Allocation in Life Cycle Inventory Analysis for joint production

Allocation in joint production is still one of the unresolved and often discussed methodological issues in Life Cycle Inventory Analysis. Using the many years of experience of management sciences, a new classification scheme is proposed. It is postulated that companies perform allocation in joint production in view of optimising the products' performance (economic and/or environmental), which helps them to maximise their profits. Therefrom it is derived that value judgements and negotiations are inevitable. The proposed classification scheme differentiates between the number of decision-makers involved, and the type of markets for joint products. Several decision-makers have to find fair allocation factors for their commonly operated joint production, whereas individual decision-makers may choose allocation factors considering the (economic and/or environmental) competitiveness of their joint products. Applied on the case of a small-scale gas-fuelled combined heat and power plant, the methodology proposed shows a strong dependency on the disutility function, i.e., private costs, environmental damage costs or a combination of the two.