Fundamentals of sustainable engineeringg

Part II
Reasons for Unsustainability
1

What Causes Environmental Impact?
• Underlying reasons for conflict between human and
environmental well-being?
• A simple but insightful way of understanding the
causes underlying the environmental impact of
human activities; IPAT equation
• Highlights relationship of impact with population,
consumption (affluence), and technology
l = P * A * T
• I: total environmental impact
• P: population
• A: affluence measured as consumption per capita
• T: technology in terms of environmental impact per
unit of consumption.
2
Sustainable Engineering: Principles and Practice

What Causes Environmental Impact?
• Relevance of diverse cross-disciplinary factors in
determining environmental impact
• Relevance of engineering; T term
• A and P terms are influenced by other disciplines
such as economics, business, and social sciences
• Next few chapters; how various disciplines have
contributed to unsustainability
• Essential for devising meaningful solutions toward
sustainable engineering.
3
Impact = Population x Consumption x Pollution
Capita Consumption

Reasons for Unsustainability
• Role of
– Economics
– Business
– Science and Engineering
– Societal and Human Behavior
• Need to understand the problems to identify
possible solutions
4

4. Economics and the
Environment
5
Nature did not appear much in twentieth century economics, and it
doesn’t do so in current economic modeling. When asked,
economists acknowledge nature’s existence, but most deny that she
is worth much.
- Partha Dasgupta

Economics and the Environment
• Important component of human well-being;
economic well-being
• Usually measured in monetary terms
• Economic activities mostly determined by markets
• Markets play an important role in determining
production and consumption of economic goods
and services
• Economic activity relies on goods and services from
nature
• It can strongly influence their availability and
status
6

How can Economics Hurt the Environment?
• Economic activities, methods, and policies can
contribute to increasing ecological degradation and
unsustainability of human activities
• Reason 1
– External social cost of economic activity is not included in the
price; ignoring the role of ecosystems in supporting economic
activities by keeping nature outside the economic system or
market
• Reason 2
– Discounting gives less importance to the future - difficult to
justify decisions with long-term benefits; valuing the present
more than the future, which makes it difficult to justify
decisions that have long-term environmental benefits
7

How can Economics Hurt the Environment?
• Reason 3
– Assumption of perfect substitutabiliy between natural /
ecological and economic capital / resources
• Reason 4
– Ignoring the physical basis of the economy takes nature for
granted; not accounting fully for the physical basis of the
economy
8

9
Components
• Ideally; competitive market consists of buyers and
sellers interacting with each other according to the
prices of goods and services
• In general, if price increases, demand for that
product decreases; iron ore demand curve in Fig-
4.1
• Other line; marginal cost or supply curve
• Represents the effect of producing and selling
goods in the marketplace
• Cost of each additional ton of iron ore that is
extracted
Basics of Free Markets

Figure 4.1 Elements of a free market

11
• First few tons extracted by suppliers; least
expensive to extract
• As more ore is extracted, cost of each additional
ton increases
• New ore may be more difficult to extract,
transport, or process into products
• Marginal cost curve represents this additional cost
• First derivative of total cost of ore extraction
versus number of tons extracted
• Competitive industry would always increase
production so that marginal cost and price are
equal

13
– Competitive market
– Interaction between demand and supply (marginal
cost) curves
– Tends to reach equilibrium at intersection of both
– Equilibrium; point A in Fig 4.1 (a)
– Even if there is a perturbation from this point due
to changes in price or production; market brings
the system back to equilibrium

14
– Consider a situation to the left of equilibrium
– Point B; buyers are willing to pay $30 per ton
– Point C; extracting an additional ton of ore will cost
about $10
– Opportunity for profit will encourage extraction of
additional ore
– More ore will be extracted and sold in the market;
causing points B and C to move toward each other;
until equilibrium (point A) is reached.
– If current situation is to the right of point A
– Cost of extracting each additional ton of ore exceeds
what people are willing to pay
– Extractors will reduce production because they would
incur a loss for the additional tons extracted
– System will move toward Point A

15
Characteristics
– Most attractive feature of competitive markets
– Ability to find solutions that balance trade-offs
– Fig 4.1 b; triangle APQ represents benefit of market to
consumers
– Market price of ore of $16 per ton is much less than
what many consumers are willing to pay for it
– There are people willing to pay a range of values
between $16 and $56 per ton
– Area of triangle APQ represents “consumer surplus"
(monetary benefit to society due to free market
equilibrium)

