Build Simul (2008) 1: 169 – 177 DOI 10.1007/s12273-008-8414-3 RESEARCH ARTICLE
Integrated Assessment Method for Building Life Cycle Environmental and Economic Performance Lijing Gu1, Borong Lin1, Yingxin Zhu1( ), Daojin Gu1, Mingxing Huang2, Jiazi Gai3 1.Department of Building Science, School of Architecture, Tsinghua University, Beijing, 100084, China 2.Guangzhou Haode Building Science and Technology Ltd., Guangzhou, 510000, China 3.School of Design and Environment, 4 Architecture Drive, National University of Singapore, 117566, Singapore
Received: 3 December 2007 / Revised: 14 April 2008 / Accepted: 27 April 2008 © Tsinghua Press and Springer-Verlag 2008
Abstract Life cycle assessment (LCA) is a powerful tool to identify a building’s environmental impact throughout its life cycle. However, LCA does have limits in practice because it does not consider the economic aspect of project implementation. In order to promote LCA application, a more comprehensive evaluation of building life cycle environmental and economic performance must be performed. To address these issues, we propose life cycle green cost assessment (LCGCA), a method that combines LCA with life cycle costing (LCC). In LCGCA the building’s environmental loads are converted to environmental costs based on the trading price of CO2 certified emission reductions (CERs). These environmental costs are then included into the building life cycle cost. Subsequently an evaluation index of green net present value (GNPV) for LCGCA can be obtained. A governmental office building in Beijing was studied using LCGCA. Several design options were compared and the sensitivity of the CER price was analyzed. The research also shows that conclusions reached by LCGCA may be different from those of traditional LCC, which does not include environmental costs. The application of LCGCA needs the support of environmental policies. A sound environmental tax mechanism is expected to be established in China soon, which will enable LCGCA to be a useful tool to guide sustainable building design efficiently. Keywords life cycle assessment, life cycle costing, environmental load, environmental cost, building design
1
Background
With the growing understanding of environmental problems, the concept of sustainability has been widely accepted in recent years. The building industry, which consumes large amounts of energy and resources, and produces huge levels of pollution, is getting increased attention. Life cycle assessment (LCA), which is a method to quantify the environmental impact of a product system throughout its entire life cycle, has been introduced into the building sector recently. LCA is an effective tool to identify a building’s life cycle environmental impact, but it is not widely used in practice. One of the main reasons for this is that LCA does E-mail:
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not address the economic aspect of building development, which usually is regarded as the most important factor by stakeholders. Therefore some researchers have tried to combine LCA with life cycle costing (LCC) to develop environmentally-concerned decision-making (Warren and Weitz 1994; Gluch and Baumann 2004; Reich 2005). LCC is a life cycle perspective economic analysis of a defined system. The life cycle cost that is analyzed in LCC is defined as all internal and external costs associated with the system throughout its entire life cycle (Warren and Weitz 1994). The most common method for combining LCA with LCC is to convert the LCA results to environmental costs mainly based on environmental taxes or relevant policies and then add them into the life cycle cost. However, there are also difficulties in implementation (Gluch and Baumann 2004).
