On market-mediated emissions and regulations on life cycle emissions

- Application of LCA in a public policy context necessitates a consequential LCA (CLCA) of a policy.
- CLCA requires consideration of issues of scale, price effects, technology and policy in the counterfactual state of the world, etc.
- Both estimating and regulating indirect emissions is challenging.
- Heuristics that might suggest vulnerability to harmful indirect effects are discussed.

We analyze the use of life cycle assessment (LCA) as a regulatory tool using biofuel regulations as an illustrative example. A regulatory context calls for a consequential LCA (CLCA) of a policy as opposed to an attributional LCA (ALCA) of a product. In performing CLCA, issues of scale, price effects, technology and policy in the counterfactual state of the world, strategic behavior, policy horizon etc. need consideration. This appears to increase both uncertainty in estimates and the cost of performing LCA. We suggest heuristics for determining vulnerability to harmful indirect effects at an early stage in the policy process and discuss alternative policies to limit harmful indirect effects without engaging in the full effort of computation and selection of a central estimate for uncertain outcomes.