1. 1 2009 International Energy Workshop Venice, 17-19 June Energy and CO 2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis Dirk C. Böhm University of Hohenheim / Robert Bosch GmbH, Langemarckstraße 9, D-76437 Rastatt, e-mail: dirkcboehm@web.de Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

2. 2 2009 International Energy Workshop Venice, 17-19 June Background and Motivation  the industrial sector accounts for nearly one-third of global energy use.  it is not only one of the largest consumers of energy, but also one of the largest energy- related carbon dioxide (CO 2 ) emitters  energy efficiency efforts in the manufacturing sector help to cut corporate costs, reduce dependency on energy imports and mitigate Greenhouse Gas (GHG) emissions. Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Energy demand of industries analysedCO 2 emissions of industries analysed

3. 3 2009 International Energy Workshop Venice, 17-19 June Background and Motivation  the industrial sector accounts for nearly one-third of global energy use.  it is not only one of the largest consumers of energy, but also one of the largest energy- related carbon dioxide (CO 2 ) emitters  energy efficiency efforts in the manufacturing sector help to cut corporate costs, reduce dependency on energy imports and mitigate Greenhouse Gas (GHG) emissions.  Key questions:  is the trend in industrial energy demand primarily dependent on the impact of changes in energy intensity or structural, i.e. product-mix effects?  to what extent do changes in the fuel-mix in industrial energy consumption and in electricity generation (i.e. emission coefficient changes) support mitigation of CO 2 emissions in the manufacturing sector? Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

4. 4 2009 International Energy Workshop Venice, 17-19 June The Concept of Decomposition Analysis Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  historical changes in economic or environmental indicators can be analysed by assessing the underlying forces or determinants that are responsible for these changes  LMDI I: Log-Mean Divisia Index Method I (Ang and Liu, 2001)  Additive time-series decomposition for energy demand and CO 2 emissions  Main application areas for the index decomposition analysis:  energy demand and supply analysis, e.g. Jenne and Cattell (1983), Howarth et al. (1991), Farla and Blok (2000), Park (1992)  energy-related greenhouse gas (GHG) emissions, e.g. Ang and Zhang (1999), Greening et al. (1998), Lise (2006), Lee and Oh (2006)

5. 5 2009 International Energy Workshop Venice, 17-19 June Methodology: Decomposition of Energy demand Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

6. 6 2009 International Energy Workshop Venice, 17-19 June Methodology: Decomposition of CO 2 emissions Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

7. 7 2009 International Energy Workshop Venice, 17-19 June Methodology: Decomposition of CO2 emissions Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

8. 8 2009 International Energy Workshop Venice, 17-19 June Data and Sources  Time frame: 1981-2005  Countries: France, Italy, Spain, Sweden and Belgium  Q: Value Added at constant 2000 prices in national currencies by industry (Source: STAN)  E: Total Final Energy Consumption in ktoe by industry and fuel (Source: IEA)  C: CO 2 emissions in kg by industry and fuel (Source: IEA)  Emission factors by fuel type (Source: IEA, IPCC)  fuels : petroleum products, natural gas, coal and coal products, electricity  ten manufacturing industries:  Food and tobacco (FOD, ISIC Rev.3: 15-16)  Textile and leather (TEX, ISIC Rev.3: 17-19)  Wood and wood products (WOD, ISIC Rev.3: 20)  Paper, pulp and printing (PAP, ISIC Rev.3: 21-22)  Chemical and petrochemical (CHE, ISIC Rev.3: 24)  Non-metallic minerals (NMM, ISIC Rev.3: 26)  Iron and steel (IRS, ISIC Rev.3: 271+2731)  Non-ferrous metals (MET, ISIC Rev.3: 272+2732)  Machinery (MAC, ISIC Rev.3: 28-33)  Transport equipment (TRA, ISIC Rev.3: 34-35) Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

9. 9 2009 International Energy Workshop Venice, 17-19 June Data: Industrial Activity and Energy Consumption Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  share of the industrial sector in relation to the total value added of the economy has fallen significantly in all countries  share of industry in total final energy consumption has also been declining for most of the countries  The ten manufacturing industries analysed in this study account for approximately 80% of industrial activity and around 90% of all energy consumed in the industrial sector of the respective countries

10. 10 2009 International Energy Workshop Venice, 17-19 June Result Overview: Energy decomposition Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  Strong positive activity effects  Partly compensated by negative energy intensity effects (especially France)  Significant negative structural effects for Spain and Sweden