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In China, building LCA has developed rapidly in recent years. Some researchers have established LCA systems for buildings in China (Yang et al. 2002; Gu 2006), and some researchers have collected data about the life cycle inventory of energy (Jiang and Ma 2004) and main building materials (Huang 2003; Gong and Zhang 2004). There has also been some applied research on optimizing the design of building energy systems (Lin et al. 2004; Li 2005) and envelopes (Gu et al. 2007). However, LCA for buildings in China is still in the early stages compared with some more developed countries and there are limitations in its practical use. Recently, some research on building LCC has focused on heating, ventilating and air-conditioning (HVAC) systems (Li 2007; Zhao et al. 2005). However, there has not yet been much research conducted on the combination of LCA with LCC, since the environmental tax mechanism in China has not been established, and the values of many pollutants are hard to currently define. At present, only the emissions of some kinds of pollutants from the energy production industry have been taxed; other environmental impacts that buildings bring are seldom considered and have not been taxed. Environmentally friendly design usually has higher initial cost, and is not adopted. However, managing the environmental problems caused by buildings in the future will be costly. Moreover, a sound environmental tax mechanism is expected to be established in the near future since it has been announced that the policy of environmental tax imposition is under planning. Consequently the environmental costs of buildings will be taxed indirectly or directly in the future. Therefore, it is necessary to create a trade-off between the environmental impact and the economic aspects of practical sustainable building design. This paper proposes an integrated assessment method combining LCA with LCC based on the unique situations in China and then describes a case study. 2 2.1
Methodology Building LCA
Building Environmental Load Evaluation System (BELES) (Gu 2006), an integrated LCA framework and system for buildings in China, is introduced as a basic platform for research in this paper. In BELES, the life cycle inventory data of energy and the main building materials of China are obtained from domestic references. Inventory data that are not available now for other Chinese materials and components are obtained by extrapolating from foreign LCA databases. BELES uses damage oriented impact assessment which is a typical endpoint impact assessment
method propounded by PRe Consultants in the Netherlands (Goedkoop and Spriensma 2001). The selection of environmental impact categories, detailed calculations of each endpoint, normalization and weighting are based on the basic data and unique conditions for China. BELES selects four endpoint impact categories: energy exhaustion, resources exhaustion, health damage, and ecological damage, and uses the total environmental load of the building industry of China as the normalization background value. The weighting coefficients are obtained through questionnaires answered by experts in the building industry, and finally provides an integrated index, the Environmental Load, with “points (pt)” as the unit of measurement. In this paper, BELES is adopted to analyze the environmental impact of a building’s life cycle. 2.2
Building LCC
The life cycle cost of a defined system, such as a product, process or activity, involves many aspects. Warren and Weitz (1994) proposed a simple but useful breakdown of life cycle cost that contains three possible categories: conventional costs, liability costs, and environmental costs. Conventional costs are the ordinary financial obligations and operating expenses or revenues of a system. For a given building system, this usually contains the initial costs, operating energy costs, management costs, and labor costs. The conventional cost is often the only cost considered in the LCC because it is tangible. Liability costs are potential future expenses such as legal counsel, penalties, possible employee injuries and changes in the future market. Because liability costs depend on the probability of the occurrence of future events and are difficult to estimate, they are not directly considered in many LCC. Environmental costs as defined by Warren and Weitz (1994) are the costs associated with the impacts of human activities on the natural environment. A building system has various environmental impacts such as energy exhaustion, resource exhaustion, air pollution, and water pollution. Environmental costs are seldom considered in LCC especially when the environmental tax mechanism is not sound, because many of them are considered to be external costs borne by society as a whole rather than by the polluter. Additionally, they are relatively intangible and challenging to measure or quantify. This paper aims to propose a model for integrated evaluation of building environmental and economic performance. The LCC in this model may be primarily used for comparison of different design options for a building envelope or HVAC system. Therefore, only the costs that concern a building envelope and HVAC system
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are considered in this paper. Costs such as labor costs and management costs, which do not vary widely for a given building, are not considered. Liability costs, which are difficult to estimate, are not included, while environmental costs that can combine LCA with LCC are considered. The building life cycle cost considered here mainly includes four categories: initial construction costs, operating energy costs, replacement costs for the building envelopes and energy system equipment, and the potential environmental costs.
