Calculation of Raw material Equivalents (RME) for EU-27 in the context of the “Eurostat Impact Project” Eurostat MFA Task Force Luxemburg, 22-23 October 2009 Karl Schoer, SSG

Eurostat Impact Project “Conceptual framework for measuring the environmental impact of the use of Natural Resources and Products” Conducted January 2009 to December 2010 by ifeu - Institut für Energie- und Umweltforschung, Heidelberg in cooperation with: Sustainable Solutions Germany – Consultants, Wiesbaden (SSG) Charles University in Prague, Environment Center (CUEC)

Eurostat Impact Project

Eurostat Impact Project

Eurostat Impact Project

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

Monetary input-output table (MIOT) Compilation of a monetary IOT (60 product groups x 60 homogeneous branches) for EU-27: Aggregation of the individual national IOTs Deduction of intra-trade flows between EU countries Closing of data gaps by estimates

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

Compilation of the expanded hybrid IOT for EU-27 Use of energy products In physical units (Energy balance) expHIOT 170 products x (170 branches + final uses) Use of products for agric. (Agricultural statistic) MIOT 60 products x (60 branches + final uses) Use of metal products In physical units (Different sources) production and enterprise statistics) 170 products (Eexternal trade, Total uses, exports Input coefficients of German expHIOT (input per unit output) 170 products x (170 branches + final uses) Output 170 branches (Production and enterprise statistics)

Limitations of expHIOT ONLY ENVIRONMENTAL ANALYSIS: The 170 x170 expHIOT was designed (by using several assumptions and simplifications) for the purpose of improving the results of specific environmental analysis compared to 60 x 60 MIOT NO MULTI-PURPOSE USE: The quality is not generally sufficient for multi-purpose use

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

+ - = = Internalization of consumption of fixed capital Intermediate consumption 170 products x 170 branches Grossed fixed capital formation 170 products Investors matrix Gross fixed capital formation 170 products x 170 branches + - Depreciation of grossed fixed capital 170 products x 170 branches (investors matrix) Depreciation of grossed fixed capital 170 products Depreciation of gross fixed capital 170 branches = = Intermediate consumption Including capital consumption 170 products x 170 branches Net fixed capital formation 170 products

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

Calculation of RME by the Leontief approach expHIOT Technology matrix 170 product groups x 170 branches Final uses 170 product groups Leontief approach (assignment of raw material inputs to final use products) and calculation of Imports in raw material Equivalents (RME) Final uses and imports in RME 60 raw material groups Imports 170 branches Environmental extension Raw material inputs to the economy in tons 60 raw material groups x 170 branches

Mixed IOT-LCA approach ESTIMATION OF EMBODIED IMPORTS: The calculation of embodied imports follows a mixed approach, which is a combination between Standard Leontief IOT approach and LCA (life cycle assessment) IOT-APPROACH: assumes that the imported products are produced with the same technology and product mix than the domestic production. STRENGTH: The IOT approach is a top-down approach. Utilization of complete and comprehensive statistical information which is fully harmonized with the National Accounting System. WEAKNESS: Not all imported products are represented in a sufficient manner by the respective domestic production processes LCA-APPROACH: The LCA-approach utilizes life cycle inventories, e.g. Ecoinvent. STRENGTH: the LCA-approach is a bottom-up approach which can use much more specific information on type of product and country of origin. WEAKNESS: for making estimates for complex products (i.e. products beyond extraction and primary processing of raw materials) the approach can only use data for selected production processes (e.g. manufacturing of computers) as a representative for a whole product group (electronic products) SOLUTION: The LCA-approach is used for selected products (“LCA-products”) which are considered not to be sufficiently represented by domestic production processes. The IOT-approach is used for all other products

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

Environmental extension Physical input vectors The physical input vectors denote the physical inputs into the economy by raw material groups and homogeneous branches Two types of physical input vectors are used: DOMESTIC EXTRACTION of raw materials in tons IMPORTS OF „LCA-PRODUCTS“ in tons raw material equivalents (RME)

Environmental extension Domestic extraction 170 homogeneous branches Each raw material enters the economy by the respective extraction branch Domestic extraction of raw materials raw materials About 60 PRINCIPAL DATA SOURCE is domestic extraction of EW-MFA SUPPLEMENTS: The EW-MFA list of raw materials was supplemented by: More detailed list of metals Introduction of metal scrap as separate raw material category Introduction of renewable energy carriers as an additional raw material category (measured in tons of oil equivalents (TOE))

Environmental extension LCA-products 170 homogeneous branches The different raw material equivalents for each product enter the economy by the respective production branch Imports of „LCA-products“ in raw material equivalents (RME) raw materials About 60 LCA-PRODUCTS are products which are (in terms of RME) not sufficiently represented by domestic production processes. Technically LCA-products are treated like domestic extraction. The following products where regarded as LCA products: Raw vegetable materials used in textiles (fibers) Petroleum and natural gas All metal ores including uranium and thorium All basic metal products (excluding iron and casting services) SOURCE: The amount of embodied raw materials (by type raw material) per unit of LCA products are estimated by life cycle inventories (e.g.Ecoinvent).

Calculation of Raw Material Equivalents for EU-27, 2000 and 2005 MIOT Monetary input-output table 60 X 60 Expansion of IOT Symmetric monetary and physical disaggregation expHIOT Expanded hybrid IOT 170 X 170 Detailed data On supply and use of products from several sources Internalization of depreciation Assignment of depreciation of fixed capital to intermediate consumption Depreciation adjusted expHIOT 170 x170 Depreciation matrix Depreciation of gross fixed capital by type of product and type of homogeneous branch RME Imports and final use products by type of raw material (60) and type of product (170) in raw material equivalents Leontief calculation Assignment of physical inputs to the economy to the final use products Environmental extension Physical input vectors

Applications of RME The scope of RME approach: ADJUSTMENT OF THE ORIGINAL VALUES OF PHYSICAL IMPORTS AN EXPORTS: However, the scope is not limited to simply adjusting the physical import and export flows by embodied flows in order to calculate economy wide IMPRME, EXPRME, DMIRME and DMCRME indicators DETAILED DATA CUBE: The detailed RME data cube with the dimensions raw material groups (60), product groups (170) as well as final use categories (consumption, capital formation, exports) and imports has the capability for a wide range of analyses

The RME data cube The data cube can be used for: INDIVIDUAL RAW MATERIALS: Analysis of direct and embodied raw material flows at the level of individual groups of raw material (imports, exports, domestic use) final use categories FINAL USE CATEGORIES: Analysis of raw materials embodied in final use products by type of product ECONOMIC DRIVING FORCES AND ENVIRONMENTAL PRESSURES: Analysis of the link between the economic production and consumption activities (economic driving forces) and the use of raw materials (environmental pressures) down to the level of individual product and raw material groups (e.g. decomposition IOT analysis, econometric modeling) ENVIRONMENTAL PRESSURES AND ENVIRONMENTAL IMPACTS: Physical framework for estimating the environmental impact of raw material use by the EIR indicator (link between environmental pressures and environmental impacts) at the economy wide as well as at a rather disaggregated level

Outlook UPDATING AND REGIONALIZATION BY A SIMPLIFIED APPROACH: The detailed EU-27 coefficient matrix (embodied raw materials per unit of products) for an individual year could be utilized in a simplified approach without complete expHIOT for updating and regionalizing the results for RME (to be elaborated)