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Input-Output Approach for Life Cycle Analysis

Govinda R TimilsinaSenior Research Director

Canadian Energy Research InstituteCalgary, Canada

ISEEE Project Meeting03 November 2006

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Structure of CEIA Model

Projection of investment & value of output

AlbertaI-O Model

Impacts on Alberta economy (GDP, employment, demand for goods & services,

government revenues)

Shares of indirect

and induced demand in Alberta supplied by other

provinces (import shares)

Increased demand for labor, goods and services in Ontario, Quebec and the Rest of Canada

I-O Modelsof ON, QC and Rest of Canada

Impacts on other provincial economies (GDP, employment,

government revenues)

Allocation of investment and outputs to goods, labor and

other operating surplus

Increased demand for labor, goods and

services in Alberta

Jurisdictional sources of the purchase of labor,

goods & services

I-O models for other provinces

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Input Data: Investment & Production Year

Mining In Situ Upgrading Total Mining In Situ Upgrading Total2000 3772 712 175 4659 3,717 2,808 1,934 8,4592001 4019 1196 1229 6444 2,322 1,708 2,627 6,6572002 4503 1573 1214 7290 4,359 2,434 2,137 8,9302003 3700 1235 349 5284 5,587 3,257 3,001 11,8462004 1130 1347 2135 4612 8,186 4,791 5,122 18,0992005 1251 1606 2232 5089 6,328 4,009 4,237 14,5742006 1227 790 1402 3419 6,985 4,443 4,958 16,3862007 1832 1255 2071 5158 7,813 6,016 5,311 19,1392008 1734 1620 2034 5388 8,043 6,316 5,593 19,9522009 2331 1348 2583 6262 8,738 6,657 6,278 21,6732010 3008 757 3266 7031 9,444 7,443 6,803 23,6912011 3004 935 2547 6486 10,540 8,510 7,496 26,5462012 2312 932 1713 4957 11,633 8,952 8,197 28,7822013 2310 847 2385 5542 12,530 9,587 8,568 30,6852014 1888 795 1994 4677 13,934 10,016 9,241 33,1912015 2227 968 2104 5299 14,891 10,434 9,879 35,2042016 1778 880 1941 4599 15,980 10,809 10,526 37,3152017 1382 1100 1673 4155 16,968 11,598 11,122 39,6892018 528 1100 535 2163 17,963 11,959 11,717 41,6402019 175 1100 0 1275 18,696 12,521 12,216 43,4342020 175 880 0 1055 19,213 13,111 12,552 44,876

Total 44,286 22,976 33,582 100,844 223,873 157,381 149,517 530,770

Production Value (millions 2004 CN$)Development (millions, 2004 CN$)

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Goods/ Services and Statistics CanadaLabour Mining Upgrading* In Situ ( For all three activities)

ConstructionManufacturing 51 44 54 19Construction 0 0 1 0Transportation & Communication 2 0 2 3Gas Utilities 0 0 0 2Electric Utilities 1 0 0 0Business Services 14 13 14 3Food & Accomodation 2 0 3 0Other Goods & Services 1 0 0 13Total Goods and Services 71 57 74 48Labour 29 43 26 52Total 100 100 100 100

Operation Manufacturing 40 32 21 11Construction 0 2 0 2Transportation & Communication 0 1 0 1Gas Utilities 17 16 59 2Electric Utilities 0 0 7 1Business Services 0 2 2 33Food & Accomodation 0 1 0 0Other Goods & Services 0 0 0 3Total Goods and Services 57 54 89 76Labour 43 46 11 24Total 100 100 100 100* Data for integrated mining is used.

CAPP

Expenditure Share in the Oil Sand Sector (%)

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CERI LiteratureSurvey Alberta RoC Foreign Alberta RoC Foreign Alberta RoC Foreign Alberta RoC Foreign

Manufacturing 38 16 46 34 16 50 64 14 22 51 34 15Construction 0 0 0 0 0 0 100 0 0 100 0 0Gas Utilities 0 0 0 0 0 0 0 0 0 100 0 0Business Services 100 0 0 100 0 0 95 4 1 88 3 9Total Goods and Services 44 14 42 44 14 43 73 11 16 79 11 10Labour 100 0 0 100 0 0 93 7 0Total 55 12 33 61 13 25 80 10 11

Manufacturing 29 26 44 17 20 63 67 13 20Construction 0 0 0 0 0 0 0 0 0Gas Utilities 100 0 0 100 0 0 100 0 0Business Services 0 0 0 0 0 0 0 0 0Total Goods and Services 61 11 28 34 16 50 - - -Labour 100 0 0 100 0 0 100 0 0Total 77 6 16 61 9 30 - - -

Construction

Operation

Statistics CanadaIn SituMining Mining & Upgrading

Jurisdictional Shares of Oil Sand Purchases (%)

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I-O Module (Goods &Sector)

Sec. No. Sector1 Agriculture2 Forestry3 Other Mining4 Crude Oil5 Natural Gas6 Coal7 Manufacturing8 Construction9 Transportation & Communication10 Electricity Utility11 Gas Utility12 Wholesale13 Retail14 Finance, Insurance and Real Estate15 Business Services16 Education17 Health18 Food and Accommodation Service19 Other Services

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Definition of Sectors/Industries Sector/ Industry Examples

Agriculture Farming of wheat, corn, rice, soybean, tobacco, cotton, hay,vegetables and fruits; Greenhouse, nursery, and floricultureproduction; Cattle ranching and farming; dairy, egg and meatproduction; Fishing, hunting and trapping

Forestry Timber tract operations; Forest nurseries and gathering of forestproducts; Logging.

