Environmental Goods and Services Sector Sacha Baud Directorate Spatial Statistics Vienna 22 - 24 October 2014

Political needs and applications (I) In the 1990s (and up to present time) the economic opportunities related to environmental protection moved into the centre of interest. Important political initiatives are: Europe 2020 Reduction of greenhouse gas emissions by 20% 20% share of renewable energy Increase of energy efficiency by 20% 6th Environmental Action Plan EU biodiversity strategy to 2020 Road map to a resource efficient Europe

Political needs and applications (II) Road map for moving to a low-carbon economy in 2050 7th Environmental Action Plan These and further political initiatives supported the development of the so called ‘green economy’ in the past and still do it. This increased focus on the environment also affected the European Statistical System as it is responsible for the provision of data to measure the efficiency of these political activities. For this purpose the ESS developed new statistical products concerning the environment and its interaction with the economy (the society).

Political needs and applications (III) In 1995 OECD and Eurostat proposed the collection of information on the Environment Industry as part of the SERIEE system. Economy Resource Use and Management Accounts Environmental Protection Expenditure Accounts Collecting and processing of basic data: e.g. Environment Industry Environment In 1999 publication of the joint OECD/Eurostat „The Environmental goods and services industry – Manual for data collection and analysis“. Definition: The environment industry consists of activities which produce goods and services to measure, prevent, limit or correct environmental damage to water, air and soil as well as problems related to waste, noise and eco-systems.

Political needs and applications (IV) Between 2006 and 2009 a Eurostat task force developed the EGSS methodology which resulted in an improved data collection of integrated technologies and clean goods and in an inclusion of resource management activities. Eurostat data collection handbook “The Environmental Goods and Services Sector” Since 2012 the EGSS methodology is a worldwide standard as part of the System of Environmental-Economic Accounting (SEEA), volume I Central Framework. The EGSS is one of the modules of the Regulation (EU) No 538/2014 of the European Parliament and of the Council of 16 April 2014 amending Regulation (EU) No 691/2011 on European environmental economic accounts. Obligatory reporting to Eurostat: First reference year 2015 (including data for 2014) First reporting year 2017

Political needs and applications (V) EGSS in the context of SERIEE SERIEE consists of three pillars: Environmental Protection Expenditure Accounts Resource Use and Management Accounts Intermediate systems for collecting and processing of basic data: These systems shall provide the data for compiling EPEA. Focus is on the output of the environment industry – EGSS. Economy Resource Use and Management Accounts Environmental Protection Expenditure Accounts Collecting and processing of basic data: e.g. Environment Industry Environment

Political needs and applications (VI) Therefore, definitions and classifications of EGSS have to be consistent with SERIEE and thereby with EPEA, Resource Use Accounts (RUA) and Resource Management Expenditure Accounts (ReMEA). This condition allows for a multiple use of data sources. However, EPEA, RUA, ReMEA and EGSS are focused on environmental activities from different perspectives so there are important differences that have to be taken into account, e.g. if data sources for EPEA are also used for EGSS.

Questions?

Definition and scope of EGSS and of green jobs (I) The EGSS - Environmental Goods and Services Sector consists of a heterogeneous set of producers of technologies, goods and services that: Measure, control, restore, prevent, treat, minimise, research and sensitise environmental damages to air, water and soil as well as problems related to waste, noise, biodiversity and landscapes. This includes “cleaner” technologies, goods and services that prevent or minimise pollution. Measure, control, restore, prevent, minimise, research and sensitise resource depletion. This results mainly in resource-efficient technologies, goods and services that minimise the use of natural resources. These technologies, goods and services must satisfy the end or primary purpose criterion, which is in this case environmental protection or resource management. Technologies, goods and services which have a favourable impact on the environment but another main purpose are NOT INCLUDED in EGSS.

Definition and scope of EGSS and of green jobs (II) Environmental protection (EP) includes preventive and remedial technologies and products: to prevent, reduce, eliminate and treat air emissions, waste and wastewater, soil and groundwater contamination, radiation, noise and vibration, to prevent, reduce and eliminate soil erosion, salinity and other kinds of degradation, to preserve biodiversity and landscapes, and to monitor and control the quality of environmental media and waste. Resource management (RM) includes technologies and products: to manage and/or conserve the stock of natural resources against depletion, including preventive and restoration activities, to monitor and control the levels and uses of natural resources stocks. Both EP and RM also comprise administrative activities, education, training, information and communication activities, research and development.

