture, Food and Rural Initiatives (MAFRI) examined crop and livestock production in the province and performed an LCA of conventional-till and zero-till wheat production. Also included in the assessment were the environmental impacts of inputs to farm production such as seed, fertilizer, fuel and pesticides. A number of farm operations were also examined, such as grain drying, grain hauling, pesticide application and harvesting. As the assessment focused on the farm scale, it ended at the farm gate.75

In Alberta, the provincial government led an initiative to conduct LCAs of various commodities from the agriculture sector (potatoes, chicken, eggs and canola). The project, called Emerging Environ mental Market Opportunities – Environmental Footprinting Opportunities in Agriculture, was initiated by Alberta Agriculture and Rural Development. Funding for this Canada-Alberta cost-shared project was provided by Agriculture and Agri-Food Canada through the Agricultural Flexibility Fund.76 The Climate Action Toolkit is a product of a threeway partnership between British Columbia, the Union of B.C. Municipalities and a program of the Fraser Basin Council – the Smart Planning for Communities. Designed to help B.C. communities reduce greenhouse gas emissions and implement their Climate Action Charter, the toolkit includes guidance on how LCA can be used to help communities and their governments meet their climate change targets. The toolkit outlines general information on how to apply LCA to estimate the environmental costs of projects.77

Private Sector Industry is leading the use of Life Cycle Approaches in Canada. As previously mentioned, the use of Life Cycle Approaches confer a number of benefits, such as lower production costs through increased efficiencies and decreased material costs, as well as enhanced company and product images resulting in improved competitiveness. Larger companies are the driving force as they have the monetary and human resources required to develop and implement Life Cycle Approaches. SMEs are less likely to use Life Cycle Approaches as they face challenges that are due to cost, capacity, and a lack of knowledge about the benefits.78

Canadian Tire Sustainability and Life Cycle Approaches

Canadian Tire is a large Canadian retail company, with approximately 500,000 products in stores located across the country and more than $11 billion in sales during 2011. Since 2008, a Life Cycle Approach has been the foundation of the company’s business sustainability strategy. This extends the focus of its efforts from the direct footprint of the business to the entire value chain.79 The company explores collaborative value chains and systems thinking using a Life Cycle Approach. This allows it to examine

***

how changes in one element of the value chain, such as product or packaging design, affects economic and environmental performance within another part of the value chain, such as transportation or post-consumer use. Canadian Tire leads with business measures, such as energy costs or carbon price-risk, and tracks a wide range of related environmental measures, such as GHG emissions and waste. To reduce life cycle costs within the value chain, the company decreases the environmental footprint of the business. The savings can be quantified by measuring life cycle costs before and after the mitigation efforts. Economic Input-Output Life Cycle Assessment (EIO-LCA) is one of the main Life Cycle Approach tools that the company uses. For example, this tool was used to calculate the carbon

footprint of Canadian Tire’s product categories and map the carbon price risk*** of each category. The EIO-LCA helped determine where to focus product design efforts to reduce embedded energy and carbon in products, thereby reducing the company’s risk to energy and carbon prices. Since its inception, the company’s business sustainability strategy has delivered results in every segment of Canadian Tire’s value chain. Most of this value is derived from managing the life cycle costs of products and their packaging. In the first year of formal measurement, the company avoided enough energy to power over 1,000 homes and the associated GHG emissions. The annual cost avoidance ($6 million annually) was equivalent to adding two new Canadian Tire stores – without actually having to build them.80

The probability of economic loss associated with a cost on carbon dioxide in a carbon-constrained economy.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Retailers such as Canadian Tire and RONA, are using Life Cycle Approaches in their business operations. Canadian Tire uses Life Cycle Approaches in a number of ways, including as the foundation of its business sustainability strategy. Life Cycle Approaches are also used to identify areas in the value chain where cost savings can be incurred. For example, Canadian Tire has reduced packaging for some of its products resulting in reduced transportation costs as well as reduced use of raw materials. The company has also redesigned products to make them more compact, which also reduces transportation and raw material costs.81 The text box below provides further details about Canadian Tire’s initiatives related to Life Cycle Approaches, which include the use of Life Cycle Costing (LCC) and Economic Input-Output Life Cycle Assessment (EIO-LCA). RONA has a comprehensive LCA platform for which it has received recognition from government and NGOs (e.g., Greenpeace). It uses this tool to identify and select low-impact products that are sold in its stores. These products are identified to the consumer through inclusion in the RONA ECO and Ecoresponsible product lines. RONA also encourages its suppliers to adopt LCA in their operations.82

Natural resource-based companies are also using Life Cycle Approaches. For example, Shell uses LCA to assess GHG emissions and related impacts in the production of its fuels. This information can then be used for a number of purposes, including to evaluate environmental impacts of new products, as well as to benchmark existing assets to prioritize investments.83 The forestry sector has also been using Life Cycle Approaches to investigate the broader environmental impacts of wood products, primarily in the building and construction industry (see case study on FPInnovations in section 4.2.2). The construction sector in Canada is advanced in the use of Life Cycle Approaches. The Athena Sustainable Materials Institute, whose purpose is to promote the use of LCA in this sector, has played a role in this advancement. There is an effort to incorporate LCA into green building certification and rating systems, such as LEED and Green Globes.84 LCA is also used by companies in the building and construction sector to differentiate their products based on environmental performance (see Green Guide case study on the next page).

The Green Guide to Specification Life Cycle Assessment of Building Materials

LCA is increasingly being used as a tool to evaluate the environmental impacts of building materials, with some designers and builders going so far as to choose materials that have been assessed in preference to those for which no comparable information is available. The U.K.-based Building Research Establishment’s Environmental Assessment Method (BREEAM) is an example of an environmental rating scheme for buildings that uses this tool. Since the scheme was first launched in

1990, approximately 200,000 buildings have been awarded BREEAM assessment rating certificates.85 The Green Guide to Specification is a component of BREEAM used to calculate overall building ratings. The guide ranks building elements according to their environmental impacts, which are based on LCA data. An A+ score indicates the best environmental performance and E the worst. Water extraction, climate change, mineral resource extraction, and fossil fuel depletion are examples of the environmental impacts considered in the rating. A variety of building types are covered in the guide, which currently contains more than 1500 specifications.86 Designers continue to be encouraged to minimize the environmental impact of the buildings they create, and one means to

Many companies are creating their own life cycle policies and requirements based on Life Cycle Approaches, which their suppliers will be expected to meet. For example, Walmart Canada, a large, private-sector retailer, has made significant efforts in the past few years to reduce its environmental footprint—and those of its supply chains—by embracing Life Cycle Approaches to corporate

demonstrate their credentials is to use as many components as possible that are rated ‘A+’. Early editions of the guide allocated western red cedar cladding a ‘B’ rating based on the data sets used at the time. As a result, the product became proportionately unattractive to architects and engineers attempting to design buildings with high BREEAM ratings. The western red cedar cladding specification was reevaluated, achieving first an ‘A’ rating and then, with data provided by the Western Red Cedar Export Association (WRCEA) and Athena Institute, an ‘A+’ rating was obtained in time for inclusion in the 4th edition Green Guide to Specification published in 2009.87 Canadian western red cedar is the only softwood listed specifically and by name in the guide.

sustainability. Through its work with the Sustainability Consortium, Walmart will seek to collect information on the life cycles of the products it sells. These voluntary Life Cycle Approaches have significantly decreased Walmart Canada’s environmental impact and have provided leadership and momentum for its peers to pursue similar sustainable initiatives.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Businesses are also forming partnerships with one or more of the dozens of academic researchers in the life cycle field to help translate theory into practice. For example, RONA works with the International Chair in LCA at the École Polytechnique de Montréal to develop product selection criteria based on LCA for its ECO product line. RONA then uses the criteria to select products with the lowest impact for inclusion in its ECO product line.88 The Chair was formed in 2007 with the mission “to deliver an integrated re-

search program that increases basic knowledge and develops the generic life cycle tools needed to implement sustainable development in our partners’ respective sectors.” 89 There are currently 12 industrial partners in the Chair, including RONA, Rio Tinto Alcan, Bell Canada, Johnson & Johnson and Hydro Québec.90

3.4 Conclusion Many businesses, organizations and governments across the world are using Life Cycle Approaches. Globally, Europe is leading the way in the adoption of these approaches at both the public and private sector levels. The private sector is leading the way in adopting Life Cycle Approaches in Canada. Nevertheless, there are examples of the federal and provincial governments developing and applying Life Cycle Approaches. But these are episodic, underlining the importance of being guided by an overall vision or framework for the adoption of Life Cycle Approaches. Progress to date, while ad hoc, demonstrates the value of Life Cycle Approaches in Canada as a method to integrate environmental and economic values and needs.

