Page 150 - Materials Chemistry, Second Edition

9 Life Cycle Inventory Analysis 135

capacity. Assume now that the planned implementations of power plants in the
market are wind turbines. The long-term effects of increasing the demand will then
be a corresponding increased implementation of wind turbines.
The difference between the immediately affected production technology, known
as the ‘short-term marginal’ and the effect on the installed production technology,
known as the ‘long-term marginal’ may be very large—in the example above, the
difference was between coal and gas power and wind. It can therefore be a very
important decision for the results of the LCA whether the short or long-term
marginal is used in the LCI. The general rule has been to use the long-term marginal
when the assessed decision is creating large changes in demand, and use short-term
marginal when the assessed decision creates small changes in demand. A change in
demand is in this context considered small, if it is smaller than the average per-
centage of annual replacement of capacity (often around 5%, see below). The
argument is that these small changes will be part of the general trend in the market
and therefore be handled by the trend in the market. The signal they send is
therefore considered too small to overcome the threshold for a structural change in
production capacity. The difference in the size of changes assumed in the LCA is in
fact what makes Situation A and B studies different in the ILCD classification (see
Sect. 7.4).

Trend in the market
The electricity example above relates to the situation where the market trend
points towards a stable or increasing demand. However, if the market trend is
rapidly decreasing, the long-term marginal response to a decision that leads to an
increase in demand will not be an increase in the implementation of more wind
turbines but rather the continued use of coal or gas power plants that would
otherwise have been taken out of operation. In this market, the demand caused by
the assessed decision will thereby make the existing least competitive technology
stay longer on the market.
The distinction between whether the trend in a decreasing market is slowly
decreasing or rapidly decreasing depends on whether the decrease happens below or
above the average replacement rate for the production technology. For example, a
market trend would be characterised as rapidly decreasing if it decreases by 10%
per year, while the average replacement rate for the production technology is 5%.
Note that a replacement rate of 5% means that production plants are designed to
operate for 20 years, which is quite common, depending on the technologies
involved. The reason for making this distinction in market trends is that for
increasing, stable or slowly decreasing market trends there is a need for imple-
mentation of new production technology, and changes in demand will therefore
affect this implementation rate. For rapidly decreasing market trends, however, the
decrease is faster than the decommissioning rate for the technology, implying that
production plants would be taken out of use before their design life time. In such
cases (small) changes in demand will not lead to changes in implementation of new