Other Mining Mining of iron, gold and Silver ores; Copper, nickel, lead, andzinc mining; Sand, gravel, clay, ceramic, limestone and granitemining; Potash, soda, borate and phosphate mining.

Construction Construction of residential, commercial and industrial buildings;Highway, street and bridge; Gas and oil pipelines; water andsewer system; power and communication lines

Manufacturing Food, beverage and tobacco; textile and apparel; leather andfootwear; rubber and plastics; furniture and fixtures; pulp andpaper; petroleum refinery; Drugs, chemicals and fertiliser; lime,glass, clay and cement; iron, aluminium and other metals;fabricated metal, machinery and equipment, electrical, electronicand transportation equipment

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Definition of Sectors/Industries (Continue) Sector/ Industry Examples

Electric Utilities Electric power generation, transmission and distributionGas Utilities Natural gas distributionTransportation andcommunication

Road, rail, air and water transportation services; postal andwarehousing; information and communication

FIRE Banking, insurance and credit companies; Real estate, rentingand leasing

Business Services Architectural, engineering, and related services; legal andaccounting services; Management, environmental, research anddevelopment and advertising services; Employment andbusiness support services

Food andAccommodation

Hotels; Recreational vehicle (RV)) parks and recreational camps;Food services and drinking places

Education Educational services; Business schools and trainingHealth Hospitals; Nursing and residential care facilities; medical

laboratories; Child and senior care servicesOthers Public administration; Arts, entertainment, and recreation;

Personal and laundry services; Repair and maintenanceservices; Waste management and remediation services; Waterand sewage systems

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Import Shares(Data for year 2000)

Total Alberta ImportsGood/Service (Million Dollar) Ontario Quebec RoC RoW

Agriculture 2,178 2 - 76 23Forestry 294 - - 89 11Other Mining 24 - - - 100Mineral Fuels 1,111 6 - 94 1Manufacturing 47,900 15 5 12 69Construction - - - - -Trans. & Comm. 4,715 34 11 34 22Utilities 238 - - 86 14Wholesale 2,609 46 11 42 1Retail 497 5 1 94 -FIRE 4,627 56 10 12 22Business Services 4,452 1 6 62 31Education 99 15 1 32 52Health 100 72 0 - 27Food and Accom. 1,183 49 1 - 51Other Services 1,379 31 5 34 30Total 71,406 20 5 22 53

Jurisdictional shares in Total Alberta Imports (%)

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Actual I-O Model Formula

FDNDNBIGO 1][

GO Change (or increase) in gross output

B The input coefficient matrix.

N Matrix of domestic shares in the total supply of a commodity.

D Matrix of sectoral shares in the total commodity production;

F Change (or increase) in final demand of a commodity

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I-O Models Runs

Alberta

Ontario

Rest of Canada

Rest of the World (Alberta I-O as Proxy)

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Emission Estimation

V (p, s, r) = e (p, s, r) x X (s, r)

Where, V (p,s,r) = Emissions of pollutant type p from sector s in region r due to the policy or activity

e (p,s,r) = Emission of pollutant type p per unit of output (measured in monitory value) from sector s in region r

X (s, r) = Change in output of sector s in region r due to the policy or activity

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Precautionary NotesOver or underestimation of indirect emissionsCEIA model has an aggregate manufacturing sector. The mix of manufacturing goods needed by the oil sands industry would be different from that of aggregate manufacturing sector. Since emission coefficients are different for different industries (even different within an industry across technologies), emission estimation based on a energy coefficient defined for an aggregate manufacturing industry would not be precise.

Potential distortions in emission coefficientsEmission coefficients expressed in terms of monitory value of output could be misleading due to the price effect. For example, emission coefficient of oil sector (tCO2 per dollar value of crude oil) calculated with an oil price of $70/bbl would be twice as low as that calculated with the oil price of $35/bbl. Hence, emission coefficients should be calibrated carefully.

Incapable of capturing economic and technological dynamics Both I-O coefficients and emissions coefficients are static.

Other standard limitations of I-O approach Fixed economic structure, assumption of unlimited supply of resources etc.

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Thank You

Contact Address

Dr. Govinda R TimilsinaSenior Research Director

Canadian Energy research Institute#150, 3512 – 33 Street NW, Calgary, AB, Canada

T2L 2A6Tel: 1 403 220 2356Fax: 1 403 284 4181

E-mail: gtimilsina@ceri.ca