corresponding to the initial costs), operation (corresponding to the operating costs), and replacement (corresponding to the replacement costs). The environmental load of each phase can be calculated with BELES. Then the environmental costs of each phase can be calculated and added to the conventional costs of the corresponding phase. We call the sum of the conventional costs and environmental costs the “green costs”. In this case “green” means that the environmental performance has been considered. Green costs can be calculated with Eqs. (1) to (5):
2.3
VEL = VCERs / ELCO2 ,
(1)
EC = EL ⋅ VEL ,
(2)
GIC = IC + ECc = IC + ELc ⋅ VEL ,
(3)
GOC = OC + ECo = OC + ELo ⋅ VEL ,
(4)
GRC = RC + ECr = RC + ELr ⋅ VEL ,
(5)
Life cycle green cost assessment (LCGCA)
The key step in combining LCA with LCC is to convert the LCA results to environmental costs. The life cycle environmental impact contains many kinds of resources and pollutants, but currently only a few of these are considered in environmental taxes or policies in China. Therefore, it is impossible to define the environmental costs of every kind of environmental impact. In this paper, a simplified method is used, where environmental costs are defined based on the carbon trading price. CO2 is a significant contributor to global warming, which is one of the most serious environmental problems today. In order to control CO2 emissions, the Kyoto Protocol was passed in 1997. International CO2 emission trading, influenced by the Clean Development Mechanism (CDM) defined in the Kyoto Protocol, is very active at present. As a developing country, China has had 171 registered CDM projects; the total expected certified emissions reductions (CERs) of these projects accounts for 48.9% of the total CERs of all CDM projects around the world (United Nations Framework Convention on Climate Change 2008). Techniques or projects for CO2 emission reduction always bring additional costs, which can be considered as environmental costs. When CERs become more challenging for industrial countries to obtain in their own countries, they may wish to purchase CERs from developing countries. While the trading price of CERs is usually lower than the technical cost for CO2 emission reduction in these industrial countries, the trading price can still reflect the value of the CO2 environmental impact. This allows environmental costs caused by CO2 emissions to be defined based on the trading price of CERs. Subsequently, by assessing the environmental load of CO2 according to BELES in conjunction with the trading price of CERs, the environmental cost of a unit environmental load can be calculated. In addition to the environmental costs, the life cycle cost contains three parts that correspond to the three phases of a building’s life cycle. In order to be consistent with the phase division in LCC, a building’s life cycle in LCA analysis is also divided into three main phases: construction (including building material production,
where VEL is the environmental cost of unit environmental load (Yuan1/pt); VCERs is the trading price of CERs (Yuan/t); ELCO2 is the environmental load per unit weight of CO2, which is 0.463pt/t; EC is the building environmental cost per unit floor area (Yuan/m2); and EL is the building environmental load per unit floor area (pt/m2). Subscript “c” refers to the construction phase, “o” refers to the operation phase, and “r” refers to the replacement phase. IC is the conventional initial costs per unit floor area (Yuan/m2); OC is the conventional annual operating costs per unit floor area (Yuan/m2); RC is the conventional replacement costs per unit floor area (Yuan/m2); GIC is the green initial costs per unit floor area (Yuan/m2); GOC is the green annual operating costs per unit floor area (Yuan/m2); and GRC is the green replacement costs per unit floor area (Yuan/m2). Thus the environmental performance is combined with economic performance through the green cost method. By utilizing basic economic theories, an integrated evaluation method combining LCA with LCC is proposed. We call this method life cycle green cost assessment (LCGCA). The evaluation index of LCGCA is the green net present value (GNPV), which is the sum of the present values of various costs throughout the building’s life cycle. The GNPV (Yuan/m2) can be calculated with Eqs. (6) to (13): GNPV = GIC + PGOC + PGRC ,
(6)
PGOC = OC ⋅ dOC + ECo ⋅ d EC ,
(7)
d OC = (qOC N − 1) /[(qOC − 1) ⋅ qOC N ],
(8)
1
RMB Yuan.
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qOC = (1 + i ) /(1 + e),
(9)
d EC = (qEC N − 1) /[(qEC − 1) ⋅ qEC N ],
(10)
qEC = (1 + i ) /(1 + eEC ),
(11)
PGRC = ∑∑ [ RCk ⋅ (1/ qRC ) k =1 j =1
qRC = (1 + i ) /(1 + em ),
Nk , j
+ ECr, k ⋅ (1/ qEC )
Nk , j
],
(12) (13)
where PGOC is the present value of the green operating costs per unit floor area (Yuan/m2); PGRC is the present value of the green replacement costs per unit floor area (Yuan/m2); dOC is the discount coefficient of the conventional operating costs (—); dEC is the discount coefficient of the operating environmental costs (—); e is the growth rate of the energy price (—); i is the bank rate (—); qOC is a function of e and i; N is the building life span (year); eEC is the growth rate of the CER price (—); qEC is a function of eEC and i. RCk is the conventional replacement costs of component (envelope or equipment) number k; ECr, k is the replacement environmental costs of component number k. Nk, j is j times the life span of the replaced component k, and Nk, jGNPV0, this means the given options are worse than the base case in terms of integrated economic and environmental performance. If GNPV