4.2 4.1

Public Sector Leadership

4.4 Conclusion

International Competitiveness

4.3 Firm Competitiveness

4.0 Gains from Life Cycle Approaches for Government and Business This chapter discusses the reasons why Canadian businesses and governments need to adopt Life Cycle Approaches. Three key reasons have emerged: (1) international competitiveness, (2) public sector leadership, and (3) firm competitiveness. International competitiveness includes addressing market access and trade issues based on the requirement of Life Cycle Approaches along the supply chain in the various jurisdictions where the businesses operate. Public sector leadership involves integrating Life Cycle Approaches in strategic areas of public sector internal operations, including policy and program decision-making. Firm competitiveness relates to using Life Cycle Approaches to realize process efficiencies in internal business operations and supply-chain management.

Several key drivers are increasing the use of Life Cycle Approaches in Canada, including market factors, trade issues and regulations. The growing demand from many business sectors for life cycle data and information along their supply chain is causing the market to respond by increasing the adoption of these approaches by Canadian companies that see opportunities to compete. Potential trade barriers from jurisÂdictions applying life cycle requirements on products sold in their country, province or state are also driving this uptake, creating new risks to existing customer relationships. The incorporation of life cycle information in policy formation and purchasing in the public sector is creating regulations that require companies to respond by increasing their own use of these approaches.

Of greatest importance to Canada is the risk to international competitiveness, followed by the opportunity for enhanced public sector leadership and firm competitiveness.

The Canadian public and private sectors are exposed to various economic and environmental risks and opportunities related to Life Cycle Approaches. Of greatest importance to Canada is the risk to international competitiveness, followed by the opportunity for enhanced public sector leadership and firm competitiveness (Figure 5). Failure to adopt Life Cycle Approaches creates risks to Canadaâ&#x20AC;&#x2122;s economic competitiveness, including potential market access and trade restrictions as the use of Life Cycle Approaches becomes more prevalent in other nations. From an opportunities perspective, the increased adoption of Life Cycle Approaches can improve supply chain and internal operation efficiencies resulting in enhanced innovation, cost reductions and stronger public funds management. Life Cycle Approaches also support environmental stewardship through increased environmental efficiencies and better integration of environmental attributes in decision-making processes.

Canadaâ&#x20AC;&#x2122;s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Figure 5. Rationale for the uptake of Life Cycle Approaches in Canada

Risks

Opportunities

Goals Economic Trade Restrictions

International Competitiveness

Economic Lack of Market Access

International Competitiveness

Environmental Negative Impacts from Policy Decisions

Public Sector Leadership

Economic Enhanced Internal Operation Efficiencies

Public Sector Leadership

Environmental Reduced Environmental Impacts

Public Sector Leadership

Economic Enhanced Supply Chain Efficiencies

Firm Competitiveness

4.1 International Competitiveness Canada is an exporting nation with internationally and regionally integrated supply chains. The increasing inclusion of Life Cycle Approaches in private sector supply-chain requirements and foreign public regulations has exposed the country to economic risks to international competitiveness. Both the private and public sectors need to step up their use of Life Cycle Approaches to remain competitive in this new reality.

For the same time period, approximately $51 billion worth of exported goods originated from mediumsized businesses.94 So far, two types of government regulations have emerged that use life cycle information. In some cases, businesses are required to disclose life cycle data in order to sell products in certain jurisdictions, as is the case with France’s proposed EPD program (described in Chapter 3) and the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) legislation described below. The U.S. EPA’s Environmentally Preferable Purchasing (EPP) Program (detailed in Chapter 3) promotes the use of life cycle information to select the most efficient option that meets the government’s needs.

Trade Restrictions Several international regulations threaten to restrict Canadian companies’ access to international markets through the required disclosure of life cycle impacts for products and commodities. This is of particular significance as the Canadian economy relies heavily on exports. In 2010, exports of goods and services accounted for 29% of Canada’s GDP,91 with a total of approximately $400 billion worth of goods sold to other countries.92 The U.S. is Canada’s largest trading partner by far, accounting for about 70% of exports as of 2010. Canadian exports to the U.S. increased by nearly 9% in 2010 to $333.6 billion. Fewer exports are sent to the EU, however, it still remains an important trading partner. In 2010, $49.2 billion worth of goods and services were exported to the EU, up just over 10% from the previous year.93 A large proportion of Canadian exporters are SMEs. Small businesses comprised approximately 86% of exporters in 2009, for a total value of $68 billion worth of exported goods.

Launched in 2007 and phased in over an 11-year period, the EU’s REACH legislation will require manufacturers and importers to collate information on chemical substances contained in their products or used during the manufacture of the products, and register these in a database. For substances that are manufactured or imported in quantities over 10 tonnes, companies will also need to provide information on how related risks will be managed during the manufacturing or use phase of their life cycle.95 In other cases, foreign governments are imposing requirements on the content of goods sold in their jurisdiction based on Life Cycle Assessment (LCA) data, such as setting minimum amounts of renewable fuel content in transportation fuels. Renewable fuel mandates and low carbon fuel standards have been used by government bodies interested in reducing GHG emissions from the consumption of transportation fuels in their jurisdiction. Adopted in the U.S., EU and British Columbia, these regulations

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

require the use of LCA to measure and compare the GHG intensity of alternative fuels with baseline fuels from “well-to-wheels.” ††† This type of Life Cycle Approach focuses only on one impact category, GHG emissions, and thus negates the ability to identify effects on other environmental attributes (e.g., water, land use, etc). Nevertheless, these regulations have raised trade issues, market access issues and methodological challenges related to LCA, the impacts of which are already being felt in Canada.

Low Carbon Fuel Standards and Renewable Fuel Standards in the United States – Implications for Canada

Two fuel regulations exist in the U.S. The U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS2) mandates that 36 billion gallons of renewable fuel is to be blended

Better life cycle data is needed to allow the com parison of transportation fuels and thus enable fuel choices to be made based on scientific fact.96 Two examples of these types of regulations exist in the U.S. They are the Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS2) and California’s Low Carbon Fuel Standard (LCFS). These regulations are described in more detail in the text box below.

into U.S. transportation fuels by 2022.97 California’s Low Carbon Fuel Standard (LCFS) ‡‡‡ requires a reduction of at least 10% in the carbon intensity of California’s transportation fuels by 2020.98 Both these regulations have implications for Canadian exports. Canada is the U.S.’s primary source of oil and gas, but one of the main obstacles to Canadian exports to date has been the application of LCA methodologies to specific biofuel production pathways. Looking ahead, biofuels used in the California market will need to meet both the RFS2 requirements and California’s LCFS. This system is most likely to affect canola oil

from Canada that is processed into biodiesel in the U.S. Oil sands production, or bitumen mining, is one of the largest contributors to Canadian exports to the U.S. Average well-towheels GHG emissions from oil sand production are higher (106 grams CO2e/MJ) 99 than the regulated standard under the LCFS (94.24 for 2012, falling to 85.24 by 2020.100) The current average for Californian deliveries and production is 95.86.101 Any Californian purchaser of oil sands crude would be burdening itself with costly high emissions products for which it would have to compensate.

†††

A broad life cycle assessment measurement approach that includes GHGs produced in the course of land use change, resource extraction, feedstock and fuel production, refining, blending, transportation and storage, as well as final use.

‡‡‡

The standard became effective in January 2010; however, the U.S. federal court issued an injunction against the LCFS in December 2011. California is currently appealing this decision. In the meantime, the legislation is not being enforced (California Environmental Protection Agency Air Resources Board 2011a).

