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Incorporating Environmental Costs in Decision Making

Incorporating Environmental Costs in Decision Making. Gordon Sparks – U of S / VEMAX Nicole Allen – M.Sc. Candidate / VEMAX September 29, 2010. Saskatchewan Ministry of Highways and Infrastructure. Acknowledgements. SMHI Ron Gerbrandt Dave Stearns Tom Davies HJR Asphalt Ltd.

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Incorporating Environmental Costs in Decision Making

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  1. Incorporating Environmental Costs in Decision Making Gordon Sparks – U of S / VEMAX Nicole Allen – M.Sc. Candidate / VEMAX September 29, 2010 Saskatchewan Ministry of Highways and Infrastructure

  2. Acknowledgements • SMHI • Ron Gerbrandt • Dave Stearns • Tom Davies • HJR Asphalt Ltd. • Battle River Asphalts • VEMAX • Paul Christenson • Darian Brown

  3. The Overall Objective • Develop a framework to incorporate full costs (economic and environmental) into Saskatchewan Ministry of Highways and Infrastructure (SMHI) decision making

  4. The Specific Project Objective • As part of the innovation agenda SMHI tendered a hot-in-place recycling contract • Explore if HIR technology could offer reduced life cycle costs and reduced environmental impact • Reduction of input materials (eg. aggregate)

  5. Why is this important for SMHI? • Saskatchewan Ministry of Environment GHG Bill 126 & • SMHI Innovation Framework

  6. What is GHG Bill 126 ? • An Act respecting the Management and Reduction of Greenhouse Gases and Adaptation to Climate Change, including: • (i) measurement of GHG output • (ii) 20% reduction in GHG thresholds by 2020 • (iii) carbon compliance payments • (iv) carbon offset credits • (v) a technology fund to subsidize investments in low carbon technologies

  7. What is the Innovation Framework ? • SMHI is in the process of developing and implementing an “Innovation Framework” - the objective of which is to accelerate the integration of innovative ideas into standard practices for the Ministry • Implementing new solutions and ideas that will lower economic and environmental costs

  8. This Current Project - • Addresses objectives for both Bill 126 & the Innovation Framework -

  9. The Problem - • Putting an economic value to environmental issues is a complex problem and includes high levels of inherent uncertainty • When used in the context of decision making, trade-offs need to be made when comparing the economic and environmental costs

  10. Part of the Solution – Decision Analysis • Decision Analysis - process developed for problems that are: • Important • Complex • Have inherent uncertainty • Decision Analysis provides a way to “explicitly” deal with complexity and incorporate and quantify the inherent uncertainty

  11. Decision Analysis Basics • Decision analysis is an in-depth subject, however, some key concepts and principles are provided below -

  12. Decision Analysis - model Influence Model Requisite Model A model, agreed upon by all participants, representing all variables and influences for a problem

  13. Decision Analysis - excel Excel Spreadsheet Model & Data

  14. Decision Analysis – LCC profile Life cycle cost profile and discounted cash flow calculations

  15. Decision Analysis – LCC uncertainty Role of uncertainty and sensitivity analysis

  16. Decision Analysis – tornado plot A Tornado plot and selection of variables

  17. Decision Analysis - probabilities Role of probability and simulation

  18. Decision Analysis – risk profile Comparing risk profiles and expected values 95% Confidence Interval Expected value

  19. Role of Decision Analysis • Applying the full environmental costs to decision making is an important, complex problem with a high level of uncertainty • Additionally this analysis needs to be done in a way that is systematic, rational and transparent the type of problem that decision analysis can help to solve

  20. Applying Decision Analysisfor Incorporating Full Cost Saskatchewan Experience Hot-in-place Recycling

  21. HIR Background • The first technology that this framework was applied to was HIR • As part of the innovation agenda SMHI tendered a hot-in-place recycling contract • Contracted with Battle River Asphalt Equipment Ltd. and HJR Asphalt Ltd. to complete a pilot segment of 70 lane km

  22. Battle River Asphalt NXG 9000 – Recycle Train • Derivative of 20 years of HIR experience • 4 stage system - material is heated and removed in lifts of less than 15mm • Greater productivity • Less damage to materials • less oxidization and damage to aggregate as material is soft at milling • More consistent temperatures in mix • Ability to meet specification in difficult conditions

  23. HIR Equipment

  24. Conventional HMAC Mobilization Transport Equipment (Truck) HMAC Transport Diesel (Truck) Transport Light Crude (Pipeline) Produce Diesel (Refinery) Produce Light Crude Oil (Oil Well) Transport HMAC (Truck) Produce Pavement (Paving) Diesel Produce HMAC (Plant) Transport Burner Oil (Truck) Transport Crude Oil (Pipeline) Produce Crude Oil (Oil Well) Produce Oil (Refinery) Transport Aggregate (Truck) Produce Aggregate (Crushing) Burner Oil Aggregate Transport Blended Crude (Pipeline) Dilute Crude Oil (Facility) Produce Bitumen (Refinery) Transport Hydrated Lime (Truck) Produce Heavy Crude Oil (Oil Well) Transport Bitumen (Truck) Transport Crude Oil (Truck) Reclaim Stock Pile Produce Hydrated Lime (Plant) Bitumen Transport Reclaim (Truck) Transport Limestone (Truck) Extract Limestone (Quarry) Produce Reclaim (Mill) Upstream Processing Processing Upstream Transport Process Boundary Lime Transport Reclaim

  25. HIR HMAC Mobilization Transport Equipment (Truck) Transport Diesel (Truck) Transport Light Crude (Pipeline) Produce Diesel (Refinery) Produce Light Crude Oil (Oil Well) Diesel Transport Propane (Truck) Transport Natural Gas (Pipeline) Produce Natural Gas (Gas Well) Produce Pavement (Paving) Produce Propane (Refinery) Produce HMAC (HIR) HMAC Propane Produce Crude Oil (Oil Well) Transport Crude Oil (Pipeline) Produce Rejuvenator (Refinery) Transport Rejuvenator (Truck) Transport Rejuvenator (Rail) Transport Corrective HMAC (Truck) Rejuvenator Produce Corrective HMAC (Asphalt Plant) Corrective HMAC Upstream Processing Processing Upstream Transport Process Boundary Transport

  26. Comparison of Various Pavement Design Alternatives • Initially looked at a project with three types of HMAC • Conventional HMAC • HMAC with reclaim material • Rubberized HMAC • HIR HMAC Project– Data Collection in progress

  27. Illustrative Project Results

  28. Requisite model-Full Initial Cost of HMAC ($/t)

  29. Project Spreadsheet

  30. Risk Profiles Alternative 1 Cumulative Probability Alternative 2 Alternative 3 Alternative 4 Total Initial Cost – Including Cost of Carbon ($/tonne HMAC)

  31. Overall Objective of this Project • The development and application of an analysis framework which is: • Rational, • Systematic, and • Transparent • That is capable of quantifying economic and environmental costs, including expected values and uncertainty, associated with alternative pavement rehabilitation methods

  32. Questions?

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