Ranking of Air Emission Reduction Projects in a Company Environmental Plan
Authors: Kuyper J. , Alsem W.H.M. , Mussig S. , van der Velden J. , Herenius T.A. 
Published: December 2007

Introduction

In the Netherlands the E&P industry has agreed an Environmental Covenant (declaration of intent) with the Government in 1995. In the Covenant reduction targets for the E&P industry as a whole have been set for the years 2000 and 2010 for all pollution to air, water and soil (relative to the base year 1990). Implementation is on a company level by a phased implementation of BAT (best available technology). When a target cannot be met in time implementation can be shifted to a later date, as compensation the attainment of other target(s) can be accelerated. In essence this is a trade off and particularly relevant as the targets in the Covenant are national reduction targets, and not targets which have taken in account the specific areas where the E&P industry can best reduce its emissions.

In a mandatory 4-yearly CEP (Company Environmental Plan) individual companies must present a.o. emission reduction projects to implement the Covenant. For the company it is important to rank such projects on the basis of cost-effectiveness in order to minimise the environmental expenditures without compromising the environmental benefits. This requires that the environmental benefits of different projects should be made comparable, e.g. can be expressed with one common denominator, if it considers different substances. To this extent REIM was developed (Ranking of Environmental Investments Model). REIM calculates the environmental benefits using the EIU (Environmental Impact Unit) as a common denominator for air emission reduction projects. For the calculation of net associated costs conventional accounting procedures are used by the model.

To arrive at a common denominator three steps are required: classification, normalisation, and weighing of the environmental themes. In the appendix these steps are briefly explained and a simplified case for the calculation of the EIUs for NOx is given.

Projects are subsequently ranked by REIM on the basis of cost-effectiveness which is expressed in Dfl/EIU. REIM uses the characterisation and normalisation data of LCA (Life Cycle Analysis), but weighing factors had to be developed. This paper describes the development of the weighing factor, its relation with the normalisation in the REIM model, and the experiences with ranking and selection of air emission reduction projects in the CEP.

Weighing factors

Where two out of the three steps in the calculation of the environmental benefits, i.e. classification and normalisation, are based on best factual knowledge and their assessment can be done in a rational way, assessment of weighing factors is inherently a subjective process. However, like societies can put values on marketable products, in fact as the outcome of the subjective preferences of many individuals, societies should be able to put values on their natural environmental assets, thus on the (perceived) severity of environmental impacts by assessment of their collective preferences on the basis of individual preferences. This concept has been the basis for the weighing procedure for the six environmental themes used in REIM.

The relevant environmental themes for air emissions (in the Netherlands this can be derived from national policies) are.–climate change (enhanced greenhouse effect)–ozone depletion (stratospheric ozone layer)–acidification (particularly areas of great natural value with mineral poor soils)–human toxicity (including winter smog)–oxidant formation (summer smog/tropospheric ozone)–nutrification (particularly of areas of great natural value with nutrient poor soils).

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