Definition and scope of EGSS and of green jobs (III) The Environmental Sector comprises: Environmental technologies, goods and services for every kind of use (intermediate or final consumption, gross fixed capital formation) Only EGS, which are produced for the environment (“main purpose criterion”) EGS produced by corporations and the general government EGS produced as principal, secondary or ancillary activity Market and non market activities

Definition and scope of EGSS and of green jobs (IV) end-of-pipe technologies integrated technologies connected products adapted goods EGSS (handbook) env. spec. services connected services ancillary activities

Definition and scope of EGSS and of green jobs (V) Environmental technologies are technical processes, installations and equipment (goods), methods or knowledge (services) whose technical nature or purpose is EP or RM. There are two types: End-of-pipe technologies are mainly technical installations and equipment which operate independently or are identifiable parts at the end of production or consumption cycles. They are used to measure, control, treat and restore or correct pollution, environmental degradation and resource depletion. Examples: Wastewater or waste treatment facilities, filters, equipment to recover materials. Integrated technologies are less polluting and resource intensive than the equivalent average technology in a given country. They comprise technical processes, methods or knowledge used in production processes. Examples: Wind turbines, combined heat and power, solar panels, dry ovens in the cement industry.

Definition and scope of EGSS and of green jobs (VI) Connected products (goods or services) are not the output of characteristic EP or RM activities but their use directly serves an EP or RM objective (the use must be exclusively for that objective), e.g. catalytic converters, rubbish containers, noise reduction windows, EP maintenance services for septic tanks. Adapted goods are less polluting or more resource efficient than equivalent normal products which furnish a similar utility. Their primary use is not EP or RM (in EPEA only extra costs are considered, in EGSS overall costs), e.g. Organic agricultural products, cars with lower emissions, recycled paper, water-saving devices, renew. heat a. energy, resource-efficient appliances. Environmental specific services are the “characteristic” environmental protection or resource management activities. Their purpose is EP or RM, e.g. waste management or wastewater management activities, energy and water-saving activities, activities to reduce water leaks and water losses, RM services such as installation of renewable energy production technologies.

Definition and scope of EGSS and of green jobs (VII) The Practical guide towards compiling Environmental Goods and Services Sector (EGSS) statistics recommends to review some of the definitions of environmental products. Environmental specific (“characteristic”) services should be extended to characteristic goods such as energy from renewable sources. The name of this new category would be environmental specific (or “characteristic”) products. b) The definition of adapted goods for environmental protection should be broadened to also include goods that are cleaner when produced. c) Concerning the category adapted goods the practical guide also acknowledges that there could be some cleaner or resource efficient services, too.

Definition and scope of EGSS and of green jobs (VIII) plus goods cleaner when produced; plus cleaner or resource efficient services Source: Handbook on Environmental Goods and Services Sector (Eurostat 2009)

Definition and scope of EGSS and of green jobs (IX) Overview of environmental goods and services (accord. to the practial guide) End-of-pipe technology: Operates independently or is an identifiable part at the end of a production or consumption cycle. Pressure on the environment already occurred. Integrated technology: Less polluting and less resource intensive than the equivalent average technology in a given country. Connected products: Are not the output of characteristic EP or RM activities but their use directly serves an EP or RM objective. Adapted products: More environmental-friendly or less polluting when produced, used or scrapped or more resource efficient when used than equivalent normal products with a similar utility. Their primary use is not EP or RM. Environmental specific products: Characteristic environmental protection or resource management goods and services (activities). Their purpose is EP or RM.

Definition and scope of EGSS and of green jobs (X) In the framework of the Eurostat EGSS questionnaire the following data shall be delivered: Output (turnover in EGSS handbook) Exports Gross value added Employment

Definition and scope of EGSS and of green jobs (XI) How to identify producers and activities belonging to EGSS? Only the producer of the final environmental technology, good or service (= main producer) is taken into account. Suppliers of components which are not used exclusively in environmental technologies are excluded from EGSS. Distributors of environmental technologies and goods are also not part of EGSS (except for G 46.77 wholesale of waste and scrap; only processing activities). Installation activities are part of EGSS as producers of connected services, if they are specialised in the installation of environmental technologies and products. Construction activities can be part of EGSS, e.g. construction of passive/energy-efficient houses, construction of wastewater treatment facilities.

Definition and scope of EGSS and of green jobs (XII) Producers Corporations General Government and NPIsH Principal Secon-dary Ancillary Market Non-market Market Non-market Market Non-market Non-market Source: Based on EGSS handbook, page 40

Definition and scope of EGSS and of green jobs (XIII) Categories of environmental producers Specialist producers: They produce goods and services for EP and RM as principal activity. Two subcategories can be distinguished: Government specialist producers and those of the NPIsH sector: They are non-market producers and provide their environmental products for free or at economically insignificant prices to other units. Other specialist producers: They are market producers which provide their environmental products at economically significant prices to other units. Non-specialist producers: They produce goods and services for EP and RM as secondary or ancillary activity. Own-account producers: They produce goods and services for EP and RM for own account only (=ancillary activities).

