(105e) Developing Roadmaps to Guide Industry Toward a Future with Net-Zero Emissions and a Circular Economy

Most corporations are pledging to have net-zero greenhouse gas emissions and a circular economy by as early as 2030. However, recent reports suggest that achieve such targets presents truly formidable challenges [1]. This is partly due to the lack of systematic methods and tools for modeling alternatives and for identifying optimal roadmaps to guide progress toward meeting these important goals. Such methods need to consider the role of potential innovations, emerging technologies and policy-actions. In this work, we develop a systematic framework for obtaining eco-innovation roadmaps to meet sustainability targets, while minimizing investment costs and carbon budget utilization. The idea is to account for the evolution of eco-innovation readiness and changing background emissions over the time horizon set by the target, and provide a ‘gantt chart’ to describe an optimal investment strategy. We formulate this as a planning optimization problem.

Recent modeling work to reach net-zero emissions has focused on analysis of alternatives such as carbon capture, biomass-based approaches, hydrogen economies, electrocatalytic processes and renewable energy systems [2]. There is a pressing need to apply PSE models and methods to systematically design plans for adopting these novel alternatives. It is also essential to be holistic and consider life-cycle environmental impact while favoring one eco-innovation over other. Additionally, the trade-off between sustainability and circularity needs to be considered in the planning procedure. Life cycle assessment (LCA) is a powerful tool to evaluate the impact of conventional and innovative value-chains using prospective and anticipatory approaches [3]. These approaches consider future scenarios of markets and emission regulation while estimating the promise of emerging technologies. In addition, Integrated Assessment models have been utilized to account for the change in background emissions from life-cycle networks that is likely to occur due to climate change and government regulations [4].

In this work, we have developed a framework which can perform stochastic planning for investing in eco-innovations with a constraint to meet sustainability and circularity targets. Each eco-innovation will be at a unique ‘Readiness level’ (RL) of adoption, which evolves over time according to probabilistic or deterministic models. We explore the usage of Continuous Time Markov chains, experience curves (S-curves) [5] and options theory [6] to model this evolution. In addition, there is a pareto front corresponding to each eco-innovation which quantifies the trade-off between Sustainability, Circularity and Economic metrics. This pareto front is obtained by enveloping pareto optimal value-chain solutions from a previously developed Sustainable Circular Economy design framework [7].

The stochastic planning problem decides which pareto optimal value-chain solution to choose for adoption, from the innovative pareto fronts which are activated through investment. The investment and adoption can happen at different points of time during the time horizon, such that investment cost and net-emissions during the time horizon are minimized. We also explore the possibility of including integrated assessment models within the planning optimization framework using simulation optimization approaches. While the evolution of innovation favors investment at a later point of time in the horizon, the net-emissions objective and integrated assessment penalize such decisions. The outcome of the developed framework is an optimal plan to invest in eco-innovation and adopt innovative value-chains which can act as a roadmap towards meeting net-zero and circularity targets.

This framework can be applied by any corporation, including companies and policy-makers, to create their plan of action for the future. We elaborate the working of this framework using a toy problem, and demonstrate its applicability to relevant case studies, such as ‘circularizing plastic films’ and ‘decarbonization of the chemicals industry’. Ultimately, we will discuss the potential additions to the framework including recourse action to allow abandonment options for eco-innovations in a future landscape.

References

[1] Day, Thomas, et al. “Corporate climate responsibility: Guidance and assessment criteria for good practice corporate emission reduction and net-zero targets.” New Climate Institute, Carbon Market Watch, 2022. Available at - https://newclimate.org/2022/02/07/corporate-climate-responsibility-monitor-2022/, Accessed on 03/23/22.

[2] Meys, Raoul, et al. "Achieving net-zero greenhouse gas emission plastics by a circular carbon economy." Science 6563 (2021): 71-76.

[3] Arvidsson, Rickard, et al. "Environmental assessment of emerging technologies: recommendations for prospective LCA." Journal of Industrial Ecology 6 (2018): 1286-1294.

[4] Mendoza Beltran, Angelica, et al. "When the background matters: using scenarios from integrated assessment models in prospective life cycle assessment." Journal of Industrial Ecology 1 (2020): 64-79.

[5] Modis, Theodore. "Strengths and weaknesses of S-curves." Technological Forecasting and Social Change 6 (2007): 866-872.

[6] Rogers, Michael J., Gupta, Anshuman, and Maranas, Costas D.. "Real options based analysis of optimal pharmaceutical research and development portfolios." Industrial & engineering chemistry research 25 (2002): 6607-6620.

[7] Thakker, Vyom, and Bhavik R. Bakshi. "Designing Value Chains of Plastic and Paper Carrier Bags for a Sustainable and Circular Economy." ACS Sustainable Chemistry & Engineering 49 (2021): 16687-16698.