Macroanalysis of the economic and environmental impacts of a 2005-2025 European Union bioenergy policy using the GTAP model and life cycle assessment

This paper describes a new tool to assess the medium- and long-term economic and environmental impacts of large-scale policies. The approach - macro life cycle assessment (M-LCA) - is based on life cycle assessment methodology and includes additional elements to model economic externalities and the temporal evolution of background parameters. The general equilibrium model GTAP was therefore used to simulate the economic consequences of policies in a dynamic framework representing the temporal evolution of macroeconomic and technological parameters. Environmental impacts, expressed via four indicators (human health, ecosystems, global warming and natural resources), are computed according to policy life cycle and its indirect economic consequences. In order to illustrate the approach, two 2005-2025 European Union (EU) energy policies were compared using M-LCA. The first policy, the bioenergy policy, aims to significantly increase energy generation from biomass and reduce EU energy demand for coal. The second policy, the baseline policy, is a business as usual policy where year 2000 energy policies are extended to 2025. Results show that, compared to the baseline policy, the bioenergy policy generates fewer impacts on three of the four environmental indicators (human health, global warming and natural resources) at the world and EU scales, though the results may differ significantly at a regional level. The results also highlight the key contribution of economic growth to the total environmental impacts computed for the 2005-2025 period. A comparison of the results with a more conventional consequential LCA approach illustrates the benefits of M-LCA when modeling the indirect environmental impacts of large-scale policies. The sensitivity and uncertainty analysis indicates that the method is quite robust. However, its robustness must still be evaluated based on the sensitivity and uncertainty of additional parameters, including the evolution of economic growth.