Definition and scope of EGSS and of green jobs (XIV) The General Government (GG) consists of central, regional and local governments, authorities, communities and government agencies carrying out activities relating to administration, planning, legislation, supervision, control, information etc. General Government provides environmental services more or less free of charge (= non-market services), e.g. regulatory, administrative or control activities related to EP or RM. Government-owned entities (like public corporations) carrying out market or non- marked activities, e.g. waste and wastewater treatment services, are excluded from general government sector (in EPEA they are called GG specialised producers). They have to be classified in those NACE rev. 2-digits which typically carry out these activities, e.g. wastewater treatment services in NACE E37, waste treatment in NACE E38.

Definition and scope of EGSS and of green jobs (XV) Data on corporations should be collected on the LKAU level (local kind of activity unit = establishment in SNA). It is the smallest unit of a corporation with book- keeping. If the environmental activity of a corporation is not the primary but secondary activity it should be allocated to the NACE category of the establishment and not of the corporation. Corporations can carry out market and non market activities. Market activities are sold on the market at economically significant prices, i.e. 50 percent or more of the production costs are covered by the price. Non-market activities are provided free of charge or at economically insignificant prices (less than 50 percent).

Definition and scope of EGSS and of green jobs (XVI) The principal activity is the activity of a unit producing most of the gross value added. If no gross value added data are available other key figures must be used to determine the most important activity, e.g. employment or turnover. In the case of a non-market producer the principal activity is responsible for most of the costs of production. Secondary activities are all other activities of a unit provided for use by other units. Ancillary activities are technologies and goods where the producer is also the beneficiary, i.e. they are not provided for use by other units but to support the main productive activities of the own unit, e.g. autoproduction of renewable energy (deviation of NACE rev. 2 rules), in-house waste collection and treatment, in-house wastewater treatment plants, education and training and other general administration. Problems related to the categorisation of environmental products and environmental producers will be addressed later in this course.

Data transmission to Eurostat

Questions?

Classifications (I) The following classifications are crucial in relation to EGSS: Classification of Environmental Protection Activities (CEPA) Classification of Resource Management Activities (CReMA) Statistical Classification of Products by Activity (CPA) Community Production (Prodcom) Combined Nomenclature (CN) Classification of the Functions of Government (COFOG) Statistical Classification of Economic Activities (NACE)

Classifications (II) Classification of Environmental Protection Activities (CEPA): Protection of ambient air and climate 1.1.2 of which for the protection of climate and ozone layer Wastewater management Waste management Protection and remediation of soil, groundwater and surface water Noise and vibration abatement Protection of biodiversity and landscape Protection against radiation Research and development 8.1.2 R&D for the protection of climate and ozone layer Other environmental protection activities Due to the legal base, the questionnaire is more aggregated.

Classifications (III) Classification of Resource Management Activities (CReMA): Management of waters Management of forest resources 11 A. Management of forest areas 11 B. Minimisation of the intake of forest resources Management of wild flora and fauna Management of energy resources 13 A. Production of energy from renewable sources 13 B. Heat/energy saving and management 13 C. Minimisation of the intake of fossil resources as raw material for uses other than energy production Management of minerals Research and Development 15.5.1 R&D for the production of energy from renewable sources Other natural resource management activities Due to the legal base, the questionnaire is more aggregated.

Classifications (IV) Statistical Classification of Products by Activity (CPA): As already explained the focus of EGSS is on the (main) producers of environmental goods, technologies and services. These products can be identified using the CPA. CPA is compatible with NACE, therefore environmental G-T-S can be allocated to the producing economic unit (if possible LKAU/establishment). But CPA is on 6-digit level and therefore in many cases too imprecise. Eurostat provides a list of environmental G-T-S based on CPA. Community Production (Prodcom): Like CPA Prodcom is a classification of products and both are compatible. The advantage of Prodcom is that it is more detailed than CPA. On EU level products are classified by 8-digit codes, on national level by 10-digit codes.

Classifications (V) Combined Nomenclature (CN) The CN is used for the classification of goods in international trade. It is based on 8-digit codes which can be linked to other classifications (products or economic activities) via correspondence tables. This classification can be used to identify exports of environmental G-T-S. But as it is the case for CPA and Prodcom, only a part of exported environmental G-T-S can be identified directly. A further problem is that there are thresholds for reporting obligations. So, further data sources are needed, e.g. surveys or telephone interviews asking for the share of environmental exports in total output.