17
– Similarly, free market is beneficial for producers as well
– Producers spend an amount less than or equal to
market price for extracting a ton of ore
– Marginal cost curve; all tons of ore until the 22nd cost
the producers less than the market price of $16 per
ton; profit
– Total profit to all producers; triangle APR in Fig 4.lb;
"producer surplus"

18
Competitive Markets - Illustration
• Suppose production
at 10 million tpy
– Price would be $40,
which is $33
greater than cost
of more output
– Producers would
increase production
• Suppose production
at 25 million tpy
– Marginal cost of $18 is above price of $10
– Industry would decrease production
• This competitive equilibrium gives maximum
benefit to producers and consumers
0 5 10 15 20 25 30 3
$70
60
50
40
30
20
10
0
Demand Curve, P
Marginal Cost
million tons per year
Dollars
per
ton
22
16
33
-8

19
Assumptions
– For free market to result in optimally efficient solution,
following conditions need to be satisfied
1. All industries are competitive
2. Consumers and producers have economic knowledge
about the costs and benefits of their actions
3. Everyone in the market is driven by the desire for
maximum financial gain
4. There is no benefit of increasing the scale of an activity
(no economies of scale)
5. There are no external or ignored social costs such as
damage to society, employees, or environment

20
– These assumptions of free markets are commonly violated
– The system then does not maximize benefits to
consumers and producers
– Some violations may encourage human actions that
cause excessive ecological degradation; unsustainable

21
Macroeconomy
– Above discussion; market for a single product
– Macroeconomic system involves multiple markets
interacting with each other
– Mainstream or “neoclassical” economics; Fig 4.2
– Overall economy consists of firms and households
– Firms supply goods and services to households, for
which households pay firms
– Households supply factors of production (land, labor,
capital) to firms, for which firms pay households
– Lower loop; goods market
– Prices are determined by interaction between producers
and consumers; previous section
– Upper loop; factors market

22
• Factors market; term used by economists for all
resources that businesses use to purchase, rent, or hire
what they need in order to produce goods or services
• These needs are the factors of production; include raw
materials, land, labor, and capital
• Factors market; also called the input market
• All markets are either factor markets (where businesses
obtain the resources they need), or goods and services
markets (where consumers make their purchases)

Macroeconomy – Neoclassical View
Figure 4.2 Typical view of the economy in most neoclassical economics
texts

24
– Tis worldview; goal of economy is to maximize GDP
– GDP is an indicator of economic activity in a given
period
– GDP may be calculated as total income or total
expenditure in the economy
– Outer loop of Fig 4.2
– Total income or total expenditure are equal under
assumption of a steady state in that time period
– Reasonable assumption; expenditure from one activity
must be another's income
– Greater circulation of money is good since it increases
GDP
– This should translate into greater prosperity and economic
well-being
– Historical trend of GDP; Ch-1; dramatic increase in per
capita GDP over the centuries

How Can Economics Hurt the
Environment?
• Reason 1
– External social cost of economic activity is not
included in the price
• Reason 2
justify decisions with long-term benefits
• Reason 3
– Assumption of perfect substitutabiliy between natural and
economic capital causes loss of NC
• Reason 4
– Ignoring the physical basis of the economy takes nature
for granted
25

Environmental Externalities
• Reason-1: External social cost of economic activity is not
included in the price
• Price of an economic activity does not include its impact
on all relevant resources
• Then market will be blind to the impact of this activity
on ignored resources
• For such resources, marginal cost curve (Fig 4.1) does
not change as the ignored resources are affected and
altered
• Such resources or services (not included in the market);
called externalities
• Market is unable to balance trade-offs between
economic activities and externalities, and
• Fails to find the economically efficient win-win solution
26

• An externality occurs in economics when a decision
causes costs or benefits to individuals or groups
other than the person making the decision
• Decision-maker does not bear all the costs or reap
all the gains from his action
• Result; in a competitive market, too much or too
little of the good will be consumed
• Examples
– Impact of automotive use on human health due to air
pollution
– Impact of nice garden on neighbor's house price
27

• Example; if transportation is available at no cost
• Role of this activity is not included in the price of ore
• Marginal cost of ore is not affected by changes in the
transportation network
• Deterioration of transportation system will not affect
the price of ore
• No feedback that maintains feasibility of transportation
system or prefers mines that are easier to access
• Importance of transportation may be felt only after a
significant disruption; severe repercussions for the
mining industry
28

Positive Externalities
• Example; benefits of a nice garden to neighbors
• Neighbors do not pay for the garden but benefit from
it
• Garden adds value to the neighborhood and may even
increase home prices
• Example; use of natural wetlands to treat industrial or
municipal wastewater
• Cost of maintaining the wetland is borne by the
company or municipality
• Benefits such as increase in biodiversity, aesthetic
value, carbon sequestration, and maintenance of the
water table are available to society, which does not
pay for the benefits
29