Similar types of regulations also exist in the EU, such as the Renewable Energy Directive (RED) and the Fuel Quality Directive. In April 2009, the EU adopted the RED, which requires that at least 20% of its energy mix come from renewable energy sources by 2020.102 This regulation may create similar complications for Canadian renewable fuel and feedstock producers interested in accessing the EU biofuels market. The main risks and uncertainties include the stringency of environmental and social criteria that will be used to evaluate life cycle biofuel performance, modelling of Canadian biofuel pathways using European data and practices, and the impact of biofuel certification costs on agricultural and biofuel producers. The EU’s Fuel Quality Directive (98/70) mandate was amended in December 2008 to require a 10% reduction in life cycle (well-to-wheel) emissions from transport fuels by 2020.103 The final values for various types of fuels have not yet been approved by national governments, but the proposal approved by the European Commission in October 2011 was to assign default values to oil sands product at 107 g CO2e/MJ, in contrast to conventional fuel at 87.5 g CO2e/MJ.104 Canada has minimal exports of oil to the EU, but the sector sees danger in yet another precedent. In general, renewable fuel mandates and LCFS have catalyzed a huge change in the energy sector. Previously, the use of Life Cycle Approaches were not necessarily on industry’s radar, but the implementation of these regulations has brought a number of large companies on board—largely because of potentially significant impacts on their businesses.105

Canada needs to keep pace with other countries by creating policies that incorporate Life Cycle Approaches, especially those related to standards and regulations. Other jurisdictions are setting their own criteria that are not harmonized with those in Canada or that are based on analysis or method ologies that result in a competitive disadvantage for Canada. This is important to note as Canada is currently entering into talks with other countries or groups of countries, including India and the EU, to enhance our trading relationships. Companies that have not adopted Life Cycle Approaches are not prepared for or able to comply easily or quickly with existing or anticipated foreign government regulations that require information based on Life Cycle Approaches. This restricts both the end-use product manufacturers’ and extractive industries’ ability to sell commodities and consumer products in jurisdictions that have requirements and standards based on Life Cycle Approaches. The risk that Canadian companies are not prepared for existing and future foreign government regulations that require Life Cycle Approaches has significant economic repercussions. Businesses can lose part or all of their access to export markets,106 face fines or penalties for not complying with the regulations, or suffer damage to brand recognition. Companies that are forced to comply with the regulations and adopt Life Cycle Approaches in a short time frame face larger and more-immediate investments to build the capacity to respond to this demand or risk losing market share.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

The design and implementation of regulations based on Life Cycle Approaches, including the measurement frameworks and indicators used to assess environmental life cycle impacts, have significant implications. For example, environmental indicators should be relevant for the productproduction system being studied and reflective of the local geographic characteristics. Issues or indi cators of importance to one jurisdiction may not be of significance to the trading partner.107 If the federal government is not broadly engaged and well informed about the design and implementation of international regulations based on Life Cycle Approaches, there is the risk that the regulations will have negative repercussions for Canada, both economically and environmentally. By applying or strengthening the application of Life Cycle Approaches in international trade agreement negotiations, the government has an opportunity to influence the development of international agreements based on sound analysis that advance both environmental and economic objectives. Life Cycle Approaches could be used to better understand the environmental impacts of trade agreements on an issue (e.g., land, water, GHG emissions, mercury)

§§§

or sectoral basis through the stages of resource extraction, production, distribution, use, and disposal/ recycling, as well as their geographic distribution within the trade zone. However, the complexity of trade flows and associated material flows suggests that Life Cycle Approaches would need to be applied in concert with other tools.

The increasing inclusion of Life Cycle Approaches in private sector supply-chain requirements and foreign public regulations has exposed the country to economic risks to international competitiveness. Preliminary work on the application of Life Cycle Approaches to trade negotiations has been performed by the Commission for Environmental Cooperation (CEC).§§§ It has conducted extensive analysis of environmental impacts in the North American Free Trade Agreement (NAFTA) zone, including some analysis based on life cycle and material flow approaches, as illustrated in the CEC schematic reproduced in Figure 6.

The CEC was established as a result of the North American Free Trade Agreement. It monitors and reports on the state of the North American environment in the context of NAFTA.

Figure 6. Life Cycle Thinking in assessing environmental effects of free trade agreements

Factors of change NAFTA rule & institutions Trade flows Transborder investment Other forces

Land Material & Energy Inputs

Production, management & Technology Physical infrastructure Social organization Government policy

System boundaries (Sector / issue)

Source: Adapted from Fernรกndez, 2007

Waste flows Resource degradation

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

This analysis has been framed in a manner similar to that used in Life Cycle Approaches. Both the environmental inputs such as land, material and energy, and environmental impacts including waste flows and resource degradation are considered. By comparing resources used at all stages of the life cycle, the effects of trade can be assessed.108 These include NAFTA rules and institutions, trade flows, transborder investments and other forces. While this analysis is not being conducted at the negotiation stage, it demonstrates the use of Life Cycle Approaches in a trade policy context.

Lack of Market Access Emerging private sector “regulations,” in which business customers are demanding life cycle data and information from suppliers, are affecting many companies across a variety of supply chains. Companies that are not able to satisfy the growing demand for life cycle information will be increasingly disadvantaged. Many sectors, including building and construction, electronics, transport, aerospace, retail, packaging, food and beverage, are facing these business-to-business requirements. Companies that fail to respond to this demand are likely to experience a decrease in revenue resulting from a loss of market share, the missed opportunity for first-mover advantages, and increased costs reacting to anticipated future customer demands. Revenue can also be lost by missing out on marketing opportunities such as distinguishing

products marketed to consumers based on life cycle information of their raw materials or products 109 and gaining brand recognition. These losses may increase if the anticipated future demand for this information from individuals and governments is realized. Companies that do not have the life cycle information of their material inputs or products encounter associated environmental repercussions. These include reduced information for manufacturers on the environmental impacts of their products, resulting in a lost opportunity to reduce impacts on the environment (e.g., air, water, waste) at multiple points of the life cycle. Evidence already exists that companies along the supply chain are starting to ask for information based on the life cycle of products. Walmart’s work with the Sustainability Consortium (see Chapter 3 for more details), and the green building and manufacturing codes and standards (see FPInnovations case study on the next page) are a few examples of these emerging requirements. The most common data of interest is cradle-to-gate (i.e., from resource extraction to factory gate) data on the life cycle performance of materials. For example, within the green building and construction sector there is increasing demand for life cycle data and information on environmental inputs and impacts of basic materials such as concrete, wood and steel.110 In the mining sector, end users, smelters, and mines are starting to track where metals come from and how they are used in products.

FPInnovations’ EPD Program for Wood Products

The forestry sector in Canada has been using Life Cycle Approaches since the early 1990s, following public demand for sustainable forest management practices. Alongside work on sustainable forestry management, the forestry industry also applied Life Cycle Approaches to investigate the broader environmental impacts of wood products, primarily in the building and construction industry. The forest industry successfully showed that wood materials were environmentally preferable compared with other alternative materials. Today, organizations such as FPInnovations are adopting Life Cycle

****

Approaches to improve the environmental image of forest products, address the rising demand for environmentally preferable products, enhance product and process efficiency and preserve export markets.111 A Canadian-based not-for-profit organization, FPInnovations, has played a lead role in developing Product Category Rules (PCRs) and Environmental Product Declarations (EPDs) in the forestry sector.**** FPInnovations is currently serving as the Program Operator (an entity that conducts a Type III environmental declaration program) for an EPD program on Wood Products. In conjunction with the Athena Sustainable Materials Institute, the organization finalized the first version of a PCR for North American Structural and Architectural Wood Products in November 2011 112 and developed two EPDs for red cedar decking and siding.113

Within the forestry and forest products sector, growth in demand for environmentally preferable products, particularly in the area of green buildings, is stimulating demand for Life Cycle Approaches. For example, Leadership in Energy and Environmental Design (LEED) is introducing a pilot credit for products that have an EPD. In addition, California’s CALGreen Green Building Standards 114 and the International Green Construction Code both include criteria for life cycle information of building components. This motivation is also closely connected to preserving export markets as countries continue to encourage product labelling. Other secondary drivers for FPInnovations’ development of EPDs include demonstrating corporate responsibility in the forest products sector and highlighting areas for product or process efficiency improvements.115

PCRs establish the requirements of a Life Cycle Assessment specific to a particular product group and are the basis for the development of an EPD. EPDs are a globally recognized third-party verified product declaration based on the ISO 14025 standard. These declarations provide quantified environmental information on the environmental impacts for all stages of a product’s life cycle to help businesses and consumers compare the impacts of similar products.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

4.2 Public Sector Leadership Canada’s public sector has an opportunity to show leadership in the application of Life Cycle Approaches for both economic and environmental gains within its internal operations and policy decision-making process. Life Cycle Approaches provide a means through which the GoC can assess the life cycle costs of products it purchases and programs it delivers to identify the most cost-effective option and thus save money for taxpayers and improve policy outcomes. They also enhance environmental stewardship by considering environmental inputs and impacts throughout the life cycle of a product, as well as identifying trade-offs among alternatives and opportunities for improvement. The adoption of Life Cycle Approaches presents an opportunity to decrease the environmental impacts of policies while improving their economic efficiency by systematically integrating and considering economic and environmental attributes in decision making.

