European Union - Regional Economics Applications Laboratory

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1 European Union - Regional Economics Applications Laboratory EU-REAL is a research net in Regional Science integrated by European people tied to the Regional Economics Applications Laboratory (REAL) in the University of Illinois at Urbana Champaign, USA. Like REAL, the European Union - Regional Economics Applications Laboratory focuses on the development and use of analytical models for urban and regional forecasting and economic development. The purpose of the EU-REAL Discussion Papers is to circulate the results of the research of its members among readers within the academic community. The opinions and conclusions expressed in the papers are those of the authors and do not necessarily represent those of the universities which they belong. All requests and comments should be directed to EU-REAL Badajoz Staff (Miguel A. Márquez and Julian Ramajo), University of Extremadura, Faculty of Economics and Business Administration, E-06071, Badajoz (Spain), Phones: ; (Ext. 9178), Fax: , eureal@unex.es. Web page: A SAM Analysis of the Energy Sector in Andalusia: Intensities and CO2 emissions Cardenete M.A., Fuentes P. (Universidad Pablo de Olavide), and Polo C. (Universidad Autónoma de Barcelona) EU-REAL DP March,

Like REAL, the European Union - Regional Economics Applications Laboratory focuses on the development and use of analytical models for urban and regional forecasting and economic development.

2 A SAM Analysis of the Energy Sector in Andalusia: Intensities and CO 2 emissions M. Alejandro Cardenete (macardenete@upo.es). Department of Economics, Universidad Pablo de Olavide, Seville. Patricia Fuentes Saguar 1 (pfuesag@upo.es). Department of Economics, Universidad Pablo de Olavide, Seville. Clemente Polo (clemente.polo@uab.es). Department of Economics, Universidad Autónoma de Barcelona. ABSTRACT The aim of this paper is to analyze the energy sector in Andalusia and its importance both from the point of view of the energy usages in the Andalusian economy and because of the consequences these usages have on the energy sector in terms of CO 2 emissions to the atmosphere. The method implemented on this analysis uses multipliers derived from Social Accounting Matrices (SAM). For the calculus of energy intensities the 1995 SAM for Andalusia (SAMAND95) is used in different endogeneity scenarios, beginning with the Leontief model of simple multipliers included in the SAM. The analysis of the CO 2 emissions is done through the application of a multipliers decomposition methodology to the SAMAND95, This allows to separate the production vector of the energy subsystem into different effects depending on where the production demand is originated. In order to connect the multipliers decomposition model with the physical CO 2 emissions we use a vector of emission coefficients per expenditure unit, which allows us to appreciate the importance each effect has on the emissions generated by the productive sectors as to satisfy the final demand. Keywords: Social Accounting Matrices, Regional Accounts, Input-Output Tables, Energy SAM Multipliers. JEL Codes: C67, C68, D57, D58, Q43, Q51, R13. 1 Postal Address: Departamento de Economía. Universidad Pablo de Olavide. Carretera de Utrera, km. 1, Sevilla. Spain. 2

ABSTRACT The aim of this paper is to analyze the energy sector in Andalusia and its importance both from the point of view of the energy usages in the Andalusian economy and because of the

3 1. Introduction. The studies that deal with energy matters are mainly justified by two reasons. One of them is their relative scarcity; the other is the fact that the use of energy for production and consumption activities provokes the emission of environmentally noxious gases. This work tackles the study both of the energy usages in the Andalusian economy and of the emissions the use of energy provokes, and does so by estimating the energy usages (energy intensities) of the productive activities in the Andalusian economy and the CO2 emissions generated by those activities and by the final demand. We try to clarify the importance that the energy sector has for the Andalusian economy, both because of the energy intensities, direct and indirect, of the different sectors (energy demand) and because of the consequences of this demand on the energy sector itself in terms of CO2 emissions to the atmosphere. The method used is the Social Accounting Matrices (SAM) multipliers analysis. The beginnings of the analysis with Social Accounting Matrices are found in Stone (1962) and in Pyatt & Round (1979) among others, having its first applications in Spain in works such as Kehoe, Manresa, Polo & Sancho (1988). Regarding specific studies about energy in Spanish economy there is, among others, the one by Alcántara & Roca (1995) and another by Alcantara & Padilla (2007) which uses Input-Output Analysis to measure energy demands and CO 2 emissions on a national scope. A study focusing on a regional scope is Manresa & Sancho (2004) where SAM analysis is used to estimate energy intensities and CO 2 emissions in Catalonia. The statistic information mainly used in this paper comes from Cardenete & Moniche (2001) Social Accounting Matrix for Andalusia on year 1995 (SAMAND95), while data on emissions were taken from the Eurostat and the Environmental Department of the Andalusian Government, and data on prices were provided by the Spanish National Statistics Institute. 3

This work tackles the study both of the energy usages in the Andalusian economy and of the emissions the use of energy provokes, and does so by estimating the energy usages (energy intensities) of