Classifications (VI) Classification of the Functions of Government (COFOG): COFOG can be used as a data source for General Government activities. Take only data on costs of production, no employment data. General public services Defence Public order and safety Economic affairs Environment protection Housing and community amenities Health Recreation, culture and religion Education Social protection

Classifications (VII) Classification of the Functions of Government (COFOG): 5. Environment protection 5.1 Waste management 5.2 Waste water management 5.3 Pollution abatement 5.4 Protection of biodiversity and landscape 5.5 R&D Environment Protection 5.6 Environment protection n.e.c. = CEPA 3, allocation to NACE 38 = CEPA 2, allocation to NACE 37 = CEPA?, allocation? = CEPA 6, allocation? = CEPA 8, allocation to NACE 72 = CEPA?, allocation? Even though most of governmental environmental expenditure is classified under COFOG 5 there could be that some environmental expenditure is classified under an another COFOG division. This should be checked.

Classifications (VIII) Statistical Classification of Economic Activities (NACE): The producers of environmental G-T-S are classified by NACE. The allocation should be done on the level of LKAU/establishment. It can differ from the enterprise classification.

Classifications (IX) Problems and conventions related to classifications The different classifications mentioned on the previous slides serve specific purposes and therefore they do not always fit with the classifications of environmental activities used for EGSS statistics.

Classifications (X) Problems and conventions related to classifications 1. Delimitation problems in CEPA and CReMA It is often difficult to assign every environmental protection activity to only one CEPA domain. Furthermore there are delimitation problems between EP and RM activities since activities may serve multiple purposes, e.g. the production of renewable energy, the incineration of waste, material recovery and certain activities concerning protection of biodiversity, forest management or management of wild flora and fauna or research and development activities. The primary purpose criterion may not be stable over time and could cause subjectivity and incomparability across countries. To ensure more stability it is proposed to implement the primary purpose criterion by using the technical nature of the activity, i.e. technically identical activities are classified in the same way in all countries

Classifications (XI) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 Some NACE industries are closely linked and should overlap to a great extend with EP and RM activities because of their principal activities. Nevertheless there can be problems in identifying the relevant activities due to the structure of the existing data sets, e.g. NACE A02 forestry and logging: Only activities for forests not available for wood supply and for uncultivated forests should be taken into account in CReMA 11 A (management of forest areas). If the distinction between cultivated and uncultivated forests cannot be made it doesn‘t mean that the total output of NACE A02 should be considered in CReMA 11 A. In that case it is recommended by the practical guide not to include management of forest areas data in the EGSS.

Classifications (XII) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 The enterprises of NACE section E (E36 – E39) are the main producers of services for CEPA 2, CEPA 3 and CReMA 10. But it is normally not possible to establish straightforward relationships between these economic activities and the environmental activities. NACE E36 may not only carry out activities in relation to water supply but also to cleaning of wastewater. If these activities cannot be separated out the practical guide recommends for the revision of the EGSS handbook to cover also the distribution, collection and potabilisation under CReMA 10.

Classifications (XIII) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 The enterprises of NACE section E (E36 – E39) are the main producers of services for CEPA 2, CEPA 3 and CReMA 10. But it is normally not possible to establish straightforward relationships between these economic activities and the environmental activities. The wholesale of waste and scrap (processing but no distribution activities) should be taken into account as it is an important link in the production chain of waste management. If these processing activites of NACE 46.77 can be separated out by type of material they should be allocated to the respective RM activities, i.e. CReMA 11 B, CReMA 13 C or CReMA 14. If the materials cannot be separated out these activities should be allocated to the main activity, which may often be CReMA 14.

Classifications (XIV) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 The enterprises of NACE section E (E36 – E39) are the main producers of services for CEPA 2, CEPA 3 and CReMA 10. But it is normally not possible to establish straightforward relationships between these economic activities and the environmental activities. The recovery of sorted materials under NACE E38 may relate to CEPA 3, CReMA 11 B, CReMA 13 C or CReMA 14 depending on the kind of materials. If the recovery activities cannot be separated out of other E38 activities than they should be allocated to CEPA 3. If they can be separated out but not differentiated by kind of material they should be allocated to CReMA 14. But if the sorted materials can be differentiated they should be allocated to the respective RM activities.

Classifications (XV) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 The enterprises of NACE section E (E36 – E39) are the main producers of services for CEPA 2, CEPA 3 and CReMA 10. But it is normally not possible to establish straightforward relationships between these economic activities and the environmental activities. The activities of NACE E39 fall under CEPA 3 and CEPA 4. If these activities cannot be separated out they should be recorded under CEPA 3. Street cleaning: If this activity is carried out by NACE E38 it should be recorded under CEPA 3. If this activity is carried out by NACE 81.2 it should be tried to get detailed data to be able to take it into account in EGSS.

