Using Life Cycle Thinking Approaches for Energy Price Sensitivity Analysis Along the Value Chain

Life Cycle Costing (LCC) is a technique to evaluate the cost of a product over its entire life cycle. Existing approaches give no sufficient answer on how input price alterations in  up stream processes influence the value chain costs of materials. But for decision makers, it is crucial to know e.g. at what oil price investments in new materials or the change of feedstock from fossil to renewable become profitable from a life cycle perspective.

Therefore, a new approach is suggested, combining LCC and Life Cycle Assessment (LCA). LCA provides the fundamental basis (a functional system model with energy and mass flow balances of all upstream processes)which is enhanced with economic parameters. It basically combines most of the elements of Life Cycle Assessment, environmental Life Cycle Costing according to the method suggested by SETAC and Total Cost of Ownership but restrictions of the respective methods can be avoided.  

The paper will describe the procedure of modelling, an exemplary process model and combined static LCA and dynamic LCC results for insulation materials along the value chain the product. The model is validated using alternating energy prices.