1. Environmental Goods and Services Sector (EGSS) European Statistical Training Programme (ESTP)
Sacha Baud – Statistics Austria
Vienna, 3 – 5 September 2018
THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

2. Definition and scope of the EGSS

3. Definition and scope of EGSS (I)
The EGSS - Environmental Goods and Services Sector consists of a heterogeneous set of producers of technologies, goods and services that:
Measure, control, restore, prevent, treat, minimise, research and sensitise environmental damages to air, water and soil as well as problems related to waste, noise, biodiversity and landscapes. This includes “cleaner” technologies, goods and services that prevent or minimise pollution.
Measure, control, restore, prevent, minimise, research and sensitise resource depletion. This results mainly in resource- efficient technologies, goods and services that minimise the use of natural resources.

4. Definition and scope of EGSS (II)
The environmental goods and services sector is a subset of the whole economy.
This subset is constituted by a group of economic units = producers.
These environmental producers are engaged in environmental activities.
The output of these environmental activities are environmental products.

5. Definition and scope of EGSS (III)
The scope of EGSS can be defined around environmental producers, environmental activities or environmental products.
PROBLEM
There is no perfect 1:1 relation between environmental producers, activities and products, e.g.:
Environmental producers may also be engaged in non- environmental activities (as secondary activities)
Environmental activities may also produce non-environmental products
The new handbook focuses on activities and products.

6. Definition and scope of EGSS (IV)
Definition of environmental activities
According to ESA 2010, § an activity occurs when resources are combined, leading to the creation of specific goods or services. An activity is characterised by an input of products, a production process and an output of products …
Environmental activities encompass those economic activities whose primary purpose is to reduce or eliminate pressures on the environment or to make more efficient use of natural resources.
Environmental activities either directly serve an environmental purpose or produce specifically designed products whose use serve an environmental purpose.

7. Definition and scope of EGSS (V)
Definition of environmental activities
Environmental protection (EP) activities include all activities and actions which have as their main purpose the prevention, reduction and elimination of pollution and of any other degradation of the environment, and
Resource management (RM) activities include the preservation, maintenance and enhancement of the stock of natural resources and therefore the safeguarding of those resources against depletion.

8. Definition and scope of EGSS (VI)
Definition of environmental products
Environmental products are the outputs of environmental activities.
Environmental products are all products that directly serve EP or RM or are specifically designed products whose use serves for EP or RM.
They can be produced as principal, secondary or ancillary output.
If an environmental producer is also engaged in non-environmental activities the output of the non-environmental activities are not EP or RM products.

9. Definition and scope of EGSS (VII)
Environmental activities and products must satisfy the main (primary) purpose criterion, which is in this case environmental protection or resource management. So, they must serve an environmental purpose.
In practice an environmental purpose may be identified by
the technical nature (i.e. inputs, a production process and outputs characterising a given activity),
presumed effects (assumed environmental consequences of an action),
real effect (objectively proven consequences on the environment of an action).
PRINCIPAL BASIS

10. Definition and scope of EGSS (VIII)
Further, an environmental purpose may be identified by
the purpose in a narrow sense (actual leading motivation or objective of actors,
the purpose laid down in legislation and
the purpose based on revealed intentions (policy statements or declarations.
BUT actual leading motivation and revealed intentions may be difficult to observe.
IMPORTANT: Goods and services which have a favourable impact on the environment but another main purpose are NOT INCLUDED in EGSS.

11. Definition and scope of EGSS (IX)
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.

12. Definition and scope of EGSS (X)
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.

13. Terminology used in the 2009 handbook
DIGRESSION
Terminology used in the 2009 handbook

14. EGSS (2009 handbook) connected products end-of-pipe technologies
integrated technologies
connected products
adapted goods
EGSS (2009 handbook)
env. spec. services
connected services

15. Terminology used in the 2009 handbook (II)
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.

16. Terminology used in the 2009 handbook (III)
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, 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:

17. Terminology used in the 2009 handbook (IV)
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.

18. Terminology used in the 2009 handbook
END OF DIGRESSION
Terminology used in the 2009 handbook

19. Definition and scope of EGSS (XI)
The 2016 EGSS handbook (as well as the questionnaire) introduced a new terminology:
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

20. Definition and scope of EGSS (XII)
The 2016 EGSS handbook (as well as the questionnaire) introduced a new terminology:
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.

