Using Materials Manufacturing Localisation

What is material manufacturing localisation?

The material manufacturing localisation method (formerly called Local compensation) solves the lack of local environmental profiles for projects all over the world. It adjusts automatically manufacturing electricity to the local electricity mix so that you can always get more representative results for your projects.

It is important to note that this does not change the manufacturing process fuel mix (e.g. from coal or oil to natural gas). The process applies only to electricity as that invariably changes between locations of manufacturing, while the same process fuels may be used in plants making similar products across the globe.

How does it work?

Material manufacturing localisation takes place by adjusting the material manufacturing process emissions for grid electricity and energy efficiency to the desired country instead of the original country the material is produced in.

The amount of consumed electricity is estimated on material sub-type level (e.g. plastic flooring / XPS insulation etc). 

This is taking place by calculating a compensation factor, equation (1), that is later on deducted from the original impact (2). 

The default equation for the compensation factor is the following: 

Compensation factor = ((Aoriginal * Boriginal) - (Atarget * Btarget)) * C (1)

• A = Electricity use efficiency
• B = Electricity impacts, kg CO2-equivalent
• C = Required electricity for the manufacturing of this material subtype, Kwh

In some special cases, where manufacturing is adjusted between countries with very different energy mixes, there is a backup mechanism for avoiding negative environmental impacts. This mechanism is applied automatically when needed in the new version. 

Finally, the localised impact calculation is the following: 

Compensated impact = Original impact - Compensation factor (2)

Expert license users can see the actual calculation by clicking on the carbon impacts that are demonstrated next to each material, and then clicking on “See calculations”.

• Is it mandatory to use? 

Using material manufacturing localisation is not mandatory. It is recommended for cases where materials are sourced from a region where local data has gaps, as well as for all BREEAM International Mat 01 LCA calculations.

Localisation is used for all One Click LCA generic resources, regardless of parameter settings, unless the tool you are using does not allow for this as default (e.g. Ympäristöministerio, Klimatdeklaration, TEK17).o).

• What is the default version and how can I adjust it in my projects? 

The software enables material manufacturing localisation by default. The default version was changed to version 2.1 (on the 7th of December 2022). Users can review the versions, switch from one to another and disable it from the project parameters and all results will be directly recalculated for the whole project.

• Can I adjust it for some of my materials?

Material manufacturing localisation is enabled on a project level, by using a target country. Still, Expert license users can disable/enable it, or switch it from one target country to another for each individual material depending on where they are sourced.

This is explained here: Adjusting compensations settings

The difference between version 1 and version 2 of the method

• What is changing from material manufacturing localisation v1, v2 and v2.1? 

Material manufacturing localisation version 2 came with updated and more accurate values for required electricity in manufacturing per material type, and more accurate calculation as it takes into account the mass of the product for all material types, which was not always the case for v1.

Additionally, v2 is better calibrated against extreme scenarios related to materials with special properties and compensation among countries with very different electricity mixes as it introduces a new sanity check that compares the compensated results against natural impact limits. If in some cases the natural limits are exceeded, the method is not applied for the resource.

Last, v2.1 has the same calculation mechanism as v2, but additionally, it uses updated electricity profiles for the “starting” countries of the calculation (Boriginal in equation nr1).

• How does it affect my existing projects?

Your existing projects that use the v1 method are not affected by the change. In such projects, you can get updated results if you change the project parameters and refresh. Every time you change the LCA parameters, all the results in the project will get recalculated. As already mentioned, selected tools are not affected by the method (e.g. Ympäristöministerio, Klimatdeklaration, TEK17).

Projects that were already using methods v2 or v2.1 before the final finalization of the method (7 December 2022) will get updated results if the projects get resaved or if there are changes in LCA parameters. Users with such projects have been notified also separately via email.

When a baseline/reference is set, the assessments and the baseline/reference shall be calculated using the same compensation method.

• Which version should I select for my ongoing or new projects?

When there is a baseline building calculated and targets were set accordingly, it is strongly recommended to use the same settings as the baseline.

For ongoing projects, in cases where the analysis and reporting are in an advanced stage, it is suggested to complete the project with the same settings.

For new projects, the recommended version is v2.1

• Which countries are more sensitive to compensation?

Compensation is influenced by the energy mix of the different countries. Consequently, the most sensitive countries are the ones that deviate most from the average energy mix.