Generation of an industry-specific physico-chemical allocation matrix - Application in the dairy industry and implications for systems analysis

Background, Aims and Scope. Allocation is required when quantifying environmental impacts of individual products from multi-product manufacturing plants. The International Organization for Standardization (ISO) recommends in ISO 14041 that allocation should reflect underlying physical relationships between inputs and outputs, or in the absence of such knowledge, allocation should reflect other relationships (e.g. economic value). Economic allocation is generally recommended if process specific information on the manufacturing process is lacking. In this paper, a physico-chemical allocation matrix, based on industry-specific data from the dairy industry, is developed and discussed as an alternative allocation method. Methods. Operational data from 17 dairy manufacturing plants was used to develop an industry specific physico-chemical allocation matrix. Through an extensive process of substraction/substitution, it is possible to determine average resource use (e.g. electricity, thermal energy, water, etc) and wastewater emissions for individual dairy products within multi-product manufacturing plants. The average operational data for individual products were normalised to maintain industry confidentiality and then used as an industry specific allocation matrix. The quantity of raw milk required per product is based on the milk solids basis to account for dairy 'by-products' that would otherwise be neglected. Results and Discussion. Applying fixed type allocation methods (e.g. economic) for all input and outputs based on the quantity of product introduces order of magnitude sized deviations from physico-chemical allocation in some cases. The error associated with the quality of the whole of factory plant data or truncation error associated with setting system boundaries is insignificant in comparison. The profound effects of the results on systems analysis are discussed. The results raise concerns about using economic allocation as a default when allocating intra-industry sectoral flows (i.e. mass and process energy) in the absence of detailed technical information. It is recommended that economic allocation is better suited as a default for reflecting inter-industry sectoral flows. Conclusion. The study highlights the importance of accurate causal allocation procedures that reflect industry-specific production methods. Generation of industry-specific allocation matrices is possible through a process of substitution/subtraction and optimisation. Allocation using such matrices overcomes the inherit bias of mass, process energy or price allocations for a multi-product manufacturing plant and gives a more realistic indication of resource use or emissions per product. The approach appears to be advantageous for resource use or emissions allocation if data is only available on a whole of factory basis for several plants with a similar level of technology. Recommendation and Perspective. The industry specific allocation matrix approach will assist with allocation in multi-product LCAs where the level of technology in an industry is similar. The matrix will also benefit dairy manufacturing companies and help them more accurately allocate resources and impacts (i.e. costs) to different products within the one plant. It is recommended that similar physico-chemical allocation matrices be developed for other industry sectors with a view of ultimately coupling them with input-output analysis.