4 allows to separate the production vector of the energy subsystem into different effects depending on where the production demand is originated. To convert the monetary units into CO 2 emission units we use a vector of emission coefficients per expenditure unit, that allows us to change the model and to appreciate the importance of the different effects on the total emissions generated to satisfy the final demand of the energy sector and on the direct emissions generated by the sector s whole production. This helps us know the weight that these emissions have on the emissions generated by all the productive activities. The results are in some cases the expected ones, because the electric and the refining sectors represent each of them around 25% of the direct emissions of all the productive activities. Electricity is actually the most polluting sector in Andalusia. On the contrary, for the different effects and their weight on the total emissions, things change because the Oil refining sector represents almost 16% of the total emissions of all the economic sectors, while the electric sector is below 7%. This is explained by the great importance that exports have on the oil refining sector s final demand, while in the emissions generated by the electric sector s production, the biggest value (75%) comes from the emissions generated by the sales to the rest of sectors, needed to satisfy these other sectors final demand. Regarding the other energy sectors, the high emissions per unit produced by the Coal sector are worth noticing, and the contrary occurs in the Gas sector, which generates much less emissions per unit produced than the rest of the energy sectors. Besides, the high CO 2 emissions generated by the Coal use is a remarkable data at the present time, because in a World concentrated in the fight against the Climate Change, some initiatives seem to be focussed to de-carbonize the energy system. The results obtained in this paper could orient the different applicable policies, though it is necessary to take into account that some differences are due to the fact that this is a sector with important price discriminations. As a hint for future research, it would be interesting to separate renewable energies from the rest and check their importance for both the economy and the environment, considering the emissions they generate along their own productive processes. 5. References. ALCÁNTARA, V., PADILLA, E. (2007): Subsistemas Input-Output y contaminación: Una aplicación al Sector Servicios y las Emisiones de CO 2 en 16

different effects on the total emissions generated to satisfy the final demand of the energy sector and on the direct emissions generated by the sector s whole production.

5 España. II Jornadas Españolas de Análisis Input-Output Zaragoza: Crecimiento, Demanda y Recursos naturales. Libro de Comunicaciones. Zaragoza, Septiembre ALCÁNTARA, V., ROCA, J. (1995): Energy and CO 2 emissions in Spain: methodology of analysis and some results for Energy Economics, Vol. 17, Nº 3, pp ANTÓN VALERO, V.; DE BUSTOS GUADAÑO, A. (1995): La emisión de CO 2 y su problemática comunitaria. Un método de estimación general. Documento de trabajo SGPS Dirección General de Planificación. Ministerio de Economía y Hacienda. CARDENETE, M.A., MONICHE, L. (2001): El nuevo marco Input-Output y la SAM de Andalucía para Cuadernos de CC.EE. y EE. Nº 41, 2001, pp CONSEJERÍA DE MEDIO AMBIENTE (2003). Inventario de Emisiones de Andalucía. Junta de Andalucía. CONSEJERÍA DE MEDIO AMBIENTE (1995). La Tabla Input-Output medioambiental de Andalucía Junta de Andalucía. DEFOURNY, J., THORBECKE, E. (1984): Structural Path analysis and Multiplier Decomposition within a Social Accounting Framework, The Economic journal, nº 94, pp HEIMLER, A. (1991): Linkages and vertical integration in the Chinese economy, Review of Economics and Statistics, 73, pp INSTITUTO DE ESTADÍSTICA DE ANDALUCÍA (1999): Sistema de Cuenta Económicas de Andalucía. Marco Input-Output Volume I y II. Edit. Instituto de Estadística de Andalucía. Sevilla. España. KEHOE, T.J., MANRESA, A., POLO, C., SANCHO, F. (1988): Una Matriz de Contabilidad Social de la Economía española, Estadística Española, Vol. 30, Nº 117. MANRESA, A., SANCHO, F. (2004): Energy intensities and CO 2 emissions in Catalonia: a SAM analysis, International Journal Environment, Workplace and Employment, Vol. 1, Nº 1, pp POLO, C. ROLAND-HOLST, D.W., SANCHO, F. (1991): Descomposición de multiplicadores en un modelo multisectorial: Una aplicación al caso español, Investigaciones Económicas, Vol. XV, nº 1. PYATT, G., ROUND, J. (1979): Accounting and Fixed Price Multipliers in a Social Accounting Framework. Economic Journal, Nº

(1995): La emisión de CO 2 y su problemática comunitaria. Un método de estimación general. Documento de trabajo SGPS-95005. Dirección General de Planificación. Ministerio de Economía y Hacienda.

6 SÁNCHEZ CHÓLIZ, J. Y DUARTE, R. (2003): Analysing pollution by vertically integrated coefficients, with an application to the water sector in Aragon, Cambridge Journal of Economics, 27, pp STONE, R. (1962): A Social Accounting Matrix for A Programme for Growth. Edit. Chapman and Hall Lid. London. 18

application to the water sector in Aragon, Cambridge Journal of Economics, 27,

UNIVERSIDAD PONTIFICIA COMILLAS FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION

UNIVERSIDAD PONTIFICIA COMILLAS FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION List of Subjects by Department 14-15 DEPARTAMENTO DE ECONOMÍA - DEPARTAMENT OF ECONOMICS Análisis de la Coyuntura Analysis