Enhancing Efficiencies in Internal Operations Life Cycle Approaches can be used to identify areas for improvement in internal operations, making this a key opportunity for savings by governments. This approach enables the identification of hot spots, in efficiencies, more favourable alternatives, or process improvements in government operations. Internal operations refer to the infrastructure, goods, services, and related processes that help governments function, including buildings, vehicle fleets, and other

assets and commodities, such as information technology and other electronic and electrical equipment. The GoC’s operational presence across the country is significant. It owns or operates more than 30,000 on-road vehicles, over 40,000 buildings owned or leased, and employs approximately 260,000 employees across Canada.116 The GoC owns approximately 25 million square metres of floor space — and leases another 6 million — in a variety of types of buildings, making it the biggest landlord in the country. Federal buildings account for a range of impacts related to GHG emissions, water use (supply and wastewater) and the building’s physical footprint. The federal fleet consists of approximately 26,000 vehicles and the GoC buys 3000–4000 vehicles each year, representing a capital investment of $120 million. Annually, the GoC procurement of goods and services is approximately $20 billion - including approximately $500 million in IT goods and services. Buildings and vehicles are notable in terms of the magnitude of expenditure and environmental impact, especially with respect to energy and fuel use. Applying Life Cycle Approaches or strengthening their current application in these major areas of internal operations will enhance efficiencies, resulting in economic and environmental benefits. Cost savings can be incurred from process improvements and increased efficiencies, as they can be from reduced air emissions, solid waste generation, and wastewater discharges. Life Cycle Approaches are already used in the Treasury Board Secretariat’s Policy on the Management of Real Property (see text box on the next page).117

Government of Canada Real Property

The government currently has several policies for applying Life Cycle Thinking (LCT) to federal buildings. The Policy on the Management of Real Property makes a few references to life cycle, or “whole of life” thinking, covering the planning, acquisition, use and disposal for which “both custodian and tenant departments are responsible.” 118 The objective of the policy is to ensure “real property is managed in a sustainable and financially responsible manner, throughout its life cycle” and is informed by findings from a performance assessment of life cycle costs and benefits.119 Furthermore, one of the targets in the FSDS is to achieve an industry-recognized level of high environmental performance in buildings (new construction, major renovations and build-tolease).120 Whenever possible, this includes the use of third-party certification programs and inter-

††††

nationally accepted benchmarks for the design, construction, and operation of green buildings such as the Building Owners and Managers Association (BOMA) of Canada Building Environmental Standards (BESt) assessment tool and the Canada Green Building Council’s Leadership in Energy and Environmental Design (LEED). Both of these tools are based on Life Cycle Approaches. The purpose of applying Life Cycle Approaches to the management of real property assets is to realize opportunities by considering and optimizing a broad range of environmental and economic factors in the planning, acquisition, operation and maintenance, and disposal of real property. In doing so, the government has an opportunity to significantly reduce its energy and water use and associated expenditures in both owned and leased buildings. The government currently consumes significant energy to heat, cool, light and power its facilities. In 2002-2003, federal buildings contributed 81% of the GHG emissions from GoC operations.††††,121 A reduction in the amount of energy consumed would reduce the associated

GHG emissions and other environmental impacts, and would result in cost savings for the government. This is increasingly important as costs for energy and other resource and material inputs to operate buildings continue to rise, and future costing of externalities, such as carbon pricing, are anticipated. Several additional environmental and economic opportunities could result from the application of Life Cycle Approaches in real property. For example, the government has the opportunity to improve employee productivity and retention through improvements in indoor environments across its buildings portfolio.122 This could result in cost savings from reducing expenses related to sick leave. In addition, the application of Life Cycle Approaches to real property provides the government with an opportunity to help increase the prosperity of the green buildings sector by demonstrating tangible benefits. This could result in environmental benefits from more green buildings in Canada, which are important for reducing GHG emissions in Canada and providing an economic stimulus for the green building sector.

This figure does not include emissions from the federal inventory and only includes operations in Canada. Canadian embassies overseas, staff lodging and military bases, for instance, are not included.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Consideration of Environmental and Economic Attributes in Policy Decisions The use of Life Cycle Approaches in decision making allows governments to fully understand the environmental impacts of their actions and thus make decisions that result in less environmental degradation and greater economic efficiency. The systems perspective inherent in Life Cycle Approaches can improve decision making by bringing data and information, as well as different perspectives, to policy and program development. It is possible to then avoid shifting environmental impacts from one stage of the life cycle to another, or from one type of environmental impact to another by including environmental input and impact information and data. For example, concern about the mercury content in compact fluorescent light bulbs (CFLs) prompted the Canadian Council of Ministers of the Environment (CCME) to examine this product when developing standards for mercury-containing products in 2000. During this process, Life Cycle Management (LCM) was used to better understand the true mercury emissions over the entire life cycle of a CFL in comparison with a standard incandescent light which does not contain mercury. By examining the mercury emissions throughout the entire life cycle of each type of bulb, the CCME analysis showed that incandescent bulbs resulted in more mercury emissions. This result was attributed to the use phase of the bulb: incandescent bulbs are less energy efficient than CFLs and thus require more energy during this phase, resulting in more mercury emissions.‡‡‡‡ Without the use of LCM, CFLs may have been banned. Now, the end-of-life of CFLs is managed in several jurisdictions to prevent mercury emissions

‡‡‡‡

Assuming the electricity for the use phase was from coal-fired plants.

at this stage and their use is encouraged. Furthermore, the use of incandescent lights is now being phased out. These policy actions would not have been taken without using a Life Cycle Approach. The GoC already uses Life Cycle Approaches in some of its policies to guide decision making in several areas. For example, NRCan has a set of Guiding Principles for Sustainable Biofuels in Canada. Applying a Life Cycle Approach and considering broader impacts on the environment, food security and the economy are explicit in four of the nine principles.123 The application of these principles in decision making related to biofuels will help ensure that GHG emissions are calculated across the life cycle. As biofuels become an increasingly prevalent source of fuel in Canada and worldwide, decision-making tools such as these are increasingly needed to ensure that the full spectrum of environmental inputs and impacts across the life cycle are considered in framework policies and subsidy or incentive programs. Another example of the use of Life Cycle Approaches in decision making is the GoC’s Chemicals Management Plan. Since 2006, Environment Canada and Health Canada have jointly stewarded the implementation of this plan, a federal initiative aimed at reducing the risks to Canadians and their surrounding environment from hazardous chemicals.124 The plan examines the life cycle impacts of targeted chemicals, mainly through tools such as risk assessment and risk management. LCA is also used to compare site remediation technologies and scenarios, waste management scenarios at the municipal level, and, infrastructure management scenarios.125

4.3 Firm Competitiveness

to the supply chain both to save money and to meet new and rising accountability demands from their shareholders, stakeholders and investors to do so.

Competition between companies is driving the uptake of Life Cycle Approaches in a variety of sectors. In the manufacturing sector, Life Cycle Approaches—such as Design for Environment (DfE) or ecodesign—can be used to demonstrate environmental performance and product quality improvements. Competition is less of a driver in raw materials industries, where market access and regulatory compliance have played a stronger role. Energy efficiency is strongly linked to competitiveness in several sectors as gains in this area can provide an ongoing competitive advantage.

There is a growing demand from companies for quantitative, science-based information to validate intuitive assumptions in product design and use, and to ensure that investments in environmental improvements are made at the right place. Companies can use Life Cycle Approaches to determine where they should invest their money to achieve the largest environmental gain at the least economic cost. Without this approach, they might invest in areas that are less effective – for example, by changing their light bulbs instead of optimizing the packaging or reducing wastes where there are more environmental and efficiency gains to be made.

Cost avoidance and innovation are drivers for companies in competitive industries as they contribute to competitive advantages and differentiation in the marketplace. Cost avoidance refers to using Life Cycle Approaches to identify cost savings through activities such as energy efficiency, waste management, and greening the supply chain. It is closely linked to a focus on the triple bottom line, which takes environmental and social performance into account alongside financial performance. Companies also use Life Cycle Approaches to innovate and identify features and improvements that can differentiate products in the marketplace. Companies are shifting their sustainability focus

§§§§

Enhancing Supply Chain Efficiencies The supply chain§§§§ represents a significant and obvious opportunity to make environmental improvements as up to 90% of a consumer good’s environmental impact is incurred in this process.126 By better understanding their supply chain through the adoption of Life Cycle Approaches, retailers and manufacturers gain an awareness of the economic and environmental risks along it (see Table 3 for a summary). This allows the identification of hot spots, processes inefficiencies, and improvements in upstream and downstream processes.

