Allocation Methods: A Practical Decision Guide

"When should I use economic vs. mass allocation?" is one of the most debated questions in LCA. This guide provides practical decision frameworks for handling multi-output processes, recycling, and other allocation challenges.

What Is Allocation?

The problem: Many industrial processes produce multiple products from a single input.

Example: Oil refinery

• Input: 1,000 kg crude oil
• Outputs: 400 kg gasoline, 300 kg diesel, 200 kg kerosene, 100 kg asphalt

Which product "owns" the refinery's environmental impacts?

Allocation divides the impacts among co-products using some rationale.

The ISO 14044 Allocation Hierarchy

ISO standards recommend this order of preference:

1. Avoid allocation by subdividing processes
2. Avoid allocation by system expansion
3. If allocation is unavoidable, use physical relationships
4. If physical relationships don't work, use other relationships (e.g., economic value)

FAQ: Allocation Decisions

"When should I use economic vs. mass allocation?"

Quick decision guide:

The deeper answer:

Mass allocation distributes impacts by weight:

Share_product = mass_product / total_mass_outputs

Pros:

• Simple, reproducible
• Stable over time
• Easy to verify

Cons:

• Ignores that a small byproduct may drive the process
• May not reflect economic reality

Economic allocation distributes impacts by revenue:

Share_product = (mass × price)_product / total_revenue

Pros:

• Reflects market causality
• Valuable products "own" more impacts
• Aligns with business decisions

Cons:

• Prices fluctuate (results become time-dependent)
• Price data can be confidential
• Different markets have different prices

Worked example: Soybean processing

Soybean crushing produces:

• 800 kg soybean meal (animal feed)
• 180 kg soybean oil (food)
• 20 kg hulls (waste/low value)

Oil is more valuable per kg, so economic allocation shifts impacts toward it.

"How do I handle multi-output processes?"

Step-by-step approach:

Step 1: Can you subdivide? Split the process into sub-processes that each produce one output.

Example: A factory makes two products on separate production lines. Measure each line's energy use separately.

If subdivision isn't possible (shared equipment, joint production), move to Step 2.

Step 2: Can you use system expansion? Expand your system to include the avoided production of the co-product.

Example: Cement kiln uses waste fuels. Credit the system for avoided waste treatment.

Net impact = Process impact - Avoided treatment impact

If system expansion creates modeling complexity or lacks suitable proxies, move to Step 3.

Step 3: Choose an allocation basis

Step 4: Apply consistently Use the same allocation approach throughout your study for comparable processes.

Step 5: Test sensitivity Report how results change under alternative allocation methods.

"What's the difference between allocation and system expansion?"

Allocation: Divides impacts among co-products

Process A → Product 1 (gets 60%)
         → Product 2 (gets 40%)

System expansion: Credits avoided production of displaced product

Process A → Product 1 (gets all impacts)
         → Product 2 (credits avoided alternative production)

Practical comparison:

Scenario: A bioethanol plant produces ethanol and animal feed (DDGS).

Allocation approach:

• Total process: 1,000 kg CO₂
• Ethanol (60% economic value): 600 kg CO₂
• DDGS (40% economic value): 400 kg CO₂

System expansion approach:

• Total process: 1,000 kg CO₂
• Ethanol takes all: 1,000 kg CO₂
• DDGS displaces soybean meal: -200 kg CO₂ credit
• Net for ethanol: 800 kg CO₂

Which is "right"?

• Allocation is simpler and more reproducible
• System expansion is theoretically preferred by ISO but requires identifying what's displaced
• Consequential LCA typically uses system expansion
• Attributional LCA typically uses allocation

"How do I allocate impacts for recycled materials?"

This is one of LCA's most contested topics. See our Advanced: System Boundary Approaches lesson for complete coverage.

