1. Environmental Goods and Services Sector (EGSS) European Statistical Training Programme (ESTP)
Sacha Baud – Statistics Austria
Marco Orsini – ICEDD
Vienna, 3 – 4 April 2017
THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

2. Round table
Please introduce yourself, your experience and expectations on the course!
You, your institution, your role in dealing with EGSS
Your experience in EGSS:
Have you already collected/estimated data?
Have you already gone through the Manuals (SEEA, EGSS handbook, EGSS estimation guidelines)?
Any experience in other modules of environmental (monetary) accounts?
Knowledge of environmental protection expenditure and SERIEE? Knowledge of national accounts?
Your expectations on the course

3. Overview of the course

4. Day 1 – point 2 of the agenda
Political needs and possible applications

5. 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% compared to 1990
20% of total energy consumption from renewable energy
Increase of energy efficiency by 20%

6. Political needs and applications (II)
Europe 2030
Reduction of greenhouse gas emissions at least by 40% compared to 1990
At least 27% of total energy consumption from renewable energy
At least 27% increase in energy efficiency
6th Environmental Action Plan
EU biodiversity strategy to 2020
Road map to a resource efficient Europe
Road map for moving to a low-carbon economy in 2050
7th Environmental Action Plan

7. Political needs and applications (III)
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 European Statistical System (ESS) developed new statistical products concerning the environment and its interaction with the economy (the society).

8. Political needs and applications (IV)
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

9. Political needs and applications (V)
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.
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”

10. Political needs and applications (VI)
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 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

11. Political needs and applications (VII)
Supporting the compilation of EGSS Eurostat published two new documents in 2016:
Environmental goods and services sector accounts – Handbook
Environmental goods and services sector accounts – Practical guide
Already in 2015 the European Commission published the commission implementing regulation (EU) 2015/2174 governing:
The indicative compendium of environmental goods and services
The format for data transmission
The Quality reports

12. Political needs and applications (VIII)
EGSS in the context of SERIEE
SERIEE consists of three pillars:
Environmental Protection Expenditure Accounts (EPEA)
Resource Use and Management Expenditure Accounts (RUMEA)
Intermediate systems for collecting and processing 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

13. Political needs and applications (IX)
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 still important differences that have to be taken into account, e.g. if data sources for EPEA are also used for EGSS.

14. Questions?

15. Day 1 – point 3 of the agenda
Definition and scope of the EGSS

16. Definition and scope of EGSS (I)
Promoting a “greener” economy:
to address environmental problems,
stimulate growth,
create additional and improved jobs,
and achieve better living conditions.
What does “greener” mean?
Incinerators
Biofuels
Public transportation

17. Definition and scope of EGSS (II)
No commonly accepted definition VS
Growing demand for indicators and statistics to measure such a
“greening” of the economy
EGSS

18. Definition and scope of EGSS (III)
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.

19. Definition and scope of EGSS (IV)
These technologies, goods and services must satisfy the main (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.

20. Definition and scope of EGSS (V)
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.

21. Definition and scope of EGSS (VI)
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.

22. Definition and scope of EGSS (VII)
The Environmental Sector comprises:
Environmental technologies, goods and services (EGS) 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

23. EGSS (handbook) connected products end-of-pipe technologies
integrated technologies
connected products
adapted goods
EGSS (handbook)
env. spec. services
connected services

24. Definition and scope of EGSS (IX)
Environmental specific services are “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.
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.

25. Definition and scope of EGSS (X)
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),
e.g. Organic agricultural products, cars with lower emissions, recycled paper, water-saving devices, renewable heat and energy, resource-efficient appliances.
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:

26. Definition and scope of EGSS (XI)
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, 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.

