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A consumer oriented prototype – forming the nucleus of a novel Ecological Accounting System

Periodic Report Summary 1 - MYECOCOST (A consumer oriented prototype – forming the nucleus of a novel Ecological Accounting System)

Project Context and Objectives:
Despite nearly two decades of research into environmental life cycle assessments and their harmonisation there is still much to be done. Different ways of measuring impacts, different limits and assumptions when gathering data and different assessment methods result in analyses which are difficult to compare. Society thrives on a diverse and complex economic structure that complicates the acquisition of reliable data. High quality data is needed to inform policy making and the effectiveness of data gathering is clouded by the aforementioned challenges. A consistent method of data gathering for assessing the resource use of products and services is necessary.
myEcoCost will develop a methodology that defines a global collaborative network of resource accounting nodes. It will provide a means of accounting for and expressing usage of natural resources for products, services and technologies, to inform all economic actors, including Small and Medium size Enterprise (SMEs) and consumers, on environmentally relevant information with dynamically calculated, near real time figures.
myEcoCost aims to support various environmental accounting and assessment practices applicable to national and international environment policy objectives. It links business added value to a measurement of aggregated resource usage as accepted environmental pressure indicator which goes beyond single issue indicators. Using an Internet-based Service Oriented Architecture (SOA) relevant and timely data is passed from supplier to customer recursively through the whole value chain to produce “ecoCosts” for each product or service. The project will demonstrate how it is technically possible to provide timely and accurate resource efficiency statements.
For this to happen a series of ICT infrastructure components will be arranged: A resource accounting framework to determine “ecoCosts”, an ICT delivery mechanism to transfer the measurement from supplier to customer, benchmark figures for companies and consumers linking to macro level policy objectives, and interfaces for industry and consumers to interpret the measurement to assist decision making.
Consumers have historically been overlooked in eco accountability research and this is a significant “missing link” in the complete eco-economic picture. Consumers have to become aware of their environmental impact and be incentivised to toe the sustainability line. The myEcoCost architecture includes the consumer as a primary stakeholder and enables the provision of personal environmental footprints.
The project aims at researching and developing all key Information and Communication Technology (ICT) and software elements to demonstrate the resource accounting framework and infrastructure in a proof-of-concept prototype, involving users, environmental data processors and policy makers.
In order to implement the above-mentioned building blocks, the overall project objective is consequently structured and detailed into the following technical project objectives:
• Create the eco-accounting module that manages the direct manufacturing ecoCosts and indirect ecoCosts;
• Define the communications infrastructure and create the software system to handle the transfer of eco data between supplier and customer;
• Rigorously test the accuracy and resilience of the accounting module and communications technologies;
• Create software tools for exploiting the use and validation of ecoCost;
• Develop ecoCost mathematics rules and aggregation methods allowing businesses to measure and monitor their eco-performance together with their economic performance;
• Develop benchmark figures for consumers based on the concept of ‘environmental space’ and aggregate product specific data flows for individual consumption behaviour and life styles;
• Ensure ecoCost has a strong relevance to existing practices by ensuring the values it can generate will contribute to LCA.

