The Environmental Cost Indicator (short ECI) is a single-score indicator expressed in Euro. It unites all relevant environmental impacts into a single score of environmental costs, representing the environmental shadow price of a product or project.
Generally, most of the emissions of a product are not created at a production facility, but along the supply chain. This can be measured by conducting a Life Cycle Assessment (LCA).
Because the environmental data comes from many different sources, the environmental impacts that are measured vary a lot: They all are measured in different impact categories.
For that reason, these numbers can become hard to compare. This is where the Environmental Cost Indicator comes into play: As a single-score indicator, it simplifies and unites different environmental data points into one (monetary) number.
As a result, we are left with one indicator that can be compared across industries.
In this article, you will learn what the Environmental Cost Indicator (ECI) is, what it is used for and how it can be calculated.
Public Procurement with the Environmental Cost Indicator (ECI)
In The Netherlands, circularity and green public procurement are becoming increasingly important. Thus, the results of Life Cycle Assessments (LCA) are gradually being adopted for this purpose.
Recently, results from LCAs are used increasingly in public procurement tenders, especially in the Dutch construction sector. In these tenders, the Environmental Cost Indicator (ECI) is used as important criteria to determine the winning bid.
In The Netherlands, the Environmental Cost Indicator (ECI) is known as Milieu Kosten Indicator (MKI)
How ECI is being used in tenders
Above all, the ECI value ensures that the quality between different contractors can be distinguished.
Discounts through lower environmental costs
By providing an Environmental Cost Indicator for their project, the contractors can receive a fictional discount on their offer. As a result, the offer with the lowest environmental costs receives the highest discount.
This means that, even if the actual price of the offer is higher, a better environmental performance increases the chance to win the tender.
Maximum ECI for contract requirements
In other cases, ECI values also serve as thresholds, where maximum ECI values are incorporated into contract requirements. Due to that, offers with a low environmental performance get automatically rejected.
Environmental Cost Indicator (ECI) – Calculation in 4 Steps
To calculate our ECI, we need to follow the steps from a Life Cycle Assessment. This is a quick overview of those steps.
1. Input data
First, we need to collect the raw materials, products, processes and energy used in the product or process we are trying to calculate.
2. Calculation of Emissions & Pollutants
Now, we evaluate the emissions these inputs create – for example CO2, PO4 and NOx.
3. Charactisation into Impact Categories
In this step, we characterize our emission data into impact categories.
Quick Overview: Impact Categories
You can get a more detailed overview on impact categories in our main article: Impact Categories (LCA)
The emissions of products and projects are expressed in impact categories, such as climate change (GWP) or toxicities. This is done using scientific calculation methods, which take into account the emissions to air, water and soil.
4. Weighting of Impact Categories
However, the environmental impacts we collected vary. In order to create a single, comparable number like the ECI, the scores need to be weighted and merged.
The environmental impacts are weighted based on the shadow price method. The shadow price is the highest cost level acceptable for governments per unit of emission control (prevention costs).
Environmental Cost Indicator: Example
The weighting of environmental impacts is done by using calculation factors like the ones below.
|Global warming||kg CO2-eq||0,05 €|
|Ozone depletion||kg CFC-11-eq||30,00 €|
|Acidification of soil and water||kg SO2-eq||4,00 €|
|Eutrophication||kg PO4 3−-eq||9,00 €|
|Depletion of abiotic resources – elements||kg Sb-eq||0,16 €|
|Depletion of abiotic resources – fossil fuels||kg Sb-eq||0,16 €|
|Human toxicity||kg 1,4 DB||0,09 €|
|Sweetwater toxicity||kg 1,4 DB||0,03 €|
|Saltwater toxicity||kg 1,4 DB||0,00001 €|
|Smog||kg C2H4||2,00 €|
In a product, this is what the Environmental Cost Indicator can look like.