Negative Externalities
• Example; community in which each residence pays for
water in proportion to quantity of water used
• Costs incurred by each residence cover resources used
• To withdraw the water: electricity and pumps
• To treat the water: chemicals
• To transport the water: pipes and electricity
• To clean the water at sewage treatment facility
• These costs do not include cost of the water itself
• Example; market price of oil usually excludes costs such
as
• Impact of CO2 emissions
• Ground-level ozone pollution
• Contribution of national defense to ensuring safety of
oil-carrying ships
30

• Situation in terms of demand and supply curves; Fig 4.3;
water
• Inclusion of cost of externalities (external social cost) in
marginal cost
• Curve shifts upward; dashed line
• For given demand curve, market equilibrium with true
marginal cost will be at point A’
• Keeping full cost of water outside the market
• Equilibrium at point A; encourages overconsumption,
since point A is to the right of point A'
• This overconsumption often results in ecological
degradation and unsustainable economic growth
31
Negative Externalities

Figure 4.3 Effect of negative externalities in a free market; water use

Tragedy of the Commons
• One way in which economics has contributed to
degradation of ecosystems
• Conventional markets have ignored the role of
nature
• Have made ecosystem goods and services
negative externalities
• Result; overconsumption and ecological
deterioration
• Such a situation; also referred to as a "tragedy of
the commons”
• Term popularized by Hardin [5]
33
Hardin, G., Science, 1968
www.dfd.dlr.de/app/land/aralsee/

• “Commons" refers to common property or public
goods
• Goods such as air, public land, oceans, rivers,
biogeochemical cycles, etc
• Belong to everyone and are usually outside the
market
• Each user of such goods benefits from access to
them
• Benefit is to the user, but impact is spread across
a larger area or population, including other users
and non-users.
34
Hardin, G., Science, 1968

• Another example. Benefit of commuting by car is to
the driver, but
• Impact of tailpipe emissions is borne not just by
the driver but by a much larger population
• Including those who do not commute by car
• Benefit is privatized, while impact is socialized
• More individuals choose to commute by car
• Common property of clean air gets polluted
• Some specific examples; Box 4.1
• Many environmental problems are such tragedies
– Aral sea (1960-1994) (http://vimeo.com/6912220)
– Lake Erie
– Plastics in the Ocean
35

• Potential solutions include regulations, taxes, emissions
trading, etc
• Implementation faces challenges due to social, political,
and cultural factors
• Chapter 21
36
Environmental Externalities; Solutions

Environment?
• Reason 1
– External social cost of economic activity is not included in
the price
• Reason 2
– Discounting gives less importance to the future -
difficult to justify decisions with long-term benefits
• Reason 3
– Assumption of perfect substitutability between natural and
• Reason 4
for granted
37

38
Benefit-Cost Analysis and Discounting
• Economists make decisions via benefit-cost (BC)
analysis
• Example; capital cost of setting up a manufacturing
process incurred at beginning of project
• While benefits are obtained every year over life of the
facility
• Value of money changes over time
• Should be considered when comparing monetary flows at
different times
• Concept of discounting; used for dealing with changing
value of money over time.

39
• Basic equation used for BC calculations
• P: present value
• F: future value
• r: interest or discount rate
• n: number of years
• Discounting gives more value the present than the
future; higher the discount rate, greater the value
of the present versus the future
– Okay for buying cars, houses
– Not okay for basic amenities – water, food, natural capital

40
– A higher discount rate prefers the present over the
future
– Would give less importance to expenses that have a
benefit far into the future
– Most environmental challenges
– Requires expenses today for benefits in the future.

Example 4.1
A significant catastrophe of $500 billion is predicted
50 years from now as a result of greenhouse gas
emissions. This could be avoided by spending $10
billion today. Does it make sense to spend the money
today? Consider discount rates of 10% and 3%.
Solution
• Discount rate, r=10%
– Future value is F = $5 x 1011
– Present value at 10% interest is
P = 5x1011/(1.1)50 = $4.3 x 109
– Expense today is not justified (4.3x109 < 1x1010)
41

• Discount rate, r = 3%
– Present value at 10% interest is $114 billion
– Spending $10 billion today to prevent a catastrophe that
will result in a future loss of $114 billion in today's dollars
is justified.
42

Present Value; Annual Expenses
• If expenses are incurred annually, present value
changes over time
• A is annual cost
• More details about this equation and its use in
engineering design; Ch-17.
43