21. Definition and scope of EGSS (XIII)
Based on the EGSS handbook 2016 and the SEEA Central Framework we can differentiate the activities as follows.
Activities
environmental
non-environmental
Environmental Protection
Resource Management
characteristic EP
non-charac-teristic EP
characteristic RM
non-charac-teristic RM

22. Definition and scope of EGSS (XIV)
Products
environmental
non-environmental
Environmental Protection
Resource Management
specific EP products
cleaner
products
specific RM products
resource efficient products
Specific services (=EP services)
Cleaner services (=adapted services)
Specific services (=RM services)
RE services (=adapted services)
Specific goods (=connected goods)
Specific goods (=connected goods)
Cleaner goods (=adapted goods)
RE goods (=adapted goods)

23. Definition and scope of EGSS (XV)
fixed assets
environmental
non-environmental
Environmental Protection
Resource Management
specific EP fixed assets
cleaner EP fixed assets
specific RM fixed assets
resource efficient fixed assets
Specific goods (=end-of-pipe technologies)
Cleaner goods (=integrated technologies)
Specific goods (=end-of-pipe technologies)
RE goods (=integrated technologies)
Specific services (=EP services)
Cleaner services (=adapted services)
Specific services (=RM services)
RE services (=adapted services)

24. Definition and scope of EGSS (XVI)
In the framework of the Eurostat EGSS questionnaire the following data shall be delivered:
Output
Exports
Gross value added
Employment

25. 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.

26. Definition and scope of EGSS (XVIII)
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.

27. Definition and scope of EGSS (XIX)
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.

28. Definition and scope of EGSS (XX)
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.

29. Definition and scope of EGSS (XXI)
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.

30. Definition and scope of EGSS (XXII)
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.

31. Questions?

32. Classifications

33. 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)

34. 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

35. 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

36. 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 EGS 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.
EGSS operational list!
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.

37. 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.

38. 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

39. 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.

40. 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.

41. 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.

42. 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.

43. 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.

44. 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.
Therefore it is proposed – as already stated - to use the technical nature of the activity, i.e. technically identical activities are classified in the same way in all countries.

45. 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.

46. 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 in general not possible to establish straightforward relationships between these economic activities and the environmental activities on the basis of national accounts data.
NACE 36: Activities to desalinate water, collect rainwater as well as to maintain water mains for reducing water losses have to be separated from other non-EGSS activities (mainly water supply).
NACE 37-39: These are in general published together by national accounts.
More detailed data are necessary, e.g. supply tables, EPEA, SBS, STS.

47. Classifications (XV)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
NACE Wholesale of waste and scrap is often seen as important in the production chain of waste management as it links supply and demand for waste and scrap.
But in the indicative compendium (indicative list) of the commission implementing regulation (EU) 2015/2174 this activity is not listed. Wholesale trade and retailing of environmental products are not part of EGSS.
Therefore it is excluded from the EGSS reporting.

48. Classifications (XVI)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
Material recovery services as well as secondary raw materials under NACE E38 should be classified under CReMA 11 B, CReMA 13 C or CReMA 14 depending on the kind of materials.
If these recovery activities and the secondary raw materials cannot be separated out of other E38 activities than they should be allocated to CEPA 3.

49. Classifications (XVII)
Problems and conventions related to classifications
2. Identifying EP and RM related activities in NACE Rev. 2 (cont.)
Depending on their focus the activities of NACE E39 may fall under each of the CEPA domains.
On CPA 6-digit-level specific products groups could be allocated to CEPA 1 and CEPA 4.
But other remediation and specialised pollution and control services (CPA ) may relate to each of the CEPA domains. For their allocation further data on the focus of the services are necessary.

50. 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 waste incineration (NACE E38.2) should be recorded under CReMA 13A (from biodegradable waste) or CReMA 13B (from non-biodegradable waste) and the production of biogas and biofuels from waste under CReMA 13A if programmes or laws mention RM as their single main objectives or if the value of these products cover more than 90% of the costs.
In all other cases, e.g. if data and modelling don‘t allow separating out these activities from other activities, they should be allocated to CEPA 3.

51. 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.

52. 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.

53. 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 EGS is limited.
As you can see from the Eurostat indicative 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.

54. Questions?

55. 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

56. Methodology: Basic approaches towards measuring the EGSS
Indicated compendium/EGS list
Mix of methods and data sources
Gap filling and estimations
Allocation of activities to environmental protection and resource management
Country examples

57. 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.

58. 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.

59. 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.

60. 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.

61. 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.

62. 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 (only extra costs) and EGSS (full costs).

63. Basic approaches (VII)
Problems related to the categorisation of environmental products:
The EGSS handbook 2009 differentiated environmental products by goods, technologies and services. These terms were defined using concepts from different statistics. Technologies are unknown in production statistics.
The term ‘technologies’ was used to track the production and installation of certain investment products that are combined into items of investment (e.g. a wind mill park).
With the handbook 2016 most environmental technologies (end-of- pipe technologies) are covered by environmental specific products. Integrated technologies are covered by cleaner and resource efficient products.

64. 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 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.