Project Results:
Within the first reporting period, all Objectives and Milestones have been achieved, and all planned Deliverables have been released and submitted.
Within WP1 ‘Requirements and System Architecture Specification’ a structured set of application scenarios, from which a suitable sub-set has been identified to serve for the exploration and demonstration of the myEcoCost technology during the project. From there, the system requirements have been systematically specified. They in turn served as starting point for the definition of the myEcoCost functional system and software architecture, including also external interfaces of the myEcoCost system. Along with the architecture, a consistent methodology for requirements traceability throughout the project has been devised.
Special attention has been given to set the scope and the boundaries of the myEcoCost system. A distinction is made between the myEcoCost demonstration system (the myEcoCost ‘nucleus’) and other additional optional features that may be included in a long term implementation of the myEcoCost target system. The former comprises the software and IT infrastructure developed and set up within this project.
Moreover, WP1 has delivered an in-depth study of industrial processes with a view on resource centric inputs and outputs to their operations, distinguishing between direct and indirect (overhead) components of the manufacturing process.
Another separate study presented the methodology to calculate the first “primitive” ecoCosts in the absence of a recursive data gathering technique, mainly from existing Life Cycle Inventory (LCI) databases; this technique will be specifically used to substitute missing ecoCost values in the earliest days of implementation.
WP2 ‘Resource Accounting Methodology’ has achieved the definition of the myEcoCost draft framework, which is largely based on life cycle assessment following ISO 14040 and 14044. However, adjustments have been made: First of all, the material footprint is introduced as indicator to measure the consumption of raw materials. The indicator is input oriented and provides an estimation of the resource efficiency and overall environmental burden of a product or service.
The system boundaries for myEcoCost have been clearly defined, and work on a set of benchmarks for business, products and has been initiated, allowing for a meaningful interpretation of myEcoCost results. Foundational work on the myEcoCost ‘mathematics’, i.e. allocation rules and calculation methodology, has been carried out.
Based on the system architecture and requirements from WP1, both WP3 ‘myEcoCost System Development’ and WP4 ‘Communications and Network Infrastructure Development’ have concluded their respective detailed design work on the software components (WP3) and the communication and network infrastructure (WP4), to proceed to the development and integration of the basic components as per design. This process is based on a carefully planned stepped approach particularly for WP3, where intense software development phases towards well-defined feature sets of the next ‘nucleus’ level are each concluded with a cooperative integration and verification window to consolidate the respective achievements in an end-to-end testbed. The first iterations have been successfully performed in the reporting period. Key components of the nucleus which have received specific attention during the first project phase are the ecoAccounting module as well as the consumer tools.
Under WP6 ‘Dissemination and Exploitation’, a wide range of dissemination activities has been carried out, including a dedicated workshop on environmental accounting, organized by myEcoCost; standardisation and exploitation activities have been initiated; work with the External Advisory Board has culminated in one major joint meeting collecting useful feedback and guidance for the project; and a number of education and training activities have been performed.

Potential Impact:
The expected overarching result of myEcoCost, as indicated by the full title of the project, and the bottom line of the logo, is:
To form the nucleus of a novel consumer-oriented ecological accounting system by developing a mature and validated proof-of-concept prototype of the core myEcoCost mechanisms and technologies,
-> realised by latest software and ICT technologies;
-> as basis for a later large-scale deployment of a myEcoCost system integrated in societies’ business processes and supply chains.
As a first step towards a fully integrated ecological accounting system, this nucleus will comprise the following six necessary building blocks:
1) a definition of the ecological cost record;
2) a means to receive the ecoCost of a product when it is purchased;
3) a means to gather the ecoCosts of input components and aggregate them as these materials are assembled to create the new product;
4) a means to incorporate the ecoCosts of indirect inputs that cover all overheads and allocate them to specific products to create a complete ecoCost for the new product;
5) a means to transfer the ecoCost of a product to the customer when the products are sold;
6) a means to interpret the ecoCost record meaningfully.
Receiving and sending the ecological cost record automatically are aspects of the communications infrastructure that needs to be developed. Gathering direct and indirect ecoCost within an organisation lies within the core of the eco-accounting module.
By enumerating an ecological cost and associating it directly to a product, steps 1) and 3) will indirectly reduce the pressure on primary raw materials and help preserve the environment and reducing pollution because each of the substances used and how they are disbursed will be visible and become part of business decision making. Because two comparable products can have their ecoCosts compared this will foster the use of secondary raw materials, as a direct comparison can be made to components sourced from primary vs. secondary products.
Another target impact throught the use of myEcoCost is to build up on more sustainable consumption and production patterns. As ecoCost will reflect the resource efficiency of an entire supply chain, everyone in that supply chain gains from developing more sustainable consumption and production patterns. Having environmental accounting linked to financial accounting should develop a sensitivity to environmental impact. Historically business decisions have been dominated by financial considerations. Including environmental impact would allow businesses to start making different decisions.
The myEcoCost method can be extended to the consumer – providing household environmental costings and budgets so people can learn to develop a sustainable lifestyle. This should be compelling as that is an area that government policy would be reluctant to regulate and yet it is probably the most significant domain for social decision making to have an effect on whole planet sustainability.
It is important to note that this project will not be attempting to accurately model a complete supply chain. The aim of the project is to create the kernel of a software solution that enables a complex supply chain to "model itself". It won’t be modeled in a single database but in a neural network of eco accounting nodes spread across all actors in a supply chain. When such a facility is in place, there will be no more "complex supply chain barriers" to effective ecological accounting. This will be demonstrated at the end of the project with a simulated supply chain.

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