Example: Visibility in the Grand Canyon
• Clear day
• Moderately hazy day
• Hazy day
• Loss of visibility due to
power plant SO2 emissions
44
http://www.aqd.nps.gov/ard/parks/grca/grcaimp.htm

Example 4.2
American National Parks attract thousands of visitors
from all over the world for their views and recreation
opportunities. However, visibility in many parks is
often poor, as shown in earlier Figure. One reason for
the loss of visibility is identified to be the presence of
a local coal-burning power plant. For the Grand
Canyon, the US National Park Service analyzed the
cost of reducing visibility-impairing pollution from the
power plant and the benefit of improved visibility in
the park [6].
45

Example 4.2; contd
• Costs of pollution control (SO2 emission) at power
plant
– Capital cost of sulfur removal equipment: $330 million at
beginning of project
– Operation and maintenance cost of equipment: $75 million
per year
• Benefits of better visibility
– Visitors' willingness to pay for better visibility: $210 million
per year
Does it make economic sense to implement this
project?
46

47

Discounting and Interest Rates
• What is the appropriate interest rate if cost is
incurred now, but benefits are far into the future?
• Present value of a dollar worth of benefit after 20
years is [F = P(1+r)n]
– 15 cents with 10% interest
– 55 cents with 3% interest
• Higher interest rate implies that the future is worth
less than the present
• Is this how you think?
• BOX 4.2 Stern-Nordhaus Debate about Discounting
Climate Change
48

Illustration: Fire Suppression (Self Study)
• Present value of annual amount
PV = 1 - (1+r)-n * Annual Amount
r
• Consider cost versus benefit of fire suppression at
different discount rates
49
Case I: Discount Case II: Discount
Rate is 10%/yr Rate is 3%/yr
A. Assumed benefit, 50 years $ 50 million/yr $50 million/yr
B. Cost of fire suppression $750 million now $750 million now
C. Levelized cost factor (lcf)
for 50 years 0.101 0.039
D. Levelized annual cost $76 million/yr $29 million/yr
E. Net benefits -$26 million/yr +$21 million/yr
F. Benefit-cost ratio 0.66 1.72

What is the Correct Discount Rate?
• Environmental benefits in the future are not worth
much today!
• Is discounting of natural capital appropriate?
• Is poor health for your children not worth much to
you today?
• Economists suggest a 3% social discount rate -
smaller than private discount rate
• Benefit-Cost analysis is becoming more popular for
policy making
• Alternate methods that are based on scientific
principles are also being developed

Environment?
• Reason 1
the price
• Reason 2
• Reason 3
– Assumption of perfect substitutability between
natural and economic capital causes loss of NC
• Reason 4
for granted
51

Substitutability
• Economics represents all activities and goods in
terms of monetary value
• Accounts for a large number of factors
• Human preference
• Supply of raw materials
• Cost of labor
• Environmental impact, etc
• Implicit assumption in using a common unit
• Substitutability between diverse flows
52

Substitutability
• This assumption of substitutability make sense for
many economic flows
• Substitutable sources of energy include coal,
natural gas, crude oil, sunlight, wind, etc.
• For building houses, substitutable materials
include stone, wood, and cement.
• Modes of transportation are substitutable
53

Substitutability
• Going beyond products, economists also usually
assume substitutability between factors required for
economic activity such as labor and capital.
• Equation called the production function [7]:
Y = F(K,L)
K: capital; L: labor
• Many combinations of K and L can result in the same
value of Y
• Capital and labor are assumed to be substitutable
54

Substitutability
• Capital in the form of machinery and automation
often replaces human and animal labor
• Tractors have replaced animals for ploughing fields
• Automated checkout counters at supermarkets are
replacing human cashiers
• Assumption of substitutability seems quite
reasonable for many products
• However, there are limitations, particularly when
dealing with ecosystem goods and services.
Nevertheless, economic theory
55

Substitutability
• Is economic capital a substitute for natural capital?
– Plastic for wood
– Water purification plant for wetlands
– Artificial fertilizers for organic manures
– Machines for animal power
• Is there perfect substitutability?
– Water?
– Carbon sequestration?
– Wetlands?
– Fish in ocean?
• Perfect substitutability can violate the laws of mass
and energy conservation
• Can also violate second law, which says that
resources can move spontaneously in only one
direction 56

Substitutability
• In reality, substitutability is limited
• Developing substitutes for the following is not
possible with current technology and may never be
possible
• Climate regulation
• Biogeochemical cycles of carbon and nitrogen
• Water cycle, etc
• Exhausting many natural resources could indeed be
a catastrophe, not just an event!
57