11. 11 2009 International Energy Workshop Venice, 17-19 June CO 2 decomposition result overview Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  high activity effects due to rise in industrial output  Negative energy intensity effects (FRA, ITA, SWE)  Considerable negative emission factor effects (FRA, ITA, ESP, BEL)  Heterogeneous structural and energy mix effects

12. 12 2009 International Energy Workshop Venice, 17-19 June CO 2 decomposition results by country: Belgium Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  In the first years activity effect was offset by energy productivity gains and a lower emission factor of electricity generation in the 1980s (negative coefficient effect)  in the 1990s the negative energy-mix and structural effect were able to reduce CO 2 output while no more energy productivity gains could be achieved

13. 13 2009 International Energy Workshop Venice, 17-19 June CO 2 decomposition results by country: France Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  Slowly accumulating activity effect was overcompensated by continuous rise in energy productivity (negative energy intensity effect).  A positive structure effect was offset by an even larger negative emission factor effect  The fuel-mix effect remained small but negative during the whole observation period.

14. 14 2009 International Energy Workshop Venice, 17-19 June CO 2 decomposition results by country: Sweden Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  Comparable activity and negative energy intensity effect  Emission cuts in periods where fuel-mix effect was significant  Very low structural effect and emission factor effect

15. 15 2009 International Energy Workshop Venice, 17-19 June CO 2 decomposition results by country: Italy Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  Cumulated activity effect slightly larger than the effect from increasing energy productivity  Due to a more favorable fuel-mix in power generation CO 2 emissions could be reduced after 2003  low structural effect and fuel-mix effect

16. 16 2009 International Energy Workshop Venice, 17-19 June CO 2 decomposition results by country: Spain Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June  Up to the mid 1990s reduction of energy intensity and negative emission factor effect  In the last ten years no more energy productivity gains while the industrial sector experienced a sharp rise in activity; even negative fuel-mix and structural effect were not able to keep carbon dioxide emissions below 1981 levels

17. 17 2009 International Energy Workshop Venice, 17-19 June Conclusion  large energy productivity gains in most countries  in addition to the energy productivity gains, changes in the fuel-mix and emission coefficients can support greenhouse gas mitigation efforts in the industry sector  A negative structural effect, i.e. a shift to less energy- and carbon-intensive industries within the manufacturing sector on a large scale could not be observed  the coefficient effect is significant for those countries which built up nuclear power capacity for electricity generation in the 1980s  negative fuel-mix effects were accomplished by a fuel switch from coal and petroleum products towards natural gas and electricity consumption  efforts to reduce energy consumption per unit of output in the industry sector have been successful over the last 25 years  Energy productivity gains are the most effective source for greenhouse gas mitigation, followed by a fuel-switch in power generation and supported by a fuel switch in final energy consumption Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

18. 18 2009 International Energy Workshop Venice, 17-19 June Thank you for your attention! Revised version available. Please contact dirkcboehm@web.de Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June

19. 19 2009 International Energy Workshop Venice, 17-19 June Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June BACKUP

20. 20 2009 International Energy Workshop Venice, 17-19 June Energy decomposition results by country: France Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

21. 21 2009 International Energy Workshop Venice, 17-19 June Energy decomposition results by country: Italy Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

22. 22 2009 International Energy Workshop Venice, 17-19 June Energy decomposition results by country: Spain Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

23. 23 2009 International Energy Workshop Venice, 17-19 June Energy decomposition results by country: Sweden Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

24. 24 2009 International Energy Workshop Venice, 17-19 June Energy decomposition results by country: Belgium Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

25. 25 2009 International Energy Workshop Venice, 17-19 June Output shares and energy intensity development by industry Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

26. 26 2009 International Energy Workshop Venice, 17-19 June Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

27. 27 2009 International Energy Workshop Venice, 17-19 June Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

28. 28 2009 International Energy Workshop Venice, 17-19 June Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

29. 29 2009 International Energy Workshop Venice, 17-19 June Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

30. 30 2009 International Energy Workshop Venice, 17-19 June Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup

31. 31 2009 International Energy Workshop Venice, 17-19 June The Concept of Decomposition Analysis Dirk C. Böhm | 19/06/2009 | „Energy and CO2 Efficiency in the European Manufacturing Sector: A Decomposition Analysis” 2009 International Energy Workshop Venice, 17-19 June Backup