27. Definition and scope of EGSS (XII)
The 2016 EGSS handbook (as well as the questionnaire) established two new categories of products:
Environmental specific (“characteristic”) products: They primarily serve environmental protection or resource management. This category comprises:
- environmental specific services
- connected products
- most environmental technologies (end-of-pipe technologies)
Examples are: Sewerage services and collection, treatment and disposal services for waste, sound and thermal insulation materials, equipment for renewable energy production

28. Definition and scope of EGSS (XIII)
The 2016 EGSS handbook (as well as the questionnaire) established two new categories of products:
Cleaner and resource efficient products: They primarily serve a non-environmental purpose but may serve a secondary environmental purpose because they are specifically designed to be more environmentally friendly or more resource efficient than normal products of equivalent use. This category comprises:
- adapted goods
- some environmental technologies (integrated technologies)
Examples are: Electric transport equipment, secondary raw materials, electricity, fuels, gas and heat from renewable sources, the most resource efficient appliances, products of organic farming.

29. Source: Handbook on Environmental Goods and Services Sector (Eurostat 2009)

30. Definition and scope of EGSS (XV)
Overview of environmental goods and services
Environmental specific services: Characteristic environmental protection or resource management services Their purpose is EP or RM.
Connected products: Are not the output of characteristic EP or RM activities but their use directly serves an EP or RM objective.
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.
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.
Integrated technology: Less polluting and less resource intensive than the equivalent average technology in a given country.

31. Scope of the EGSS: focus on the main purpose
Difficulties to strictly adhere to the technical nature and producer intention criteria: for example when EP and RM expenditure data are used to compile EGSS accounts the compiled EGSS data may include some goods and services that are not environmental products but which are used for EP and RM activities (e.g. gross fixed capital formation for the production of EP services and for RM activities)

32. Exercise 1

33. Definition and scope of EGSS (XVI)
In the framework of the Eurostat EGSS questionnaire the following data shall be delivered:
Output („turnover“ in EGSS handbook)
Exports
Gross value added
Employment

34. Definition and scope of EGSS (XVII)
Output: those produced goods or services that become available for use outside the producer unit, any goods and services produced for own final use and goods that remain in the inventories at the end of the period in which they are produced. In the EGSS output also includes ancillary output.
Gross Value Added: represents the contribution made by these activities towards gross domestic product (GDP). It is the difference between the value of the output and intermediate consumption.
Employment: to be measured by the full-time equivalent employment engaged in the production of the environmental output.
Exports: consisting of sales, barter, gifts or grants, of goods and services from residents to non-residents.

35. Definition and scope of EGSS (XVIII)
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.

36. Definition and scope of EGSS (XIX)
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.
GG 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) carry out market, own account or non-marked activities, e.g. waste and wastewater treatment services: check where they are accounted for (GG or corporations? NACE?) (in EPEA they are 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.

37. Definition and scope of EGSS (XX)
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.
2 dimensions to distinguish producers of EGS
Corporations can produce environmental goods and services as principal, secondary and ancillary activity.
Corporations can produce EGS as market output, output for own final use and non-market output.

38. Definition and scope of EGSS (XXI)
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 activities whose output is intended for use within an enterprise. They are produced and consumed to enable principal and secondary activities of that unit, in-house waste collection and treatment, in-house wastewater treatment plants, education and training and other general administration.

39. Definition and scope of EGSS (XXII)
Market output is sold on the market at economically significant prices, i.e. 50 percent or more of the production costs are covered by the price.
Output for own final use consists of goods or services that are retained either for own final consumption or for capital formation by the same institutional unit.
Non-market output is provided free of charge or at economically insignificant prices (less than 50 percent).
Problems related to the categorisation of environmental products and environmental producers will be addressed later in this course.

40. Definition and scope of EGSS (XXIII)
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.
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.

41. General Government and NPIsH
Producers
Corporations
General Government and NPIsH
Principal
Secondary
Ancillary
Market
Own final use
Non-market
Market
Own final use
Non-market
Market
Non-market
Non-market

43. Definition and scope of EGSS (XXVI)
Definition and scope of EGSS (XIX)
Definition and scope of EGSS (XXVI)
These three types of breakdown:
EP and RM
NACE (and institutional sector)
Type of product/producers
together with the temporal dimension offer to the user of the data a great number of details on the EGSS and the possibility to build indicators using EGSS and national accounts data, given the fact that the EGSS data is consistent with national accounts definitions.