Environment?
• Reason 1
the price
• Reason 2
• Reason 3
– Assumption of perfect substitutability between natural and
• Reason 4
– Ignoring the physical basis of the economy takes
nature for granted
58

• Fig 4.2; conventional view of economy; next page
• Inner loop flows
• Physical goods
• Including items produced by firms and
consumed by households
• Such as cars, food, fuel, etc
• Outer loop
• Money flowing in the opposite direction
59
Economy – Scientific View

• Look at this diagram from a physical point of view;
as for a manufacturing process.
• Diagram looks strange
• Goods are flowing in the system and enabling
economic activity without any external inputs or
outputs
• In economy, order is desired in economic goods and
services
• Similarity in thermodynamics; need for any system
to maintain itself in a state of low entropy
• External inputs are required
• Fig 4.2; without any external inputs; perpetual
motion machine, which is impossible!
61

• In reality, economy involves many flows in addition
to those that are considered in neoclassical
economics
• A more complete diagram; Fig 4.7 [10]
• This system includes the environment
• Source of resources to firms
• Absorbs the wastes produced by economic
activities
• This view; economy is nested within environment; is
dependent on it and is governed by all the laws of
nature
• Economy is not a perpetual motion
62

Figure 4.7 Interaction
between biosphere
and economy

• Any discipline that takes nature for granted is likely
to contribute to ecological degradation and
encourage unsustainable activities
• New developments in economics are addressing
these issues [2, 3]
• Environmental economics
• Ecological economics,
• Ch-21; how these developments can contribute to
sustainable development.
64

Key Ideas and Concepts
65

Part IV
Solutions for Sustainability
How do we develop sustainable systems?

Solutions for Sustainability
• Virtually all disciplines contribute to the
unsustainability of human activities
• Solutions also stem from multiple disciplines
• Focus here; solutions that may be designed by
engineers
• However, “design” in a broad sense
• Design of technological solutions, ecosystems,
policies, and human behavior
• Also; solutions that are based in economics and
societal transformation

17. Designing Sustainable Processes and
Products
The last word in ignorance is the man who says of an animal or
plant: “What good is it?” If the land mechanism as a whole is
good, then every part is good, whether we understand it or not.
If the biota, in the course of eons, has built something we like
but do not understand, then who but a fool would discard
seemingly useless parts? To keep every cog and wheel is the first
precaution of intelligent tinkering.
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Introduction
• Sustainability assessment; for choosing among
alternatives, their footprint or life cycle
environmental impact is usually one among
multiple objectives.
• Rare to select an option just because it has
smallest environmental impact
• Other factors also important
• Economic feasibility
• Societal preference; etc

Introduction
• This chapter; approaches that utilize environmental
sustainability assessment methods, along with
• Methods for assessing economic feasibility
• Incorporation of sustainability considerations in
tasks such as
• Engineering design
• Corporate strategy
• Government policy
• Consumer choices.
• Emphasis on design of manufacturing processes
and products.

Introduction
• Sustainability assessment methods are being used
to guide engineering decisions
– Product design
– Process design
– Supply chain management
– Corporate strategy
• These approaches go beyond traditional methods for
enhancing profit or efficiency of a single process
• Life cycle aspects are usually included
• Covered here; techno-economic analysis, eco-
efficiency, process and product design

Techno-Economic Analysis
• Techno-economic analysis (TEA)
• Estimates economic feasibility of technological
alternatives
• Popular and practical approach
• Focus here; common methods for engineering
economic or cost analysis
• Essential for quantifying the economic bottom line
• Essential component of sustainability

• Methods for techno-economic analysis (TEA)
• Goal; assess and choose between technological
options
• Use of conventional economic analysis
• Later; methods that combine such economic
analysis with environmental sustainability
assessment’
• Eco-efficiency; metrics combine the quantification
of environmental impact with measures of
economic feasibility

• How has engineering design evolved over the
decades toward its current focus on sustainable
development
• Formulating sustainable product and process
design problems as multi-objective optimization
• Trade-off between these objectives
• Heuristic principles (rules of thumb) also suggested
for environmentally friendlier decisions in chemistry
and engineering

• Total Cost (C) = Capital cost + Operating cost
• Capital cost: buildings, materials, land, etc.
• Operating cost: raw materials, labor, utilities,
depreciation, etc.
• Revenue (R): Earnings from selling products,
byproducts, carbon credits, etc.
• Gross profit (Pg) and Net profit (Pg)
Phi; tax rate; D: depreciation allowance
• Components of total capital investment; Table 17.1

