Analytical applications and policy needs Air Emission Accounts Analytical applications and policy needs Angelica Tudini ESTP course Vienna, 6-7 September 2012 Vienna, September 2012 ESTP course on air emission accounts Vienna, 6-7 September 2012 Angelica Tudini - Istat 1

An overview of analytical procedures by industry and policy questions/1 Description related policy/analytical questions (derivable policy relevant information) Presentation and simple analysis of the data of NAMEA-type tables Derivation of insights from the breakdown of direct environmental pressures and economic data by industries and private household Distribution: Shows how a country’s total of a certain environmental pressure (e.g. CO2-emissions) is distributed over industries and private households; e.g. how much percentage of total CO2 is emitted by private households and how much by industries Allows identifying main ‘hot spots’ within the production system; e.g. most CO2-emission arise in the electricity industry. Industry-specific “environmental profiles”: Shows how much a given industry contributes to total pressures and economic results; e.g. agriculture gives a low contribute to value added, though high to NH3 emissions Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

How much do households contribute to emissions How much do households contribute to emissions? How much production activities? 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1990 2003 CH4 CO CO2 NMVOC NOx Pb SOx attività economiche famiglie Quanto contribuiscono alle emissioni dei vari inquinanti le famiglie? E le attività produttive? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Structure of the emissions (households/production activities) in time series Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

“Environmental profile” of the Electrical energy, gas and water industry - 1992 and 2003 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% effetto serra acidificazione NMVOC Pb PM10 Value added Production Employment 1992 2003 How much does a specific industry contribute to the national economy and how much to the environmental pressures? How did both change? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Structure of the emissions (industry profiles) Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Greehouse gas emissions by gruoup o f industries - 1992, 1998 and 2003 (CO2-equivalents per million euro of product) 500 1000 1500 2000 2500 3000 01-05 10-14 15-37 40-41 45 50-55 60-63 64-95 Totale attività economiche 1992 1998 2003 Which are the most efficient activities, as for their environemntal pressures? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Emission intensities by industry – GHG and acidifing gases Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

But which are the determinants emission changes? Trends of air emission themes and output, Italy 1992 – 2006 (index 1992=100; output at chained prices, base 2000) Is there a decoupling between economic growth and environmental pressures?? 35.5 5.6 - 50.6 - 51.4 But which are the determinants emission changes? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012 9

An overview of analyses by industry and policy questions/2 structural de-composition analyses/models The development of a certain environmental pressure over time is explained by a number of determinants (effects) quantitatively. E.g. what are the determinants of the change of CO2-emissions between 1990 and 2003? How much can it be attributed to each of the several overlapping effects that contribute to it? How much has economic growth triggered the emissions? ,Has this effect been compensated by technological progress? What role did the changing production patterns play? Did consumption patterns (e.g. increased share of services consumption and reduced share of products from manufacturing) evolve as to reduce or to increase emissions? scenarios based on Leontief model and extensions The re-attribution models enable to anticipate effects of changed consumption patterns on environmental pressures as well as on economic variables. E.g. How much would CO2-emissions rise if the export of cars would increase by 10%? How would resource use change if private household consumption would become more service-oriented? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Changes 1992 - 2006 broken down by effect (% of 1992 level) - 20.7%: less polluting fuels more efficent use of fuels emission abatement systems production delocalisation service activities: from 53% to 57% of total output Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012 11

An overview of analyses by industry and policy questions/3 basic Leontief model q = (I-A)-1 ∙ y A model derived from symmetric IOT, where the dependent variable production output q is explained by a modified transformation matrix (I‑A)‑1 and the final demand y. The basic Leontief model enables to model consequences of changed consumption patterns (i.e. changes in Y). e.g. what would happen if the final demand for cars increases by 10%? How much output by other industries (e.g. tyres) would be needed in addition? How much would the output of all industries rise? Re-attribution of total (direct and indirect) emission and economic data… P = p∙ (I-A)-1 ∙ Y In general, one or more variables are connected to the basic Leontief model (e.g. environmental pressure variables such as e.g. CO2 or resource use, value added, employment), and made endogenous (i.e. dependent from final demand). A re-attribution model calculates how much of such a variable (e.g. environmental pressures) is activated directly and indirectly by the final demand. How much of the total pressure has been activated by the private households’ consumption or by exports. How much value added, employment, arise along the entire production-cycle (process-tree) of the final products of the individual industries. The demand for which group of products activates the highest direct and indirect pressures? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