44. Questions?

45. Day 1 – point 4 of the agenda
Classifications

46. 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)

47. 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

48. 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
R&D for the production of energy from renewable sources
Other natural resource management activities

49. Exercise 2

50. 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 CPA.
CPA is compatible with NACE, therefore environmental G-T-S can be allocated to the producing 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.
Prodcom is more detailed than CPA. On EU level products are classified by 8-digit codes, on national level by 10-digit codes.

51. 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 goods, technologies and services.
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, like surveys or telephone interviews asking for the share of environmental exports in total output.

52. Classifications (VI)
Classification of the Functions of Government (COFOG):
COFOG can be used as data source for General Government activities. Use only data on costs of production; there are 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

53. 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 1,4,5,7, allocation?
= CEPA 6, allocation?
= CEPA 8, allocation to NACE 72
= CEPA 9, allocation?
Even though most of governmental environmental expenditure is classified under COFOG 5 some environmental expenditure could be classified under a different COFOG division. This should be checked.

54. Classifications (VIII)
Classification of the Functions of Government (COFOG):
Contrarily to EP, no full division is dedicated to resources management. Expenditure for RM could therefore be classified under several items and in particular in:
division 4, economic affairs, which could include expenditure related to renewable energy and/or recycling and
division 6, housing and community amenities, which could include expenditure related to low energy/passive buildings.

55. Classifications (IX)
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.

56. Classifications (X)
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.

57. Classifications (XI)
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.

58. Classifications (XII)
Problems and conventions related to classifications
1. Delimitation problems in CEPA and CReMA (cont.)
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

59. Classifications (XIII)
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: When complying with sustainable measures, e.g. with Forest Stewartship Council (FSC) or the Programme for the Endorsement of Forest Certification (PEFC) standards, fuel wood and other wood are incl. as cleaner and resource efficient products. Afforestation, reforestation and the protection of forests against forest fires and pest are incl. as specific RM products.

60. Classifications (XIV)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
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 (in general in NACE 37). These activities should be separated.
(If these activities cannot be separated out the previous version of the practical guide recommended for the revision of the EGSS handbook to cover also the distribution, collection and potabilisation under CReMA 10. But this is not mentioned in the handbook. So this should not be done.)

61. Classifications (XV)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
For the revision of the EGSS handbook it was proposed to include parts of NACE Wholesale of waste and scrap (only processing, no distribution activities) because these processing activities of waste and scrap would have an important link in the production chain of waste management.
But in the indicative compendium (indicative list) of the commission implementing regulation (EU) 2015/2174 this activity is not listed. Therefore it is excluded from the EGSS reporting.

62. Classifications (XVI)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
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.

63. Classifications (XVII)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
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.

64. Classifications (XVIII)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
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.

65. Classifications (XIX)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
There are enterprises carrying out environmental activities in different 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.

66. Classifications (XX)
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.

67. Classifications (XXI)
Problems and conventions related to classifications
4. Identifying EP and RM output using product classifications
Different product classifications (CPA, Prodcom, CN, …) 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 to identify E-G-S 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.

68. 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 rev. 2, 2-digit level)

69. Questions?

70. Definition and scope of EGSS: summing up
EGSS = EP + RM
Types of products: goods, services and technologies
Types of activities:
Market, for own account and non-market / Principal, secondary and ancillary
No RU
No natural hazards
Only main purpose (technical nature)
Environmental specific services
Connected products
Adapted goods
End of pipe and integrated technologies

71. Day 1 and 2 – Point 5 of the agenda
Methodology:
Basic approaches towards measuring the EGSS
Indicated compendium/EGS list
Mix of methods and data sources
Gap filling and estimations
Data sources
Allocation of activities to environmental protection and resource management
Relationship of EGSS to other monetary environmental accounts
Country examples

72. 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)
Demand side data sources (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.

73. 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 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.

74. 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.

75. 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 (cont.):
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.

76. 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 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 industries supplying the environmental goods and services used for investments. Modelling is necessary to allocate these investments to the supplying industries. In these cases the user perspective can determine the scope of EGSS.