Supply chains refer to the cycle of products and services, beginning with design and then moving through sourcing, production, distribution, and sales and ending with consumption.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Table 3. Life Cycle Approach-related risks and opportunities in the supply chain Risks

Opportunities

Procurement: Decreased or no ability to obtain certain materials in procurement

Financial: Reduced distribution costs through identification of fuel savings

Financial: Increased cost due to potential rising prices of materials used by suppliers

Financial: Increased supply-chain reliability and flexibility in sourcing

Carbon: Anticipated carbon price and the related “carbon exposure” from the supply chain

Financial: Increased distribution efficiency

Environmental: Limited or no knowledge of substances of concern along the supply chain

Environmental: Increased supplier awareness of hot spots to address through process improvements

End-of-life: Increased management cost for waste, products, packaging, etc. due to programs such as Extended Producer Responsibility (EPR)

Environmental: Enhanced consumer awareness of ways to limit environmental impacts in use and disposal Environmental: Reduced or eliminated environmentally harmful substances from products through enhanced ability for downstream companies to work with suppliers

By applying Life Cycle Approaches to their supply chain, businesses are realizing economic benefits. Distribution costs are being reduced by identifying areas for fuel savings, such as decreasing the amount of packaging and thus the weight or volume of the product to transport or the introduction of hybrid vehicles, resulting in overall cost savings.127, 128 Increased supply chain reliability and flexibility in sourcing, as well as improved time to get products to the market through distribution efficiency,129, 130 are resulting in increased business competitiveness. Distribution efficiency is “having the right product distributed to the right place, at the right time, and at the right cost.” 131 Environmental gains are being realized through increased supplier awareness of hot spots that could be addressed through process improvements, and through enhanced consumer awareness of steps to take to limit environmental impacts during use and disposal. This information helps downstream companies work with suppliers to reduce or eliminate environmentally harmful substances from their products. For example, in Europe, the Restriction of Hazardous Substances Directive (RoHS) restricts the use of lead, mercury, cadmium, hexavalent chromium, and polybrominated flame retardants in electronic and electrical equipment.132 In response to this directive, manufacturers of electrical and electronic equipment are identifying and limiting regulated substances that are used in the components that make up their products. Similarly, suppliers to Walmart Canada are reacting to Walmart’s goal of a 20 million metric tonnne annual reduction in GHG emissions from its supply chain by 2015 (see text box below for more details). RONA is also targeting reductions along its supply chain with respect to packaging and it aims to decrease packaging by 5% by the end of 2015.133

Enhancing Internal Operation Efficiencies Similar to the public sector, the private sector is using Life Cycle Approaches to identify areas for economic and environmental improvements in internal operations. Internal operations refer to the infrastructure, goods, services, and related processes that help businesses function, including manufactu ring or processing practices that are internal to the company. The identification of hot spots, inefficiencies, more favourable alternatives, or process improvements in operations “owned” by the company can be achieved through the adoption of Life Cycle Approaches. The resulting efficiencies are opportunities for economic savings, as well as for conservation of resources and pollution prevention. These include improved product quality as ongoing measurement provides an imbedded continuous improvement mechanism134 and improved process reliability. Companies are in turn becoming better environmental stewards by reducing negative impacts through the use of Life Cycle Approaches in internal operations. Environmental benefits, such as reduced air emissions, solid waste generation, and wastewater discharges and reduced noise or other quality-of-life emissions are being achieved through the use of this approach.135 The following case study shows how BASF is using a Life Cycle Approach, eco-efficiency, to incur these benefits in their products and processes. Eco-efficiency analyses the environmental and economic impacts of a product or process over its life cycle to support choices that are cost effective and have minimal environmental impacts with respect to resource conservation, emissions and waste generation.136

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Walmart Canada – Driving Supply Chain Sustainability

Globally, Walmart is taking steps to reduce its environmental footprint – and that of its supply chains – by embracing Life Cycle Approaches to corporate sustainability. To support these efforts, Walmart launched the Product Sustainability Index program in 2009. Once fully implemented, this global program will seek to collect life cycle information on products sold in Walmart stores. It is being implemented in three phases: administration of a supplier sustainability assessment, development of a life cycle analysis database, and creation of

a tool to communicate life cycle information to customers.137 The Sustainability Consortium is collaborating with Walmart on this initiative.

its operating costs, especially energy and waste management costs, to a point where stores currently use an average of 40% less energy than they did in 2005.139

Walmart Canada joined this global effort in 2010. The retailer operates 329 stores nationwide and serves more than one million customers daily. It has set a goal of reducing its GHG emissions by 20 million metric tonnes annually by 2015 through supplychain emission reductions.138 The company is driven primarily by the business benefits of reducing their environmental footprint. Consumer demand is not currently motivating its adoption of Life Cycle Approaches, but it is anticipated as a future driver. To date, this voluntary program has significantly decreased Walmart Canada’s environmental impact and has provided leadership and momentum, inspiring its peers to pursue similar sustainable initiatives. The company has reduced

Due to its large share of and position in the Canadian retail market, Walmart Canada is expected to play a strong role in advancing Life Cycle Approaches through its suppliers. In order to ensure that their products end up on Walmart’s shelves, suppliers are more likely to consider adopting Life Cycle Approaches. There is evidence that this type of initiative has driven life cycle work in the packaging industry. 140 The company has encountered several barriers that have limited it from engaging more fully in Life Cycle Approaches. These include internal governance and awareness issues, incentives that were tied only to sales and profits, and infrastructure gaps.141

Eco-efficiency Analysis at BASF

BASF, a global chemical producer, has been using an eco-efficiency analysis to improve the environmental impact and economic cost of its products and processes since 1996. Results from ecoefficiency analyses conducted over the life cycle of a similar product or process can be used to determine the best option and identify areas for improvements. The company has conducted more than 450 analyses to date,142 the results of which are communicated to customers in an eco-efficiency label.

For example, BASF used ecoefficiency analysis to compare the economic and ecological impacts of two plastics – the new Ultradur® High Speed product and its standard product Ultradur®. These plastics are used in a variety of products including connectors, housings, switches, wipers, door handles, external mirrors, sunroof frames and optical fibre cladding. The analysis assessed the impact of these two plastics over the life cycle, including those incurred during raw-material production and the processing of the plastic via injection moulding. Through its eco-efficiency analysis, BASF was able to demonstrate that, compared to its existing product, the most eco-efficient alternative for the production of injection moulding components is the new Ultradur®

High Speed plastic. The economic and environmental advantages were primarily attributed to less material use and lower electricity consumption with better product performance during the use phase. The new product resulted in primary energy consumption savings of 1400 MJ per piece (approximately a 20% decrease), equivalent to the average consumption of an utility car during a 475 km trip.143 The environmental benefits of the Ultradur® High Speed plastic included an improved ecological fingerprint in six areas: energy use, emissions, toxicity potential, risk potential, material use and area use. It also demonstrated a reduction in air emissions resulting in Global Warming Potential Savings of 66 kg CO2 equivalent per piece - equivalent to the average CO2 exhaust of an utility car in 300 km.144

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

4.4 Conclusion The NRT’s research and convening revealed three key reasons for Canadian businesses and governments to adopt Life Cycle Approaches. First, Canada’s international competitiveness faces risks from market access and trade issues that result from the requirement of Life Cycle Approaches along the supply chain by foreign governments and business sectors. This risk is real and Canada must act now to maintain its competitiveness. Second, the public sector has an opportunity to advance environmental stewardship objectives and show leadership by integrating of Life Cycle Approaches in strategic areas of the government’s internal operations, as well as in policy and program decision making. Some policies and programs are currently in place that support or incorporate this approach, but significant room for improvement exists particularly if it is to support private sector needs in this respect. Savings in its own internal operations can also result. Third, Life Cycle Approaches present an opportunity for the private sector to realize process efficiencies in internal operations and supply-chain management, improve product and service offerings to customers, and increase its competitiveness in national and foreign markets.

5.1

5.3

Conditions for the Successful Implementation of Life Cycle Approaches

Conclusion

5.2 Priority Areas for Action

5.0 Priority Areas for Government of Canada Action This chapter explores the conditions for successful adoption of Life Cycle Approaches by the private and public sectors in Canada. Some challenges to this adoption identified through the NRTâ&#x20AC;&#x2122;s research and convening are summarized in Appendix 4. This chapter also sets out priority actions that the Government of Canada could apply to ensure that the right conditions are in place for Canada to advance its use of Life Cycle Approaches.

5.1 Conditions for the Successful Implementation of Life Cycle Approaches Four key conditions are needed for the successful uptake and implementation of Life Cycle Approaches in both the public and private sectors. They are (1) awareness of benefits, (2) capacity and expertise, (3) life cycle data and information, and (4) common standards. Within the private sector, small and medium enterprises (SMEs) often need more assistance to attain these conditions than larger companies.