Table 17.1 Components of total capital investment [3]

• Operating costs
• Raw materials, utilities, labor, depreciation,
maintenance, taxes, etc
• Take place throughout life of manufacturing
process
• Depreciation (D)
• Straight-line method
• Divide capital cost of depreciating asset by life
• Typical components of total production cost (C);
Table 17.2

Table 17 .2 Constituents of
total production cost and
gross profit [4]

Costs and Earnings
• Revenue (R); earned from selling products in the
marketplace
• Additional revenue (may be); credits such as those
due to carbon trading or selling waste heat or
byproducts; Ch-19 and 21
• End of life; equipment, buildings, and other capital
may have some salvage value
• Various stages of engineering design
• Early stages; approximate cost estimation
methods

Example 17.1
The total capital investment needed for a new process is
$20 million. Out of this, $8 million depreciates at the rate of
2 percent per year. The expected revenue per year is $1
million and the total cost before depreciation is $800,000.
Calculate the gross and net profit for this process. The tax
rate is 20%.
Solution

Time Value of Money
• Simple interest:
• Compound interest:
• If interest is compounded at rate other than annual
(m number of periods per year)
• Present value of operating cost incurred every year
• If payments are made in m periods per year

Example 17.3
A particular car costs $20,000. Fuel, insurance, and
maintenance cost $1800 per year. Assuming that the
operating costs are paid at the beginning of each year, what
is the total cost of the car over a five-year period in terms
of present dollars, at an annual interest rate of 8%?
Solution

Profitability Metrics
• Determining and comparing the economic feasibility
of alternatives requires metrics that utilize
information about costs and revenue streams
• First two metrics: do not take into account time
value of money
• Next two metrics: take into account time value of
money

Return on investment (ROI)
• Ratio of profit to capital cost
• Annual rate of monetary return that may be
obtained from investing capital in the design
• If profit or investment vary over time
• Average values used to calculate ROI
• Eng corporations; minimum annual ROI required for
a project to be considered monetarily feasible
• Similarities between this monetary ROI and energy
ROI defined in Eq 12.4

Payback period (PBP)
• Time required for investment to pay off; ratio of
• Direct capital investment Δ (item-1 of total
capital investment in Table 17.1) to
• Annual cash flow, which consists of net
earnings and depreciation (Pn + D)

Net Present Value (NPV)
• Present value of all cash flows
• Initial investment Co
• Recurring earning Ci every year
• Feasibility requires a positive NPV

Discounted cashflow rate of return (DCFR)
• Interest rate i that results in a zero NPV
• This equation usually needs to be solved by trial and
error
• For project to be feasible
• DCFR should be greater than minimum rate of
return acceptable to the investor

Example 17.5
A capital investment of a million dollars yields a steady
earnings stream of $50,000 every year as net profit.
Calculate the return on investment and net present
value. You may use an interest rate of 8%, and
assume depreciation to be 10% per year.
Solution

Note
• Previous section; methods to analyze and design
engineering systems based on their economic
feasibility
• However, sustainability requires consideration of
environmental and societal aspects
• Outside the market
• Not captured by monetary values
• Remaining chapter
• Addressing these multiple goals of sustainable
engineering

Eco-Efficiency
• Eco-efficiency; approach popularized by World
Business Council for Sustainable Development
(WBCSD)
• Reducing environmental impact while increasing
economic value to a company [3]
• Creating more value with less impact
• WBCSD definition of eco-eff1ciency
• “Eco-efficiency is achieved by the delivery of
competitively-priced goods and services that satisfy
human needs and bring quality of life, while progressively
reducing ecological impacts and resource intensity
throughout the life-cycle to a level at least in line with the
earth’s carrying capacity.”

Eco-Efficiency
• Three main objectives
– Reduce consumption of resources. Could be achieved by
enhancing recyclability and closing of material loops
– Reduce environmental impact. This involves reducing
emissions of pollutants and their impact
– Increase product or service value. Provide more benefits to
consumers through increasing product functionality,
flexibility and modularity
• 7 elements have been identified for businesses to
improve their ecoeff1ciency; Table 17.3

Changes from Eco-Efficiency
• Efforts to become eco-efficient are meant to
encourage companies toward four types of changes
1. Re-engineer their processes by decreasing
their resource intensity, and pollution intensity
2. Re-valorize their byproducts by efforts toward
zero-waste or 100% product
3. Re-design their products to use more
renewables, enhance recyclability, improve
durability, etc.
4. Re-think their markets; to improve their eco-
efficiency, companies will rethink their supply
and demand