65. 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.

66. 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.

67. 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.

68. 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.

69. Questions?

70. 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.

71. Indicative compendium/EGS list (II)
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 by using further data sources, e.g. expert information, company data.

72. Mix of methods and data sources (I)
As there is no standard classification of environmental 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’s operational list is produced by product and activity and includes references to various classifications for the EU statistics.

73. Mix of methods and data sources (II)
Two main compilation approaches can be distinguished:
Bottom-up approach: Micro data (data of individual producer units) are used to identify the EGSS producers and then these data are aggregated.
Top-down approach or integrative approach: Meso and macro data (groups of products or producers) are used from different data sources. It is necessary to identify the environmental share.
Both approaches can be combined.

74. Mix of methods and data sources (III)
1. Bottom-up approach

75. ‚Specialist producers‘
EGS
Producers
Source: EGSS handbook 2016, page 42

76. Mix of methods and data sources (V)
Step 1: Analysis of economic activities
Starting points are the indicative compendium and the operational list. Skip those activities which are not relevant for your country and add those activities which are important at national level but not included in the list or the compendium. Create your own country- specific list.
Some activities clearly refer to environmental activities, e.g. NACE 37, 38 and 39. So, they can be fully taken into account. Nevertheless it might be that they also produce non-environmental products (out of the scope of EGSS).

77. Mix of methods and data sources (VI)
Step 1: Analysis of economic activities (cont.)
Most activities comprise environmental and non-environmental activities, e.g. NACE (Architectural activities) or (Research and experimental development of natural sciences and engineering).
It is necessary to determine their environmental share. At national level it might be possible to have more detailed classifications with clear declarations of the environmental products, e.g. NACE Stove-fitter in Austria.
With this step it will be possible to identify some of the environmental activities. Further investigations are necessary by using specialised business registers, data bases etc.

78. Mix of methods and data sources (VII)
Step 2: Analysis of products
In addition to the analysis of economic activities it may be necessary to analyse products.
A starting point is the indicative compendium and the operational list of Eurostat. They cover the core products for EGSS. Again, products not relevant at national level should be skipped and relevant products which are not part of the lists should be added.
At national level more detailed information may be available than in the operational list (CPA 6-digit). That could facilitate the identification of environmental products.
Otherwise it is again necessary to use further data sources to determine the environmental share of a specific product group.

79. Source: EGSS handbook 2016, page 46

80. Source: EGSS handbook 2016, page 47

81. Mix of methods and data sources (X)
Step 3: Identification of environmental producers
After the identification of the environmental activities and the environmental products it is necessary to identify the corresponding producers using statistical and administrative source, like SBS, STS, business registers.
IMPORTANT: The non-environmental production of these producers needs to be identified. Further data sources are necessary.

82. Mix of methods and data sources (XI)
Step 4: Construction of the EGSS database
In the last step the result of the first 3 steps can be put together in a database containing codes of activities and products, company IDs etc.
Data sources for the bottom-up approach
Structural Business Statistics
PRODCOM
Surveys

83. Mix of methods and data sources (XII)
2. Top-down approach
This approach uses data for the calculation of EGSS which are already aggregated; at the level of economic activities, sectors, products or product groups.
The data come from different sources and in most cases the environmental share has to be determined.

84. Mix of methods and data sources (XIII)
2. Top-down approach (cont.)
Supply side sources, e.g.:
SBS
PRODCOM
Parts of national accounts (production and generation of income accounts, SUTs, employment, etc.)
EPEA
COFOG
ReMEA
External trade and balance of payments
Sector specific statistics (e.g. share of organic farming, sustainable forestry, renewable energy)

85. Mix of methods and data sources (XIV)
2. Top-down approach (cont.)
Demand side sources, e.g.:
EPEA
Parts of national accounts (e.g. gross fixed capital formation)
Further data sources, e.g.:
Business reports
Trade association reports
Engineering reports
Expert information
Specialised literature
etc.

86. Mix of methods and data sources (XV)
2. Top-down approach (cont.)
Data maps
For the top-down approach mainly data should be used that are regularly produced by the statistical system and whenever possible combined with results of EGSS surveys and data from business associations to improve the coverage and data quality.
Because of the use of different data sources we have to deal with overlapping data, different scopes, definitions, classifications or valuation principles.
Therefore a careful integration is needed to achieve a sufficient coverage but also to avoid overlaps and double-countings.
Data maps can be useful in this task.

87. Source: EGSS handbook 2016, page 65

88. Mix of methods and data sources (XVII)
Allocation of activities to domains of EP and RM
Once all environmental GTS 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

89. Mix of methods and data sources (XVIII)
Allocation of activities to domains of EP and RM (cont.)
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.