Awareness of Benefits Companies and governments are not yet fully aware of the benefits, both economic and environmental, that can result from the application of Life Cycle Approaches. The lack of awareness of a business case is the most common obstacle. Without a clear and convincing business case, it is difficult to encourage the adoption of these approaches in both the public and private sectors’ decision making. Even if an awareness of potential benefits exists, the lack of an internal champion at an influential level can prevent the adoption of Life Cycle Approaches. In the private sector, support from the Chief Executive Officer (CEO) or Chief Financial Officer (CFO) can help realize the benefits of this approach. Deputy Ministers (DMs) and Assistant Deputy Ministers (ADMs) can similarly help champion the adoption of Life Cycle Approaches in departments and agencies. Central decision-making processes also need to be more fully aware of and engaged in the considerations of Life Cycle Approaches in interdepartmental and Cabinet deliberations to make this a “whole of government” priority. In the public sector, there is a bias towards low up-front capital costs for investments because of the desire to show balanced budgets every year. When traditional cost-benefit analysis is applied, the option that is less expensive over the life cycle may not be appealing if it requires higher up-front capital costs. The long term is not always taken into consideration. In the private sector, negative perceptions of Life Cycle Approaches are an obstacle to their adoption. Firms may see them as a consulting or academic tool that is expensive, slow and not aligned with their immediate commercial interests. It can also be difficult to make a case for the reduction of environmental inputs and impacts identified as hot spots in the application of Life Cycle Approaches to their business and operations. This is particularly true when dealing with resources or impacts for which there is no current or anticipated

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

market price, such as biodiversity and human health. It is much easier to make a business case for the conservation of resources that have a well-recognized economic value, such as oil, natural gas, or lumber. The conservation of resources is also important to companies where they are instrumental to their operations and it is in their best interest to preserve them to ensure continued access. The private sector’s actions related to Life Cycle Approaches are to a certain extent driven by judgment of their ability to fulfill their societal obligations as corporate citizens – to be environmentally responsible and earn a social licence to operate. This is determined by consumer behaviour and acceptance of corporate and product performance. Life Cycle Approaches are increasingly used for educating consumers and raising their awareness about the material and energy consumption related to goods and commodities. The federal government could play an important role by enabling the provision of accurate data and information to consumers. Consumer influence incents the private sector to be innovative in increasing its economic benefits while reducing the environmental impact attached to its products and commodities.

Capacity and Expertise Many companies and governments lack the expertise to understand what Life Cycle Approaches are and how to apply them to their operations and decision making. The complexity of life cycle issues, including the lack of consistent terminology, can be daunting. When companies are able to grasp their application, they may not even have the financial resources to

invest in these approaches to the degree desired or to sustain the investment over several years. Gaining access to knowledge and expertise, data and information systems, and processes needed to implement Life Cycle Approaches remains a basic challenge. The degree to which this obstacle impacts the private sector is variable. Some larger companies have the expertise and capacity to adopt Life Cycle Approaches, while many SMEs do not.145 Yet, this capacity and expertise are needed for companies to respond to increasing business-to-business demands or international requirements for information based on Life Cycle Approaches. In the public sector, knowledge of Life Cycle Approaches is increasing at the sector and technical level because governments have hired analysts and program staff with academic training in the area and have begun to apply these concepts. However, governments do not have a core of expertise that knows how to integrate this thinking and apply it more broadly and consistently to decision making. This includes evaluating trade-offs, auditing results, and allowing for future policy changes.

Life Cycle Data and Information Having access to reliable and useful life cycle data and information is essential to effectively adopt Life Cycle Approaches. Accurate, representative, transparent and adaptable life cycle data is necessary for both initiating and measuring the impact of Life Cycle Approaches. Access to standard information on life cycle impacts and costs of certain products and processes is needed to inform internal operation and policy decisions. This information is also needed to respond to business-to-business demands along the supply chain, as well as to comply with international regulations based on Life Cycle Approaches. But in many cases, data on environmental aspects is not as readily available as financial or economic data. The most common type of data required is Life Cycle Inventory (LCI) data. It represents the inputs and outputs for a given product system incurred over its life cycle. High quality LCI data is lacking in Canada, which results in the use of less reliable Canadian data or dependence on European or U.S. data that may not reflect Canadian realities. The private sector is sometimes reluctant to collaborate on LCI data development. Competition between companies and the need to protect personal confidential information can drive companies to avoid collaboration. This increases the individual costs of conducting analyses and implementing Life Cycle Approaches. The reluctance to collaborate needs to be overcome, and it can be done, for example, by averaging the data to avoid attribution to a particular company.

Information is also a problem in the public sector. Data related to the use phase of assets is a particular obstacle, especially within the GoC. There is a lack of monitoring and tracking of relevant costs and environmental data during the use phase of purchased commodities as well as for the operation and maintenance of many buildings. For other assets, whose environmental attributes and associated cost savings (which informed the procurement decision) may degrade over time, appropriate management during the use phase is critical. The GoC cannot live up to the principle of life cycle asset management without collecting performance information during the use phase. The procurement and disposal phase are more controlled and often involve employees specializing in those processes. In contrast, during the use phase a wide range of users and building occupants may interact with the asset. For buildings, there is the added dimension of ownership and lease arrangements leading to different incentive and management structures that may enhance or impede the achievement of environmental and cost-saving objectives. The GoC also uses Life Cycle Assessment (LCA) in R&D projects, which requires access to LCI data. A lack of data can impact these projects, as illustrated in the following case study.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Environment Canada’s Life Cycle Bio-fibres Research Project

In 2010, Environment Canada launched an $800,000 R&D project to conduct an LCA of energy generation from bio-fibres relative to coal over 100 years. The research is being done in anticipation of an increase in biofuel use by electric power utilities

to meet performance standards set under the government’s coal-fired regulations. Multiple environmental impacts along the product life cycle are being assessed, such as GHG emissions, habitat, landscape impacts, air emissions, soil, and nutrients. Several key challenges to performing an LCA have been encountered in this project, relating primarily to data and methodologies. For example, a lack of data on nutrient impacts and soils resulted in the nutrient cycling and long-term productivity impacts categories being dropped from the analysis.

Common Standards At present, there is a substantial range of guidance documents available on the methodology and application of LCA. Some are of very high quality, providing detailed information, but a lack of a standardized approach leads to variable and incomparable results. The development of consistent guidance and standardized practices related to LCA would be a significant achievement in enabling robust and reliable decision making.

Furthermore, much of the environmental impact data that is available is specific to Europe, which required adjustments to reflect the Canadian context. There were also methodological challenges, including the development of methods for nontraditional LCA impact categories. Upon completion in March 2012, the final project will provide information on impacts of biofibre energy generation relative to coal and establish a model to be further refined. This information can then be used to inform policy development in related areas.

There is a lack of regionally specific Product Category Rules (PCRs), guidance on applying LCA in specific sectors, and work on regional impact categories in Canada. PCRs provide detailed standards for the application of LCA in the production of Environmental Product Declarations (EPDs – a type III environmental label standardized by ISO and based on LCA). In this case, PCRs for a specific product such as floor coverings – including carpet, hardwood or linoleum - are created by an independent entity called a Program Operator (often an industry body). These are then approved by ISO.

The PCR provides detail on how to conduct an LCA for the product, including where to set the boundaries which provides a basis on which to compare the life cycle impacts of products. The results are communicated in the form of an EPD. The number of products in the global economy is immense; thus the number of PCRs needed to cover the entire economy is overwhelming. Targeting the creation of PCRs toward areas where there is an immediate need, such as oil and gas, makes the task more manageable and helps set priorities. ISO provides a framework for LCA, but it does not prescribe the detailed guidelines to ensure consistency in its application that are contained in PCRs. Without PCRs, LCA can be conducted in different ways making it difficult to compare the results across products or categories. Much of this inconsistency is due to disagreement on the extent of impact cate足 gories and the boundaries of the assessment. Some firms seek to limit the scope of industry-wide LCAs to better portray their product(s), while other firms wish to only disclose climate change impacts.146 This barrier is important in the debate over the life cycle impact of the oil sands, for example. Many studies exist that claim to detail these impacts, however, it is difficult to compare these studies as they are often based on different boundaries. A clear set of national and international standards would allow for such comparisons to be made with confidence in their validity and scientific basis.

There is a clear need to develop Canadian capacity and expertise to facilitate the implementation of Life Cycle Approaches within both the public and private sectors.