77. Basic approaches (VI)
Problems related to demand side data sources (cont.):
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.

78. Basic approaches (VII)
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 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 “re- classified” as connected products or adapted goods.

79. Basic approaches (VIII)
Problems related to the categorisation of environmental products (con.):
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.
The identification of connected goods is rather difficult if production and trade statistics do not provide data at very detailed commodity level.
The identification of adapted goods is also very difficult.
Therefore the indicative list containing the most important environmental products and activities is enclosed to the EGSS questionnaire.

80. Basic approaches (IX)
Problems related to the categorisation of environmental products (cont.):
Even though the same terminology is used definitions in EPEA often differ from those in EGSS, especially 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 does NOT 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.

81. Basic approaches (X)
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.

82. Basic approaches (XI)
Problems related to the categorisation of environmental producers (cont.):
Specialist producers can be identified at individual unit level (could occur in any NACE category) or at 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.

83. The integrative approach
When comprehensive supply-side surveys on EGSS are not feasible because of time or resource constraints:
integrative approach
In general, the compilation of EGSS statistics through an integrative approach should follow a progression from a minimum set of estimates based on statistical data regularly produced to more detailed and exhaustive estimates to include data from a wider range of sources (ministries, agencies and producers associations).
The approach must balance the needs for detail and exhaustiveness of the estimates with timeliness of the statistical production and the resources available.

84. Questions?

85. Indicative compendium/EGS list (I)
It has been established by the Commission Implementation Regulation (EU) No. 2015/2174 and comprises the environmental goods and services as well as the economic activities to be covered by the EGSS accounts.
It describes the core products/activities found relevant for EGSS accounts and important in most European countries.
Of course it is possible to take into account further goods and services and activities with national relevance. Eurostat has to be informed about these activities and products.
To facilitate the use of the indicative compendium Eurostat maintains two lists, one of activities and one of products.

86. Indicative compendium/EGS list (I)
Only a few CPA/NACE/CN codes are fully environmental (i.e. they ONLY include EGS).
For most codes relevant for EGSS only a part of the products included under the heading of the code is environmental. This share varies depending on each country and specificity of the product.
So, the EGS % has to be determined.

87. Exercise 3

88. Mix of methods and data sources (I)
1. step: Identification of the EGSS population
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 EGS, based on CPA.

89. ‚Specialist producers‘
EGS
Producers
Source: EGSS handbook, page 72

90. Mix of methods and data sources (III)
1. step: Identification of the EGSS population (cont.)
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). This list also provides the type of product and the EP or RM domain.
But this statistics doesn’t provide information on gross value added and exports. Availability of employment data depends on the level of aggregation.

91. Exercise 4

92. Mix of methods and data sources (IV)
1. step: Identification of the EGSS population (cont.)
Structural Business Statistics: Allows for the identification of economic activities (NACE G to N, S95), i.e. industries. Except for specialist industries further information is necessary 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.
Up to now focus was on products and industries.

93. Mix of methods and data sources (V)
1. step: Identification of the EGSS population (cont.)
Other official statistics/external information: In those cases where it is necessary to determine the environmental share of a CPA or Prodcom code this can be done e.g. with following data sources:
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)

94. Mix of methods and data sources (VI)
1. step: Identification of the EGSS population (cont.)
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.

95. Mix of methods and data sources (VII)
2. step: Filling data gaps and estimations
Once all environmental technologies, goods and services are identified and allocated to industries missing data have to be filled.
Examples:
Employment is missing:
From Short Term Statistics data on production value and employment (persons and performed hours) 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.

96. Mix of methods and data sources (VIII)
2. step: Filling data gaps and estimations (cont.)
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 per employed persons in the economic branch (or a similar branch) at the most detailed level (4-digit in Austria).
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.

97. Mix of methods and data sources (IX)
2. step: Filling data gaps and estimations (cont.)
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 directly identified.
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.

98. Mix of methods and data sources (X)
2. step: Filling data gaps and estimations (cont.)
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 production in TJ and price per kWh is known.
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 exports are not done in Austria but would be analogous to the estimations already described (Exports from CN or other sources).