Traditional Engineering vs Eco-Efficiency
• Box 17.1; Eco-Efficiency in Industry [3];
• Volkswagen introduced the Lupo 3L in 1999 …
• Traditional engineering approach: Enhance efficiency
of individual processes
– Process integration to enhance energy, water, solvent
efficiency
– Improve efficiency of solar photovoltaic panels
– Design more efficient buildings – high efficiency appliances,
low flow faucets, tankless water heaters, etc.
• Eco-efficiency approach: Enhance efficiency at life
cycle scale
– Increasingly popular in industry
– Choose product components that minimize carbon and other
footprints
– Example: Unilever Co; Planet & Society
– http://www.unilever.com/sustainable-living/ourapproach/eco-
efficiencyinmanufacturing/performance/

Measuring Eco-Efficiency
• Eco-efficiency; reduction of intensity of various kinds
of resources
• Intensity; ratio of a flow to or from environment to
production from the manufacturing process,
represented in physical or monetary units
• Interaction between system and environment
• May be indicated by mass of resources consumed,
or pollutants emitted
• Common measures of economic value
• Quantity produced, in physical or monetary units

• Table 17.4; typical example of eco-efficiency metrics
reported by industry
• Results demonstrate increasing eco-efficiency over
time
• Reported intensities are decreasing
• Multitude of companies; annual sustainability
reports and other outlets
• Efforts to modify existing designs to enhance their
eco-efficiency.
Measuring Eco-Efficiency

Examples of Eco-Efficiency

Example 17.6
A factory emits 200 t/yr of C02 and uses 10,000 L/yr
of water to produce 50,000 units/yr of a bearing, with
an annual profit of $10,000. Determine its eco-
eff1ciency. By using a more efficient furnace, C02
emissions can be decreased by 15% for a 5%
decrease in profit. Water use and production rate
remain unchanged. What will be the eco-efficiency if
this furnace is installed?
Solution
• Eco-efficiency of factory; Equation
• Either production or profit as denominator

• With production as denominator
• With higher-efficiency furnace
• C02 emissions become 0.85 x 200 = 170 t/yr
• Profit becomes 0.95 x 10, 000 = $9500
• Eco-efficiency values, for both denominators,
without (current) and with new furnace installed
(future); Table 17.5
Example 17.6

• Techno-economic analysis (section 17.1)
• Focuses on economic feasibility
• Primary goal of engineering design and decisions
• Sustainability requires consideration of other criteria
in addition to economic feasibility
• Various approaches for assessing sustainability
• Accounting for direct and indirect environmental
impacts of human activities
• This section; evaluating economic and
environmental aspects of engineering activities for
making decisions toward sustainability
Process and Product Design

• Figure 17.1; evolution of engineering design over the last
several decades
• Before 1980s; industry did not consider environment in
its decisions: primary focus was to maximize
profitProtecting the environment was considered to be a
liability or a necessary evil
• Increasing environmental impact; environmental
regulation and laws
• New industrial practice; accounting for environmental
impact in design as a constraint
• Drawback; resulting design is not likely to improve
environmental performance beyond the imposed
constraint
• This approach; not possible to get innovative solutions
that can improve both economic and environmental
performance

Evolution of Engineering Design

• “Win-win” approach; view environmental protection as an
opportunity
• Design methods including reduction of local
environmental impact as an objective along with
profit maximization
• Need for decisions based on understanding and
addressing the trade-off that often exists between
economic and environmental goals
• Last 20+ years; evolution of environmental objective
• Consider environmental impact beyond direct
emissions from the process
• Include impact of emissions from entire life cycle of
engineering activity
• Approach evolving further toward working with nature
and respecting its limits; Ch-20.

Sustainable Process Design
• Traditional design problem maximizes profit
• Incorporate sustainability considerations along with
maximizing profit

Sustainable Process Design
• Sustainability requirements could be a constraint
• Better to consider sustainability as an objective

Multicriteria Decision Making; Pareto Curve
• Design for sustainability involves multiple objectives
– Profit (maximize)
– Life cycle impact (minimize)
– Societal benefits (maximize)
• Need to find solutions that balance the trade-offs
• Pareto Curve
– Represents trade-off between objectives
– All solutions on Pareto curve are optimal
– Choosing a solution involves valuation

Figure 17.2 Pareto curve showing trade-off between multiple objectives

• Fig 17.2; Design goal; minimize cost and minimize carbon
footprint
• Each point represents a feasible design, except D
• Design B is better than A for both objectives; “win-win“ design;
design B is said to dominate design A
• Similarly, design C dominates designs A and B
• Design D would dominate designs, A, B, and C
• However; not possible to develop design D owing to
physical, safety, and other constraints
• All the "win-lose" solutions lie on the curve.
• Pareto or trade-off curve
• One extreme; design with minimum carbon footprint
• Other extreme; design with minimum cost
• Designs above the Pareto curve; feasible
Multicriteria Decision Making; Pareto Curve

