Modelling and allocation of CO2 emissions in a multiproduct industry:: The case of oil refining

As oil refining is a multiproduct industrial activity, there are innumerable ways to allocate a refinery's CO2 emissions among the various refined products. The linear-programming models used to manage refineries may serve to compute the marginal contribution of each finished product to the CO2 emissions of the refinery. We show that, under some conditions, this marginal contribution is a relevant means of allocating all the refinery's CO2 emissions. The application of this allocation rule leads to interesting results which can be used in a well-to-wheel life cycle assessment. In fact, this allocation rule holds rigorously if the demand equations are the only binding constraints with a nonzero right-hand side coefficient. This is certainly not the case for short-run models with fixed capacity of processing units. To extend the application field of our approach, we therefore suggest three distinct solutions, inspired by economic theory: applying the Aumann-Shapley cost-sharing method, or adapting the Ramsey pricing-formula, or using proportionally-adjusted marginal contributions. A numerical application to a simplified refining model is presented. (c) 2007 Elsevier Ltd. All rights reserved.