Allocation of CO2 emissions in joint product industries via linear programming:: a refinery example

In joint product industries such as an oil refinery, there does not exist a unique way to fully allocate the refinery's CO2 emissions to its oil products. Under certain conditions, however refinery linear programming (LP) models can provide a relevant and unique allocation procedure based on the marginal contribution of each oil product to the total CO2 emissions. In this particular case, the marginal CO2 allocations can be directly used for Life Cycle Assessment (LCA) purposes. In this paper we apply the marginal allocation methodology to the oil refinery LP model developed by the Institut francais du petrole (IFP) to evaluate and compare the CO2 emissions associated with different oil products. We also study the consequences of the degeneracy phenomenon on the obtained results. Finally, the limitations of this approach for short-run decisions are discussed.