A framework to identify environmental-economic trade-offs by combining life cycle assessment and life cycle costing – A case study of aluminium production

Abstract

The aim of the study was to identify dependencies between environmental and economic performance applying LCA/LCC-integration. Life cycle assessment (LCA) is an established methodology to evaluate the environmental performance of products. For holistic sustainable decision-making, also the economic and social perspectives are important. Economic performance can be assessed with life cycle costing (LCC) and is a major concern in business. As business often associates an improvement in environmental performance with trade-offs in terms of economic efficiency, a joint assessment of LCA and LCC is essential to obtain valid statements about sustainable performance. Few such studies have been conducted so far and no standard exists to integrate LCA and LCC. Conducting a case study of different aluminium production scenarios, the study aimed to propose an adaptable LCA/LCC-integration approach for different actors involved in the life cycle of products to identify environmental-economic trade-offs. The study found that drivers for both costs and environmental impacts varied for the different production sites and that environmental improvements do not automatically entail economic disadvantages. A shift to green electricity supply from the conventional electricity mix for the German primary aluminium producer resulted in a roughly 70% smaller global warming potential (GWP) while costs only slightly increased (0.3%). The Chinese alumina producer lowered his GWP by 11% and his costs by 6% when only sourcing domestic bauxite. The findings revealed the urgency to assess the environmental and economic performance parallelly for identifying potential trade-offs or win-win-situations. A practicable framework for LCA/LCC-integration and for visual result communication of trade-offs meant for decision makers was proposed.