Classifications (XVI) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 The enterprises of NACE section E (E36 – E39) are the main producers of services for CEPA 2, CEPA 3 and CReMA 10. But it is normally not possible to establish straightforward relationships between these economic activities and the environmental activities. The production of energy from incineration (NACE E38.2) is differently treated in SEEA 2012 and the EGSS handbook. In terms of international comparability the practical guide proposes to include all waste incineration under CEPA 3, when it is not possible to differentiate between renewable and non-renewable materials. If this is possible incineration of bio-degradable waste should be allocated to CReMA 13 A. Also processing of waste cooking oil into biofuels should be allocated to CReMA 13 A.

Classifications (XVII) Problems and conventions related to classifications 2. Identifying EP and RM related activities in NACE Rev. 2 There are enterprises carrying out environmental activities in many NACE divisions. Unless the NACE subdivisions are detailed enough to identify these environmental activities further data sources or models are necessary, e.g. NACE A01: Calculation of organic farming data using the share of organic farmland in total farmland, and if possible to adjust these data with the differences in per-hectare revenues. NACE D35: Calculation of the production of renewable energy using data from energy statistics, and if possible to adjust these data with information on price elements and price differences between electricity from various sources.

Classifications (XVIII) Problems and conventions related to classifications 3. Identifying EP and RM activities through COFOG All government expenditure should be classified under one and only one COFOG position. As already mentioned division 5 is provided for environmental protection expenditure. Due to the fact that items of government expenditure can relate to more than one function the compilers of COFOG have to decide on the final allocation. Therefore, in some cases environmental protection expenditure may be classified in another COFOG division, in particular in COFOG 1 (general public services), COFOG 4 (economic affairs) and COFOG 6 (housing and community amenities). A cooperation with the national COFOG compilers is recommended.

Classifications (XIX) Problems and conventions related to classifications 4. Identifying EP and RM output using product classifications There are different product classifications (CPA, Prodcom, CN, …) that can be used to identify environmental products and services. They differ in level of detail (from 6-digit codes to 10-digit codes at national level) and coverage (services included or excluded). Therefore their usefulness with regard to the identification of environmental products and services is limited. As you can see from the Eurostat EGSS list (enclosed to the EGSS questionnaire) there are products or product groups which may be regarded as 100% environmental. But there are much more which are not 100% environmental. For these products or product groups further data are necessary to calculate their environmental share.

Classifications (XX) Goods – Technologies – Services Adapted goods Connected product End-of-pipe technologies Integrated technologies Specialized services Connected services Ancillary activities Environm. protection activities (CEPA) Resource management activities (CReMA) Prot. of ambient air and climate Waste manage-ment Noise and vibration abatement R&D Management of waters Management of fossil energy res. Management of wild flora and fauna Wastewater management Soil, groundwater, surface water Biodiver-sity and landscape Other Management of forest resources Manage-ment of minerals R&D Others Industries (NACE 2008 2-digit level)

Questions?

Basic approaches (I) For compiling EGSS statistics three general approaches are proposed: EGSS surveys: Their main advantage is that they allow for identifying EGSS enterprises and collecting relevant data. But these surveys are time and resource intensive. Alternatively existing supply side data sources (like SBS, Prodcom, external trade statistics, production and generation of income accounts or supply tables of the national accounts) or Demand side data source (like EPEA or gross fixed capital formation from national accounts) can be used. Of course these three approaches can be combined depending on national circumstances and available data sources.

Basic approaches (II) In the case of EGSS surveys two different models are possible: Adding EGSS questions to an existing survey: The questions can be sent to the whole population of the survey or to a subset. They can be integrated into the main survey or be in the form of an extra sheet. The main advantage of this model is that an existing survey infrastructure can be used. The main disadvantage could be that the respondents are not familiar with EGSS leading to poor data quality. Conducting specific EGSS surveys: They can provide detailed information on the variables of the EGSS broken down by environmental activities and industries. Depending on the design of the questions and the accuracy of the survey sample these specific EGSS surveys can provide the largest amount of information and the most precise results.

Basic approaches (III) If supply side data sources are used to compile EGSS variables the following three types of producers – depending on their industrial classification – should be considered: EGSS producers which are classified in specialist NACE categories that are characteristic for EP or RM activities: The whole or most of the output can be considered as EGSS relevant, e.g. NACE E37 – E39. Some non EGSS relevant secondary output may be singled out using data from supply tables. EGSS producers which are classified in NACE categories that are not characteristic for EP or RM activities but which can be identified as relatively homogenous subgroups within a specific NACE category: Examples are producers of organic farm products in NACE A01 or producers of electricity from renewable sources in NACE D35.1. In these cases further data are necessary to calculate the EGSS shares.