Quick summary of approaches:

Cut-off (recycled content) approach:

• Recycled input arrives "burden-free"
• End-of-life recycling burden goes to next life cycle
• ecoinvent "Cut-off" system model uses this

End-of-life (substitution) approach:

• Recycled input carries virgin-equivalent burden
• End-of-life recycling earns credit for avoided virgin production
• ecoinvent "APOS" uses a variant

Circular Footprint Formula (CFF):

• Shares burdens between life cycles (50/50 default)
• EU PEF method uses this
• Accounts for quality changes

Decision guide for recycling allocation:

Allocation in Common Situations

Agriculture: Crop + Residue

Example: Wheat grain + wheat straw

Common practice: Economic allocation (straw is a byproduct, not the reason for farming).

Meat Processing: Multiple Cuts

Example: Cattle produces beef cuts, organs, hide, bones

Approaches:

• Mass: All meat is equal per kg
• Economic: Premium cuts get more; bones/organs get less
• Biophysical: Based on protein content or nutritional value

Common practice: Economic allocation (market value reflects desirability).

Petroleum Refining

Products: Gasoline, diesel, jet fuel, LPG, asphalt, petrochemicals

Approaches:

• Mass: Simple but ignores that refinery adjusts for market demand
• Economic: Reflects market drivers but prices are volatile
• Energy: Logical for fuels but ignores non-fuel products

Common practice: Energy content (for fuels) or economic (for mixed products).

Recycling: Open-Loop

Example: PET bottle → recycled fiber (different product)

Challenge: Quality changes. Recycled fiber isn't equivalent to virgin PET.

Solution: Quality factors in CFF, or substitution ratio <1 in end-of-life approach.

Combined Heat and Power (CHP)

Products: Electricity + heat

Common practice: Exergy-based allocation or system expansion (crediting avoided heat from boiler).

When Allocation Goes Wrong

Common Mistakes

Mistake 1: Ignoring byproducts Assigning all impacts to the main product when byproducts are significant.

Mistake 2: Using mass when economic makes sense Animal feed byproducts shouldn't share impacts equally with food products.

Mistake 3: Inconsistent allocation within a study Using mass allocation for one process, economic for another, without justification.

Mistake 4: Double-counting recycling Claiming both "recycled content" benefits AND "end-of-life recycling" credits.

Mistake 5: Not testing sensitivity Allocation choices can change results dramatically—always test alternatives.

When Allocation Really Matters

Allocation is most critical when:

• Co-product value is similar to main product
• Your product is actually a byproduct of another industry
• Recycled content is a significant fraction
• Results will be used for comparative claims

Practical Recommendations

Default Choices by Sector

Sensitivity Analysis Protocol

Always test:

1. Your chosen allocation method
2. At least one alternative method
3. Report the range of results

If results change significantly (>20%), discuss implications in your conclusions.

Documentation Checklist

For each allocated process, document:

• Products and their masses/values
• Allocation basis chosen
• Rationale for choice
• Sensitivity to alternatives
• Data sources for allocation factors

Key Takeaways

1. Try to avoid allocation first (subdivision, system expansion)
2. Mass allocation is simple but may not reflect causality
3. Economic allocation reflects market drivers but is less stable
4. Recycling allocation is complex—use approaches consistently
5. Sensitivity analysis is essential—test alternatives
6. Check your PCR/standard—it often specifies the method

Decision Flowchart

Multi-output process
         │
         ▼
Can you subdivide?
    │         │
   Yes        No
    │         │
    ▼         ▼
Subdivide   Can you use system expansion?
    │              │         │
    │            Yes        No
    │              │         │
    │              ▼         ▼
    │        Expand       Products similar?
    │                        │         │
    │                      Yes        No
    │                        │         │
    │                        ▼         ▼
    │                      Mass    Economic
    │                        │         │
    └────────────────────────┴─────────┘
                    │
                    ▼
            Document & test sensitivity

---

Next Steps

With allocation understood, the next lesson covers Data Collection & Gap-Filling Strategies—practical techniques for dealing with missing data.