99. Source: aligned with EGSS handbook, page 120

100. Source: aligned with EGSS handbook, page 120

101. Source: aligned with EGSS handbook, page 120

102. Source: aligned with EGSS handbook, page 120

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

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

105. Mix of methods and data sources (XVII)
3. step: Allocation of activities to domains of EP and RM
Once all environmental G-T-S 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 Renovating, maintenance and restoration work for one- and two-dwelling buildings … is classified in CReMA 13 B. Heat/energy saving and management
ÖPRODCOM 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

106. Mix of methods and data sources (XVIII)
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 reduction of natural resource use shall be classified as a resource management activity.

107. Mix of methods and data sources (XIX)
3. step: Allocation of activities to domains of EP and RM (II)
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)

108. Examples for data calculation, estimation methods and data sources

109. Some estimations methods from: EGSS – practical guide – 2016 edition

110. EGSS: output & exports (I)
Market and non-market production of wastewater, waste and water management services
SUPPLY SIDE APPROACH FOR WASTEWATER MANAGEMENT AND WASTE MANAGEMENT SERVICES
SUPPLY SIDE APPROACH FOR WATER MANAGEMENT SERVICES

111. EGSS: output & exports (II)
Market production of EGSS other than wastewater, waste and water management services: non-capital goods and services
SUPPLY SIDE APPROACH FOR THE PRODUCTION OF ENVIRONMENTAL PROTECTION SERVICES
DEMAND SIDE APPROACH FOR THE PRODUCTION OF ENVIRONMENTAL PROTECTION SERVICES
SUPPLY SIDE APPROACH FOR ORGANIC FARMING PRODUCTS
SUPPLY SIDE APPROACH FOR ELECTRICITY PRODUCED FROM RENEWABLE SOURCES
PRICE TIMES QUANTITY APPROACH FOR BIOFUELS / biogas

112. EGSS: output & exports (III)
Market production of EGSS: capital goods and services
DEMAND SIDE APPROACH FOR ENVIRONMENTAL PROTECTION: CAPITAL GOODS AND SERVICES
DEMAND SIDE APPROACH FOR WATER MANAGEMENT: CAPITAL GOODS AND SERVICES
DEMAND SIDE APPROACH FOR ELECTRICITY FROM WIND, SOLAR AND HYDRO POWER: CAPITAL GOODS AND SERVICES
DEMAND SIDE APPROACH FOR BIOFUELS/biogas: CAPITAL GOODS AND SERVICES
DEMAND SIDE APPROACH FOR HEAT AND ENERGY SAVINGS: CAPITAL GOODS AND SERVICES

113. EGSS: output & exports (IV)
Non-market production other than wastewater, waste and water management services
Ancillary output
Exports

114. EGSS: employment (I)
Basic model

115. EGSS: employment (II) Ratios: labour compensation to production value
labour compensation per full time equivalent

116. EGSS: gross value added
Basic model for estimating EGSS gross value added

117. Relationships with other modules (I)
MEA Modules
Included in the Regulation (EU) 691/2011
Included in the Regulation (EU) 538/2014
First obligatory data delivery
Environmental taxes 
by 30 September 2013
Environmental subsidies and similar transfers
Environmental protection expenditure account (EPEA)
by 2017
Resource management expenditure account (ReMEA)
Environmental goods and services sector (EGSS)

118. Relationships with other modules (II)
EPEA, ReMEA and EGSS: coverage
a) “technologies” are mainly products used as capital formation. EPEA and ReMEA partly cover the use of such “technologies”
b) The EGSS covers also to some extent the use of environmental products since the EGSS questionnaire asks for export of environmental goods and services. In practice it covers the use of EGSS products by the ROW sector.