5.2 Priority Areas for Action Canada Needs to Develop Capacity and expertise in Life Cycle Approaches There is a clear need to develop Canadian capacity and expertise to facilitate the implementation of Life Cycle Approaches within both the public and private sectors. The needs of these sectors differ with regards to the level of training, guidance and awareness that are required to foster an increased application of Life Cycle Approaches. Due to the multifaceted nature of Life Cycle Approaches, the development of a collaborative knowledge-sharing model makes sense. A joint effort to bring together a network of practitioners to further mainstream applications would benefit government and business. This collaborative model would provide an opportunity for practitioners from both sectors to share knowledge and expertise with each other. The government, through its participation, would provide much needed oversight and address any trust issues surrounding data sharing across the private sector. In the public sector, training and guidance for people implementing Life Cycle Approaches and also for senior decision makers needs to be a priority. This is intended to address an overall lack of awareness of the benefits associated with using these approaches and a practical understanding of how and where Life Cycle Approaches work best. The nature of the public sector requires that their application be coordinated across departments. To increase the use of Life Cycle

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Approaches within government policy decisionmaking, clear guidance and direction will be needed on how to use these within existing mechanisms such as the Regulatory Impact Analysis Statement (RIAS) and Strategic Environmental Assessments (SEAs). The GoC will also have to develop internal capacity to identify key sectors that would benefit the most from their adoption. In order to accomplish this, better engagement, training, and guidance will be required across elements of the public service. From an internal operations perspective, such training will be particularly valuable for departmental staff who have an important role in the stewardship of assets across the life cycle, especially during the use phase. The private sector is a leader in the application of Life Cycle Approaches in many different forms, from corporate life cycle costing to product design development. The capacity to implement them, within the different private sector actors, however, is highly variable. Large corporations have the ability to implement Life Cycle Approaches with no or minimum assistance as they have the internal financial and human resources to implement them. The situation is quite different for SMEs, where there is a definite lack of capacity, expertise and, in most cases, awareness. Due to their small size, most SME’s have underdeveloped management systems that could easily adopt Life Cycle Approaches and would require further training, guidance and awareness. This capacity gap may present significant economic risks for Canada, as SMEs represent collectively 99.7 % of Canada’s business and industrial profile.147 The government could help the promotion and use of Life Cycle Approaches by directly supporting industry associations or by participating in cost-sharing ini-

tiatives with companies, industry and trade associations, and universities. In Québec, a partnership between the federal government and the food sector (Fonds de développement de la transformation alimentaire) enabled many SMEs to undertake Life Cycle Approaches projects since the mid-1990s. Other jurisdictions are embracing similar approaches.

Canada Needs to Develop Information Resources that Reflect the Canadian Reality There is a need to provide science-based, transparent, adaptable and reliable life cycle data for Canadian resources, processes and products. A Canadian Life Cycle Inventory (LCI) database would benefit a variety of stakeholders and provide access to important information for both the private and public sectors. This data is normally housed in a LCI database (see text box on the next page for more information on LCI databases). Several public and private national and multi-national databases currently exist. Ecoinvent (Swiss-based) and Gabi (German headquarters) are two of the most commonly used private databases. These databases are available on a fee for use basis. The U.S.’s database is supported by the federal government and is housed at the National Renewable Energy Laboratories (NREL). The EU also has a publicly available database, the European Reference Life Cycle Database (ELCD), which is administered by the Joint Research Centre (JRC). In Canada, the Québec government has funded CIRAIG to adapt the Swiss-Ecoinvent data to reflect any differing geographic realities.

Life Cycle Inventory Databases

This data is used to calculate the total inputs and outputs associated with a good, commodity or service over all or part of its life cycle. LCI information is required to conduct an LCA of a commodity, good or service and to produce an Environmental Product Declaration (EPD).

Life Cycle Inventory (LCI) databases are the cornerstone of Life Cycle Assessment (LCA), enabling the empirical evaluation of a commodity, good or service’s environmental impact throughout its life cycle. LCI databases contain data on industrial and consumption activities, notably on their environmental inputs (e.g., raw materials, energy, water, etc.) and outputs (e.g., air emissions, pollutants to water and soil, waste disposal). Inputs and outputs to and from other activities (e.g., goods and services flowing from one activity to another) are also included.148

LCI information contained in a database can be made available in two ways. The accumulated input and output incurred from cradle-to-gate (i.e., from resource extraction to factory gate) of goods, products or services can be pre-calculated and made available as black boxes – this is referred to as a database of aggregated datasets. Alternatively, the inputs and outputs associated with each activity, which includes the flows between the different activities, can individually be made available, allowing the accumulated inputs and outputs to be calculated – this is a disaggregated, or transparent, database.

Both types of databases have their strengths and weaknesses. For example, databases of aggregated datasets can be easier to use and make safeguarding the businesssensitive data simpler. Trans parent databases make it easier to pinpoint where in a product life cycle the significant impacts are coming from, and individual datasets can be adapted to suit multiple contexts. In the absence of a database containing relevant LCI data, Canadian companies or organizations conducting LCAs need to fall back on data contained in databases from other regions of the world, which may undermine the relevance of the results. Studies may be more complex, lengthy and expensive if the rele vant data needs to be generated. A national database is especially useful in providing essential data for supply-chain inputs for a given LCA. This can be a critical factor for SMEs required to provide LCA data or EPDs to meet customer requirements.

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

Several sets of guidelines have been created to provide some consistency in the collection of data for these databases. As mentioned in Chapter 3, the EU released the first edition of their guidance documents in 2010 called the International Reference Life Cycle Data System (ILCD) Handbook.149 In 2011, the UNEP-SETAC Life Cycle Initiative launched their Global Guidance Principles for LCI Databases (also known as the Shonan Guidance Principles).150 These principles go one step further by suggesting how to manage LCI databases, in addition to how to collect the data they contain.

There is a need to provide science-based, transparent, adaptable and reliable life cycle data on Canadian resources, processes and products. National databases are necessary as LCI data is geographically dependent. For example, the source of electricity (e.g., hydro vs. coal-fired) can have significant implications for GHG emission data contained in the database. Using data from the European databases can result in misleading findings for environmental inputs and impacts of Canadian products, companies and industrial sectors. A Canadian LCI database would benefit a variety of stakeholders and provide access to important information for both the private and public sectors. This was acknowledged by the Senate Standing Committee on Agriculture and Forestry in 2011

when they recommended that “the Government of Canada defray 34 per cent of the costs for a value not exceeding $5 million in a public/private partnership to develop a database of life-cycle assessments of manufactured products, for use in Environmental Product Declarations.” 151 The database would allow the private sector to respond to trade and market access requirements related to Life Cycle Approaches. LCI data is needed for companies to conduct an LCA of their product or commodity to satisfy private and public sector regulations. The database would also enable companies to ensure that the information that they are providing is truly reflective of the impacts associated with their product or commodity and thus level the playing field on which companies compete. The availability of rigorous data that is comparative to that in other international jurisdictions is of particular importance to companies. The integration of Life Cycle Approaches into government internal operations and decision making would also be supported by the database. Decisionmakers could use the data to inform the development of policies and programs to ensure that key economic and environmental impacts of the options are identified and considered in the process. With the existence of a Canadian LCI data, the GoC would be able to request life cycle information from potential suppliers as part of its procurement processes.

A few important points need to be considered with respect to the development of such a database in Canada: •

International guidelines on LCI database development should be followed when developing the Canadian database to ensure that the data developed complies with international standards. Canada should be engaged in these discussions at the international level to ensure that the data developed in Canada will be accepted by other jurisdictions;

•

Long-term, predictable funding support is required along with an institutional arrangement to host the database, such as through a public-private partnership or in an academic or independent government institution with a supportive mandate;

•

The data and statistics from the Canadian database needs to be comparable with those from similar databases of Canada’s trading partners, in particular the European Union and the United States;

•

Industry confidence in maintaining the confidentiality of data is important. There needs to be the forging of an implicit relationship whereby industry needs to have the assurance that data related to their industrial and manufacturing processes will not be misrepresented or misused. Some sort of partnership will be required; and

•

This effort will need to be linked to existing efforts, such as the Québec database that is currently being created by CIRAIG, as well as data from Statistics Canada. Without an institutional anchor, Canada will not get coherence in the LCI database that it needs and seeks.

The development of a Québec LCI database and the recently announced Québec carbon footprint initiative may have implications throughout Canada if Québec was to expand the use of Life Cycle Approach-based provisions on goods and commodities. If capacity does not exist within other provinces and territories to provide the requested data and information, there could be implications for inter-provincial trade, creating barriers to the movement of goods and services across provinces. To prevent such problems, the federal government could play a critical role in supporting the development of a national LCI database. It is also worth noting that economic and environmental data systems (which are the basis for a LCI database) have historically had an emphasis on industry sectors rather than commodities. Statistics Canada has traditionally built its data systems on industry profiles but this is not how most international jurisdictions are currently approaching the database development. In the future design of data and standards, there may be a need to shift the approach toward commodities rather than just industry sectors.