Basic approaches (IV) If supply side data sources are used to compile EGSS variables the following three types of producers – depending on their industrial classification – should be considered: EGSS producers which are neither classified in specific industries nor can be identified as relatively homogenous subgroups within specific NACE categories: For the calculation of the EGSS shares of these enterprises further supply-side data sources could be useful, e.g. business registers, SBS, Prodcom, information from trade associations and specialised business associations.

Basic approaches (V) Demand side data sources are particularly important to cover EGSS producers which are not classified in specific NACE industries characteristic for EP or RM. These producers are identified on the basis of investments for EP or RM. The main data sources are EPEA and data on gross fixed capital formation from the national accounts. Problems related to demand side data sources: Expenditure on imported products are included but exports are excluded. Demand side data sources provide no information on the industries supplying the environmental goods and services used for the investments. Some modelling is necessary to allocate these investments to the supplying industries. In these cases the user perspective can determine the scope of EGSS. Expenditure valued at purchasers’ prices must be converted to basic prices. RM is less well covered by demand side data sources than EP. Scope and measurement of adapted goods differ in EPEA and EGSS.

Basic approaches (VI) Problems related to the categorisation of environmental products The categories of environmental products (goods, technologies and services) are defined using concepts from different statistics. Technologies are unknown in production statistics. In the EGSS the term ‘technologies’ is used to track the production and installation of certain investment products that are combined into items of investment (e.g. a wind mill park). Nevertheless some environmental technologies may be classified as connected products or adapted goods. Furthermore there may be products that are at the same time connected and adapted goods (e.g. biodegradable trash-bag). For this reason it is important to have a list of products assigning goods, technologies and services exclusively to one of the different product categories.

Basic approaches (VII) Problems related to the categorisation of environmental products The identification of connected goods is rather difficult if production and trade statistics do not provide data at very detailed commodity level. As adapted goods are very difficult to be identified a short indicative list containing the most important adapted goods is enclosed to the EGSS questionnaire. Even though the same terminology is used definitions in EPEA often differ from those in EGSS, especially the scope and measurement of adapted goods and technologies are different. This issue has to be taken into account when using EPEA data for EGSS and vice versa. In EGSS technologies are seen as product categories and in EPEA as categories of investment expenditure. EPEA doesn’t cover resource management expenditure. In EPEA only the extra costs for adapted goods are included. In EPEA only the extra costs for integrated technologies are included.

Basic approaches (VIII) Problems related to the categorisation of environmental producers Some government units provide environmental services as secondary activities. They would not be classified as specialist producers. For the sake of simplicity all characteristic activities carried out by government may be classified as being produced by specialist producers. Also for the sake of simplicity all wastewater management services provided by NACE E36 are classified as being produced by specialist producers. Specialist producers can be identified at the individual unit level (could occur in any NACE category) or at the level of specific NACE categories (including secondary EGSS output). The scope of specialist producers in EGSS is broader than in EPEA, where it is limited to producers that primarily produce environmental protection specific services.

Questions?

Methodology (I) 1. step: Identification of the EGSS population (I) As there is no standard classification of environmental technologies, goods and services, the first and most important step is the identification of the EGSS population. As already described this task can usually not be done with a single approach, so a mix of methods and data sources has to be applied. The EGSS handbook and the Practical guide provide practical examples and guidance but the methods finally chosen depend on the data sources available at national level. Main data sources should be official statistics, supplemented by further data sources, registers, studies, internet or literature research etc. Eurostat provides a list of environmental goods and services, based on CPA.

‚Specialist producers‘ Methodology (II) ‚Specialist producers‘ EGS Producers Source: EGSS handbook, page 72

Methodology (III) 1. step: Identification of the EGSS population (II) CPA or Prodcom statistics: This is the most important data source, because it is focused on the output by product. With the support of the Eurostat EGS list it is possible to identify a part of ‘specialist industries’ and EGS (NACE B to F). Furthermore the list provides the type of product and the EP or RM domain. This statistics doesn’t provide information on gross value added and exports. Availability of employment data depends on the level of aggregation. Structural Business Statistics: Allows for the identification of economic activities (NACE G to N, S95), i.e. industries. Except for specialist industries it is necessary to use further information to calculate the environmental share, e.g. through surveys or expert estimations. Provides information on output, employment and gross value added. Environmental protection expenditure accounts (EPEA) or COFOG: Data source for costs of production and maybe employment of General Government.