119. Relationships with other modules (III)
EPEA, ReMEA and EGSS: coverage
Area of difference
EPEA
ReMEA
EGSS
Accounting structure
Full functional account
Table of production related statistics
Coverage of goods and services
Production: all EP characteristic services
Expenditure (use): all EP characteristic services and connected and adapted goods
Production: all RM characteristic products
Expenditure (use): all RM characteristic services and connected and adapted goods
Production: all EP and RM characteristic products, connected goods and services, adapted goods and technologies.
Valuation of adapted goods
Net/ extra cost only
Full value
Coverage relating to international trade
Imports included in aggregate measures of expenditure
Exports included in aggregate measure of production
Treatment of taxes and subsidies
Valuation of expenditure at purchasers’ price
Valuation of output at basic price

120. Questions?

121. Country example: Austria (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 of Agriculture and Forestry), Economic Accounts for Agric. & For.
Specialized literature
Expert information
Internet research

122. Country example: Austria (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.

123. Country example: Austria (III)
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.

124. Country example: Austria (IV)
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; the number of employees in FTE is calculated using hours performed on NACE 4-digit level divided by the normal working hours per NACE 2-digit, (GVA is calculated with SBS average values).
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).

125. Country example: Austria (V)
Structural business statistics:
SBS data are used together with other data sources to calculate environmental output, gross value added 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).

126. Country example: Austria (VI)
Structural business statistics (cont.):
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).

127. Country example: Austria (VII)
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, biomass systems and wind power.

128. Country example: Austria (VIII)
Other enterprises:
1. step: These have to be identified as potential suppliers of EGS (data sources: Network Environmental Technology, studies, environmental newspapers and internet research).
2. step: Environmental output, gross value added and employment data are calculated on the basis of STS, telephone interviews, Association of Austrian Social Security Institutions and SBS.
Green report (Ministry of Agriculture and Forestry):
Data on revenues, gross value added and employment of certified organic farms; supplemented with data from Economic Accounts for Agriculture and for Forestry.

129. Country example: Austria (IX)
Energy balances:
Production of renewable electricity. Data on turnover, gross value added and employment from STS.
Energy-efficient /passive houses, energetic dwelling renovation:
Definition of environmental output, gross value added and employment of construction industry is difficult.
Pragmatic approach: output, GVA and employment calculated on the basis of housing subsidies (criteria energy savings and thermal rehabilitation); data source is a study.

130. Country example: Austria (X)
Recycling products
Calculated on the basis of input of scrap.
Paper: Environmental share of output, gross value added 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 is not possible.
Metals: Calculation of environmental output, GVA 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.

131. Country example: Austria (XI)
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.
Ancillary activities:
Environmental ancillary activities are only identified in agriculture; data source is the Green Report.
In previous years also production of renewable energy for own consumption was treated as ancillary activity. New rule since 2015: (secondary) market output, unless NA practice is different. EGSS data should adapt to NA practices.

132. Day 2 – point 6 of the agenda
Eurostat data requirements

133. Eurostat data requirements (I)
Module on EGSS of Regulation (EU) 538/2014 amending Regulation (EU) 691/2011
What are the data requirements in the regulation concerning EGSS?
Commission implementing regulation (EU) 2015/2174
Eurostat EGSS questionnaire

134. Eurostat data requirements (II)
Module on EGSS of Regulation (EU) 538/2014 amending Regulation (EU) 691/2011
Environmental specific services, environmental sole purpose products (connected products), adapted goods and environmental technologies.
Focus on market activities
NACE Rev. 2 A*21 aggregation level
Units: Million National currency and full time equivalents
Market output:
of which export
Value added of market activities
Employment of market activities

135. Eurostat data requirements (III)
Module on EGSS of Regulation (EU) 538/2014 amending Regulation (EU) 691/2011
Breakdown by CEPA and CReMA domains:
CEPA 1
CEPA 2
CEPA 3
CEPA 4
CEPA 5
CEPA 6
CEPA 7+ CEPA 8+ CEPA 9
CReMA 10
CReMA 11
CReMA 13
CReMA 13A
CReMA 13B
CReMA 13C
CReMA 14
CReMA 12 + CReMA 15 + CReMA 16

136. Eurostat data requirements (IV)
How to fill in the Eurostat EGSS questionnaire?
Plausibility and consistency checks!

137. Day 2 – point 7 of the agenda
Discussion of problems

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