An overview of analyses by industry and policy questions/4 eco-efficiency indicators (ratios) … The general principle/approach is to relate an economic (monetary) element to an environmental pressure variable. This ratio can be calculated for the total economy and it can be broken down by industries, whereby several options arise. Typical eco-efficiency ratios on the level of national economy are the energy intensity (primary energy use per unit GDP) or the resource productivity (GDP gained per unit resource use, e.g. in terms of DMI). … of production activities (direct) Relates the production generated in a single industry to the direct environmental pressure induced by this industry (directly). For instance, CO2 emitted by the electricity sector in relation to the production generated by the electricity generating industry. … of final demand (direct and indirect, i.e. re-attributed) Relates the direct and indirect environmental pressures activated by a certain final demand to the value of the respective final demand For instance, CO2 emissions activated system-wide … …by final electricity demand in relation to the employment activated in the value chain (it would be nice to be able to distinguish different ways of producing electricity, e.g. from renewables7 from fossil fuels) ... by final demand for investments. Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

An overview of analyses by industry and policy questions/5 time-series The results of all analytical procedures above can be analysed over time. How are environmental pressures by industries evolving? Which industries improved? How much has the output been changing due to increased final demand (e.g. exports)? How did the direct and indirect environmental pressures evolve that were activated by private household consumption? How did the direct and indirect environmental pressures evolve that were activated by the total final demand for a specific product group (e.g. products of the car industry)? How did the direct and indirect environmental pressures evolve that were activated by the demand for a specific product group (e.g. products of the car industry) by a certain final demand category (e.g. private households)? How did the eco-efficiency of a certain industry develop? How did the eco-efficiency of the production for a certain final demand category develop? How did the eco-efficiency of the production of a certain product group develop? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Reason for discussion on goods sent abroad for processing The 1993 SNA stipulates that in the absence of a change of ownership, a transaction must be imputed when measuring economic activity, that, in effect, assumes a change of ownership. As firms are increasingly sending material abroad for further processing, many experts have raised concerns about the meaning of international transactions as recorded in the balance of payments and the SNA as the statistics become increasingly decoupled from the underlying and actual financial transactions. Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Reason for discussion on goods sent abroad for processing This discussion has led to a recommendation to no longer impute a value for goods sent for processing; which better reflects the size of international transactions and the type of transaction, namely a (processing) service rather than a good. The nature of the production account, and the input-output account where the relationship between material inputs and production is central also changes. Under the new concept, emphasis is put on the contribution of each entity to the production process (or economic process) rather than on the physical technology Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Numerical examples using both SNA 93 and SNA 2008 concepts Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Questions raised due to change in SNA2008 How to account for supply and use in physical terms (kg/m3) in the energy accounts? To whom belong the emissions? Dutch refinery? Owner of the input and output? Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Numerical example: 100% of Dutch refineries are processing Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Numerical example: 50% of Dutch refineries are processing Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Implications of following SNA 2008 for energy accounts and indicators Key hybrid indicators (energy-intensity and energy productivity) are dependent on legal agreements between principal and contractor Changes in legal agreements over time lead to changes in key indicators over time. These changes in key indicators have nothing to do with a potential improvement/worsening of the physical transformation process of a particular industry. More difficult to interpret changes in indicators (‘real’ or ‘legal’ changes). Key indicators are not comparable anymore in between countries. For example, Norway uses relatively more domestic crude oil and less imports for refinery purposes than the Netherlands does. The changes drawn up in SNA2008 only apply for import and exports. The ratio ‘intermediate energy consumption from domestic supply’ is different in between European countries. Source: Changes in ESA 2010 and their possible implications for the energy accounts, Prepared for TF energy accounts meeting by: Maarten van Rossum May 2010 -Luxemburg Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Questions-answers: a framework P OLICY - MAKER QUESTIONS E NVIRONM . ACCOUNTING Choice of objectives Choice of policy MODULES Allocation Allocation Allocation among agents instruments among forms among of capital territories in what way can A SPECIFIC ENVIRONMENTAL ACCOUNTING in what way can MODULE be used DIFFERENT for the DIFFERENT ENVIRONMENTAL TYPES OF ACCOUNTING MODULES ALLOCATIVE be used for A SPECIFIC DECISIONS TYPE OF ALLOCATIVE DECISION Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

Allocative decisions by kind and related policy-maker questions kind of allocation examples of questions among different forms of capital To what extent is the generation of flows potentially damaging the natural capital necessary for the activity of the key economic sectors? (trade-off between natural and economic capital) Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

kind of allocation examples of questions among different agents (e.g. economic activities) What is the relationship between the economic performance and the environmental performance of various production activities? Are the economic activities that pollute the most the same ones that spend the most on environmental protection? What about the environmental taxes they pay? Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012

kind of allocation examples of questions among distinct territories Are there significant differences among territories in terms of environmental efficiency? Are the territories with the greatest pollution and degradation the same ones that spend the most on environmental protection? If there are Regional NAMEA-type data, the questions can be tackled jointly Angelica Tudini ESTP course on air emission accounts Vienna, 6-7 September 2012