Canada Needs to Play a Proactive Role in the Development of National and International Life Cycle Approach Standards Canada should be involved in multilateral discussions where life cycle-based standards are being created, such as EPDs (e.g., France’s La Grenelle) or content requirements (e.g., California’s Low Carbon Fuel Standard). This would include the development of robust Product Category Rules (PCRs) by third parties but with the oversight of

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

the federal government. With the strong reliance on commodities in Canada, there is also a need to develop PCRs for commodities. There is an urgent need for guidance and standardization of LCA methodologies to ensure the consistent use of this tool. Globally, many jurisdictions are leading the development of standards and Canada is being forced to accept foreign standards being imposed on our exports. The need to act is reaching a critical point whereby Canada needs to have standards for LCA methodologies (e.g., PCRs) associated with certain goods and commodities so that coherent national and international responses could be developed to these emerging trade-related regulations. This will ensure that Canadian companies have a comparable basis on which to compete for access to markets that have LCA-based regulations imposed by governments or private companies. The U.S. has started a similar process with the American Centre for LCA, in which the EPA has been involved with a committee to support the development of PCRs in the U.S.152 Collaboration with industry and international organizations is vital to ensure that LCA is applied consistently and in a harmonized fashion. The federal government can play a strong role here by providing consistent guidance and streamlined support for developing life cycle methodologies that can be adopted within a sector and broadly endorsed across jurisdictions within our country and abroad. A practical way to make progress is for the GoC to play the role of “certifying the certifier” by encouraging industry associations to develop these

standards, which would then be evaluated by the GoC. This would allow the GoC to make progress on a targeted basis and simultaneously develop standards or guidelines for multiple commodities categories (e.g., oil and gas, wood, etc.). By using a collaborative model for stakeholder engagement, the GoC could identify priority areas where no guidance exists for the use of LCA and work with stakeholders to develop immediate short-term responses. The endorsement of a designated standard for a product, process or commodity class within a sector where there may be numerous competing standards would help the private sector to mitigate the risk of increased green-washing in the marketplace.

Canada should be involved in multilateral discussions where life cycle-based standards are being created, such as EPDs (e.g., France’s La Grenelle) or content requirements (e.g., California’s Low Carbon Fuel Standard). Similarly, participation from the government in the management of a uniform labelling program or EPD for multiple environmental attributes for a product or class of products that meets a designated standard would lend credibility to the label, increase awareness surrounding the label, and encourage companies to invest in the certifications required to support use of the label. The development of a robust process, as well as product or commodity standards to which a product is measured to attain a designated eco-label would lead to a greater degree of confidence. The use of such standards would allow a level playing field and reduce inconsistent claims (e.g., green-washing) while reducing complexities for consumers.

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The Government of Canada Needs to Apply Life Cycle Approaches Internally to Realize Economic and Environmental Efficiencies The GoC would benefit from a shift in current institutional practices to simultaneously increase economic savings and enhance environmental stewardship. A reform in the current institutional practices would allow the GoC to use Life Cycle Approaches to realize economic and environmental efficiencies in management of its expansive asset base. There would be benefits in functionally integrating the acquisition, maintenance and disposal functions across the GoC through the development of budgeting and management practices that are more conducive to Life Cycle Approaches. This would confront the GoCâ&#x20AC;&#x2122;s intrinsic bias toward low up-front capital costs that result from current accounting and budgeting practices. In traditional cost-benefit analysis, options that fare best over the life cycle seem costly, but over the long-term they lead to more benefits, both economically and environmentally. Progress would be fostered by having the Finance Department and Treasury Board Secretariat recognize this in budgeting and expenditure management and by having the Auditor-General recognize this in programs audits and evaluation. The GoC should use performance information to conduct benchmarking and to build and bolster the business case for green procurement and asset management based on Life Cycle Approaches. A specific goal would be to maintain and expand the use of

performance-based building-management contracts to ensure that green buildings are performing as designed and to optimize building management. Specifically, enhanced systems should be developed to measure and track use-phase (operation and maintenance) costs associated with the various public sector assets. The effort can begin with assets and commodities with the greatest potential impact and performance variability. For example, current policies provide no incentive for individual departments to act on energy efficiency. If an individual department saves money on electricity, the savings go to the governmentâ&#x20AC;&#x2122;s consolidated funds, leaving no benefit for the department.

The GoC would benefit from a shift in current institutional practices to simultaneously increase economic savings and enhance environmental stewardship. Life Cycle Approaches need to be integrated into decision making in the area of major policy and program development. The Regulatory Impact Analysis Statement (RIAS) that must be developed for every regulation created by the GoC could include Life Cycle Approaches to facilitate integrated decisionmaking frameworks. Similarly, Strategic Environmental Assessment (SEAs), which are required for Cabinet decisions on new policies and programs, represent an opportunity to systematically include Life Cycle Approaches. This type of action is essential to improving internal knowledge and capacity within the federal government on Life Cycle Approachrelated opportunities and risks. Mainstreaming these

Canada’s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

efforts through such existing mechanisms is more practical than creating new instruments, although a specific assessment of their utility is still required. The GoC has already taken a number of measures to improve the performance of the regulatory system for the development of major resource projects (e.g., Project Agreements, Major Project Management Office) which have improved the efficiency and effectiveness of the system. Policy makers have been

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adopting broader applications of Life Cycle Thinking (LCT) including the implementation of Cumulative Environmental Impact Assessment models to address these issues. Such models would evaluate and address impacts from a regional planning horizon rather than on a project-by-project basis. There are additional opportunities to improve the regulatory system by using Life Cycle Approaches to explore issues such as cumulative effects of natural resource development and the impacts of product use.

5.3 Conclusion Four key conditions are needed for the successful uptake and implementation of Life Cycle Approaches in both the public and private sectors. They are (1) awareness of benefits, (2) capacity and expertise, (3) life cycle data and information, and (4) common standards. The government could intervene at various scales (domestically, regionally, globally) and through a series of short- and long-term actions to advance the establishment of these key conditions. This would help address the trade and market access issues while increasing efficiencies within its own operations and in the private sector. This is an area where the government will need to work in partnership with the private sector. Changes in government’s practices will also be needed in the longer-term. The task is not a small one, but a few targeted actions now will go a long way to putting Canada back in the driver’s seat.

6.3

6.1 Moving Ahead

6.2 Recommendations

Governance for Implementation of Recommendations

6.0 Conclusions and Recommendations This chapter sets out the NRTâ&#x20AC;&#x2122;s proposed approach for moving ahead on adopting Life Cycle Approaches to sustainable development in a comprehensive and consistent way. We believe there is a clear economic imperative for doing so quickly to address growing market-access issues for Canadian goods and commodities. Equally, we believe that the growing demand for integrating environmental and economic considerations in business decisions and government policies requires a stronger understanding and application of Life Cycle Approaches in both the private and public sectors. Our recommendations address both of these concerns. We also offer a practical and staged way to implement these recommendations.

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6.1 Moving Ahead Life Cycle Approaches to sustainable development are here to stay. While their full application remains a “work in progress”, the trend is clear. From an earlier position of leadership in this area, Canada has not invested as much as needed to keep pace with our trading partners. Knowledge and expertise is growing in this field and Canada must grow with it. The NRT believes that greater involvement in learning and applying Life Cycle Approaches will help the government lead on environmental stewardship issues and better protect our national economic interests in the international arena. Most immediately, action is required from the federal government to better understand and address potential threats to international trade and market access for Canadian commodities and products. As we engage on this and other life cycle fronts, Canadian businesses and governments have the potential to realize cost savings and environmental gains on behalf of Canadians. This is not just a government priority. Business has a critical role to play too. The recommended actions in this chapter will require public-private partnerships and collaboration. Changes in government practices will also be needed over the longer-term. Government actions should be directed first towards supporting the private sector and improving internal government operations and decision making through the use of Life Cycle Approaches. The government’s response needs to be focused on key life cycle issues identified here and staged over time. Short-term responses are necessary to counter more immediate risks to international competitiveness in the areas of trade and market access. Longer-term responses will foster enhanced economic efficiencies and related environmental benefits of Life Cycle Approaches by gradually increasing their adoption in the public and private sectors. In government, these new innovative practices will lead to improved efficiencies in internal operations and the integration of Life Cycle Approaches in policy decision-making. In business, it will result in increased efficiencies in internal operations and throughout the supply chain. As a first step, the government should work with the private sector to identify the current non-tariff trade barriers where Life Cycle Approaches could help address the situation. It should also initiate government-wide discussions to identify areas where costs savings and environmental gains could be achieved within the public service.

Canadaâ&#x20AC;&#x2122;s Opportunity: Adopting Life Cycle Approaches for Sustainable Development

6.2 Recommendations Having established our principal goals of international competitiveness, public sector leadership, and firm competitiveness, the NRT recommends that the GoC move in four areas to respond to the identified risks and opportunities Canada is facing as related to Life Cycle Approaches. From each of these areas, a series of specific recommended actions follow. They are set out in Figure 7.

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Figure 7. Recommendations and key actions for the Government of Canada to respond to Life Cycle Approach-related risks and opportunities in Canada