Methodology (IV) 1. step: Identification of the EGSS population (III) Up to now focus was on products and industries. Other official statistics/external information: It is necessary to determine the environmental share of those CPA or Prodcom codes which are not fully environmental. This can be done with further data sources, e.g. Energy balances/statistics (products) Business register (producers) Survey on environmental services of service industries Responsible ministries (products, producers) Business associations (products, producers) Specialised internet platforms (products, producers) Direct data collection from enterprises engaged in EGS by telephone Specialised literature/studies (products) Expert information (products, producers, industries)

Methodology (V) 1. step: Identification of the EGSS population (IV) If enterprises/producers are used to calculate the environmental share of a CPA or Prodcom code (e.g. biomass heating systems, wind mills) data on output, gross value added and employment can be drawn from Structural Business Statistics. At this stage all environmental goods, technologies and services should be identified.

Methodology (VI) 2. step: Filling data gaps and estimations (I) Once all environmental technologies, goods and services are identified and allocated to industries missing data have to be filled (subsequently some examples are described). Employment is missing: From Short Term Statistics data on production value and employment on NACE 5-digit level (at least in Austria) are available. Employment/unit of production value can be used to estimate the employment (necessary for Prodcom data). Structural Business Statistics can be used in an analogous manner. Output is missing: For enterprises not part of the SBS population (e.g. small enterprises, national parks, environmental organisations) assumptions are possible, e.g. average share of output and gross value added per employed persons in the economic branch (or a similar branch) at the most detailed level (4-digit in Austria).

Methodology (VII) 2. step: Filling data gaps and estimations (II) Gross value added is missing: Data on gross value added can be taken e.g. from Structural Business Statistics or National Accounts. GVA can be missing for e.g. whole economic activities (industries), enterprises or data based on Prodcom. GVA can be calculated based on unit of employment or unit of output. Export is missing: Exports can be calculated on the basis of the CN classification of trade statistics. But as already mentioned only a part of exported environmental G-T-S can be identified directly. A further problem is that there are thresholds for reporting obligations. So, further data sources are needed, e.g. surveys or telephone interviews asking for the share of environmental exports in total output.

Methodology (VIII) 2. step: Filling data gaps and estimations (III) Only physical amounts are available: In exceptional cases it could be that only the output in physical values is available, e.g. fuelwood. In Austria we use the following solution: From energy statistics we know the production in TJ and the price per kWh. 1. calculation step: conversion of TJ in kWh 2. calculation step: calculation of output in Euro 3. calculation step: calculation of employment using information on average revenues by person (self)-employed in FTE in forestry. Calculations on gross value added and exports are not done in Austria but would be analogous to the estimations already described (Exports from CN or other sources, gross value added from National Accounts or Forestry Accounts).

Methodology (IX) Source: aligned with EGSS handbook, page 120

Methodology (X) Source: aligned with EGSS handbook, page 120

Methodology (XI) Source: aligned with EGSS handbook, page 120

Methodology (XII) Source: aligned with EGSS handbook, page 120

Methodology (XIII) Source: aligned with EGSS handbook, page 120

Methodology (XIV) Source: Practical guide towards compiling Environmental Goods and Services Sector (EGSS) statistics, page 36.

Methodology (XV) 3. step: Allocation of activities to domains of EP and RM (I) Once all environmental technologies, goods and services are identified and allocated to industries they have to be assigned to the appropriate environmental protection or resource management domain. The description of the CEPA classification and the EGS list provides useful support. In most cases the assignment is straightforward because of the purpose of the activity, e.g.: NACE 37 Sewerage is classified in CEPA 2 Waste management ÖPRODCOM 4100301003 Renovating, maintenance and restoration work for one- and two-dwelling buildings … is classified in CReMA 13 B. Heat/ energy saving and management ÖPRODCOM 221120 Retreaded pneumatic tyres, of rubber is classified in CReMA 13 C. Minimisation of the intake of fossil resources as raw material for uses other than energy production

Methodology (XVI) 3. step: Allocation of activities to domains of EP and RM (II) But technologies and goods can also be related to more than one domain of EP, of RM or both EP and RM. In such cases the activity shall be allocated to the main domain which is identified via the main purpose, the technical nature as well as the intention of the producer. e.g.: Renewable energy serves two purposes – prevention of both air emissions and natural resource depletion. Producers of renewable energy are classified in 13 A. Production of energy from renewable sources. Reason: By convention all activities aiming at the protection of ambient air and climate through the reduction of natural resource use shall be classified as a resource management activity. Recycling consists of two steps – the collection of waste and the transformation of waste into secondary raw materials or final goods. Collection/treatment of waste is classified in CEPA 3 Waste management, secondary raw materials (and final goods) in RM (class depends on material)

Questions?