90. Mix of methods and data sources (XIX)
Allocation of activities to domains of EP and RM (cont.)
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 in RM (class depends on material)

91. Some estimation examples (I)
Some examples from
the practical guide 2016!

92. Some estimation examples (II)
Market and non-market production of wastewater, waste and water management services
Data can be taken from NA broken down by industry. In general A*64 level data are available.
Supply tables provide information on non-environmental secondary output that has to be removed and secondary output in other industries that has to be added.
In case E37-39 is published together further data are necessary to split CEPA 2 and CEPA 3, e.g. EPEA.
For the breakdown of market and non-market output it might be also necessary to use further data sources (EPEA and COFOG).

93. Some estimation examples (III)
Market production of EGSS other than wastewater, waste and water management services: non-capital goods and services
Demand side approach for the production of environmental protection services:
This consists of using the balancing equation between supply and demand:
Production – Intermediate consumption + Imports + VAT and other taxes less subsidies = Final consumption + GFCF + Exports

94. Some estimation examples (IV)
Market production of EGSS other than wastewater, waste and water management services: non-capital goods and services
Supply side approach for organic farming products:
Multiplying the share of land use for organic farming in total used agricultural area with national accounts (NA) data on agricultural output
Information on organic and conventional agriculture may be used to reflect different productivities and prices for the two types of farming.

95. Some estimation examples (V)
Market production of EGSS other than wastewater, waste and water management services: non-capital goods and services
Supply side approach for electricity produced from renewable sources:
Combining the national accounts data for CPA D35 (electricity, gas steam and air condition supply) with the shares of electricity output, of electricity generation in electricity output and of electricity generation from renewable sources in total electricity generation provides an estimate of the output of electricity from renewable sources.
Price times quantity approach for biofuels/gas

96. Some estimation examples (VI)
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 head and energy savings: capital goods and services

97. Some estimation examples (VII)
Non-market production other than wastewater, waste and water management services:
This category covers all EGSS government output other than output of characteristic services.
EPEA can be used as data source - ‘internal current expenditure’ should include the costs of materials used and compensation of employees used for in-house environmental protection activities, and exclude payments for bought environmental services.
EPEA data are broken down by CEPA (no CReMA) and must be allocated to NACE.

98. Some estimation examples (VIII)
Ancillary output:
Ancillary output is only intended for use within enterprises to enable the production of principle and secondary output. It is also not purchased from other units.
In national accounts ancillary output is not recorded separately, only included implicitly.
A data source could be EPEA but EPEA has a different structure of NACE than EGSS. There it is necessary to recalculate the ancillary output

99. Some estimation examples (IX)
Ancillary output (cont.):
Source: EGSS practical guide 2016, page 68

100. Some estimation examples (X)
Exports:
There are several data sources for exports but they are classified by products and not by activities and they do not include services.
Possible data sources:
Foreign trade statistics (for products)
Balance of payment statistics (for services)
SBS (exports by economic activity; data on foreign turnover; in Austria e.g. not in SBS but in STS)
Supply and use tables
Use of micro data
Expert opinions

101. Some estimation examples (XI)
Exports (cont.):
Calculation of exports by using supply and use tables.
Source: EGSS practical guide 2016, page 72

102. Calculation of employment (I)
Basic model:
Source: EGSS practical guide 2016, page 76

103. Calculation of employment (II)
Ratios:
Labour compensation to production value
Labour compensation per full-time equivalent

104. Calculation of gross value added
Basic model for estimating GVA:
Source: EGSS practical guide 2016, page 83

105. Questions?

106. 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 Sustainability and Tourism), Economic Accounts for Agric. & For.
Specialized literature
Expert information
Internet research

107. 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.

108. Country example: Austria (III)
Some EGS 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.

109. 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, hydro turbines, devices for filtering or purification of gases, liquids or air (about 70 positions in PRODCOM).

110. 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).

111. 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).

112. 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.

113. 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 Sustainability and Tourism):
Data on revenues, gross value added and employment of certified organic farms; supplemented with data from Economic Accounts for Agriculture and for Forestry.

114. 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.

115. Country example: Austria (X)
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.

116. Eurostat data requirements

117. Eurostat data requirements (I)
Regulation (EU) 691/2011 as amended sets out the obligation to report to EGSS data.
What are the data requirements in the regulation concerning EGSS?
Commission implementing regulation (EU) 2015/2174
Eurostat EGSS questionnaire
Eurostat quality report

118. Eurostat data requirements (II)
Regulation (EU) 691/2011 as amended sets out the obligation to report to EGSS data.
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

119. Eurostat data requirements (III)
Regulation (EU) 691/2011 as amended sets out the obligation to report to EGSS data.
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

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

121. Eurostat data requirements (V)
Quality report

122. Questions?