Example 17.7
Your friend would like to buy a compact car from the list in
Table 17.6. Excluding hybrid cars, find the cars on the
Pareto curve and suggest a car for her to buy. Now include
hybrid models and answer the same questions.
Solution
• Goals are price and fuel economy
• Price and fuel economy of cars; Table 17.6
• Plotted in Fig 17.3
• Pareto curve that excludes hybrid cars
• Cars on this curve are Nissan Versa, Scion iQ, and
Honda Fit
• Your friend should choose between these cars
depending on relative importance of fuel economy

Table 17.6 Price and fuel
economy data for 2015
compact cars.

Pareto Curve for Cars

Example 17.7; contd
• Pareto curve that excludes hybrid cars
• Cars on this curve are Nissan Versa, Scion iQ, and
Honda Fit
• Your friend should choose between these cars
depending on relative importance of fuel economy
versus price
• If she is highly price-conscious; choose Nissan Versa
• If she is highly conscious about fuel use; Honda Fit
may be a good choice
• Toyota Yaris may be a good compromise between price
and fuel economy.

Example 17.7; contd
• Approximate Pareto curve after including hybrid cars;
also shown in Fig 17.3
• Small number of hybrid models in this table; not possible
to obtain a more accurate curve
• Toyota Prius lies on this curve; may be a good choice
• Notice that with inclusion of hybrid cars
• Pareto curve for conventional cars shifts to a region
that is infeasible with conventional technology
• Example of innovation resulting in expansion of design
space and finding win-win solutions

54
Heuristic Design
• With experience, engineers usually identify
heuristics or rules of thumb to guide the design
process
• No guarantee of an optimal design
• Solution may even be incorrect in some situations
• However, in most design situations, heuristics
help by eliminating many alternatives and
expediting the design process
• For example, some heuristics used by chemical
engineers; BOX 17.2
• 12 Principles of Green Chemistry [5]

55
BOX 17.2: 12 Principles of Green Engineering [6]
1. Inherent rather than circumstantial - Designers need to strive
to ensure that all material and energy inputs and outputs are
as inherently nonhazardous as possible.
2. Prevention instead of treatment - It is better to prevent waste
than to treat or clean up waste after it is formed.
3. Design for separation - Separation and purification operations
should be designed to minimize energy consumption and
materials use.
4. Maximize mass, energy, space, and time efficiency - Products,
processes, and systems should be designed to maximize mass,
energy, space, and time efficiency.
5. Output-pulled versus input-pushed - Products, processes, and
systems should be “output pulled” rather than “input pushed”
through the use of energy and materials.
6. Conserve complexity - Embedded entropy and complexity must
be viewed as an investment when making design choices on
recycle, reuse, or beneficial disposition.

56
BOX 17.2: 12 Principles of Green Engineering [6]
7. Durability rather than immortality - Targeted durability, not
immortality, should be a design goal.
8. Meet need, minimize excess - Design for unnecessary capacity
or capability (e.g., “one size fits all”) solutions should be
considered a design flaw.
9. Minimize material diversity - Material diversity in
multicomponent products should be minimized to promote
disassembly and value retention.
10.Integrate local material and energy flows - Design of products,
processes, and systems must include integration and
interconnectivity with available energy and materials flows
11.Design for commercial “afterlife” - Products, processes, and
systems should be designed for performance in a commercial
“afterlife”.
12.Renewable rather than depleting - Material and energy inputs
should be renewable rather than depleting

57
Shortcomings of Life Cycle Design
• Normalized metrics can be misleading
– Improvement in metrics is possible without reducing
environmental impact, just by economic growth
• Focus is on continuous improvement
– Maintains status quo by continuing to use inherently
unsustainable products – focus on doing “less bad”
– Current methods need not encourage a shift away from
such products or breakthrough innovation
• Economic aspects could lead to rebound effect
• Most methods ignore ecological capacity to absorb
emissions and resource extraction
• Wicked nature of sustainability

Summary
• Techno-economic analysis considers economic
sustainability
• Eco-efficiency combines aspects of environmental
and economic sustainability
• Engineering design has evolved from ignoring the
environment to considering life cycle impacts
• Sustainable design problems involve multiple
objectives and constraints

Fundamentals of sustainable engineeringg

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