Country example (I) Data sources used in Austria: Short term statistics (STS) – Industrial commodity statistics Structural business statistics (SBS) Environmental protection expenditure accounts (EPEA) Energy balances Business register Survey on environmental services of service industries Direct data collection from companies engaged in EGS by telephone Association of Austrian Social Security Institutions (employees) Market statistics on renewable energy technologies (photovoltaics, solar thermal energy, heat pumps and biomass) Green Report (Ministry for Agriculture and Forestry) Specialized literature Expert information Internet research

Country example (II) For data collection a mix of methods is applied as it is not possible to cover all aspects of the environment related economy with a single source. Basically, a supply-side approach is taken; only in exceptional cases demand-side elements are included (e.g. energy balances). Data are collected both by product groups (from short term statistics (STS) or structural business statistics - SBS) as well as by individual enterprises (primarily in the case of technology). Preferably data of official statistics are used, otherwise other data sources. Some E-G-S are classified together with non-environmental products - the shares of the environmentally relevant products are estimated (e.g. services) If only one of the two variables (output or employment) is available the other is estimated compliant with the EGSS manual. These estimates are based on data from STS as well as SBS, assuming an average ratio of output per employee or vice versa.

Country example (III) Short term statistics: NACE E37 - E39 are fully taken into account in EGSS; for explicit environmental goods and services identified by Prodcom, energy balances or eco labels production value is taken from STS; if necessary number of employees in FTE is calculated using per capita average productivity of a relevant NACE 4-digit. Examples: air filters, renewable energies, eco textiles, eco paints, eco cleaning agents, eco furniture, eco matresses, recovered paper, hydro turbines, devices for filtering or purification of gases, liquids or air (about 70 positions in Prodcom).

Country example (IV) Structural business statistics (I): SBS data are used together with other data sources to calculate environmental output and employment. Examples: NACE 45.2: Share of costs for servicing of nuisance, e.g. exhaust gases, as well as costs for correcting deficiencies (Association of Automotive Technicians). NACE 55 and 56: Share of companies with Austrian eco label for tourism. NACE 69.1, 70.2, 74.9: Environmental share of legal activities, management consulting activities, other professional, scientific and technical activities n.e.c. (EPEA and survey on environmental services of service industries).

Country example (V) Structural business statistics (II): Examples: NACE 71.1, 71.2, 72.1: Environmental share of architectural and engineering activities and related technical consultancy; technical testing and analysis as well as research and experimental development on natural sciences and engineering (survey on environmental services of service industries). NACE 81.2, 81.3: Environmental share of cleaning activities (mainly chimney sweepers) and landscape service activities (survey on environmental services of service industries).

Country example (VI) Environmental protection expenditure accounts for the General Government: Expenditure is classified by CEPA, with data from other sources and assumptions it is also possible to allocate data to resource management activities. Attention: Take care of reclassifying market production of General Government to corporations. Market statistics on renewable energy technologies: Study of TU Vienna comprising data on turnover and employment of production, installation and R&D of photovoltaic and solar thermal systems, heat pumps and biomass systems.

Country example (VII) Further enterprises: 1. These have to be identified as potential suppliers of E-G-S (data sources: Network Environmental Technology, studies, environmental newspapers and internet research). 2. Environmental output and employment data calculated on the basis of STS, telephone interviews, Association of Austrian Social Security Institutions and SBS. Green report (Ministry for Agriculture and Forestry): Data on revenues and employment of certified organic farms. Energy balances: Production of renewable electricity. Data on turnover and employment from STS.

Country example (VIII) Energy-efficient /passive houses, energetic dwelling renovation: Definition of environmental output and employment of construction industry difficult. Pragmatic approach: output and employment calculated on the basis of housing subsidies (criteria energy savings and thermal rehabilitation); data source is a study. Recycling products (I): Calculated on the basis of input of scrap. Paper: Environmental share of output and employment calculated on the basis of used waste paper in paper production (Association of Austrian Paper Industry). Plastic: Recycling of waste plastics classified in NACE 38, therefore covered by STS. But correct allocation to CReMA 13 C. Minim. of the intake of fossil res. as raw material for uses other than energy production not possible.

Country example (IX) Recycling products (II): Metals: Calculation of environmental output and employment on the basis of input of scrap in steel production as well as aluminium recycling products (one company in Austria). Glass: Recycling of glass packaging carried out by a small number of companies, all of them are taken into account. Research institutes, universities, environmental protection organisations, natural and national parks: Employment in environmental technology research at universities based on studies of the Environment Agency Austria; further companies engaged in environmental research, but also environmental protection organisations, natural and national parks are identified by business register and internet research.

Country example (IX) Ancillary activities: Small amount of ancillary activities (own generation of renewable energies, environmental ancillary activities in agriculture); data sources are energy balances and the Green Report.

Eurostat data requirements Module on EGSS of Regulation (EU) 538/2014 amending Regulation (EU) 691/2011 What are the data requirements in the regulation concerning EGSS? Eurostat EGSS questionnaire

Discussion of problems Please write down problems you still have? Which support do you need from Eurostat?