K. Liaskas et al. r Energy Economics 22 2000 383]394 387
m F
m F
j j
j j
Ž .
D C s P ?
a ?
e ? ef ? s y P ?
a ?
e ? ef ? s
11
Ý Ý
Ý Ý
n i n
i n i n
i i
i
is 1
js 1
is 1
js 1
It can be seen from the last equation that the change in total CO emissions is a
2
Ž .
function of four variables: The total output P , the share of each branch to the
t
Ž .
Ž .
Ž
j
. total output a , the energy intensity
e and the fuel share
s in each
i t i t
i t
industrial branch. The emission factors are taken as constants because they do not change with time.
Ž .
Applying the total differential formula, Eq. 11 can be decomposed as follows:
m F
j j
Ž .
D C s P y P
? a
? e ?
ef ? s output effect
Ý Ý
n i
i i
is 1
js 1
m F
j j
Ž .
q P ?
a y a
? e ?
ef ? s structural effect
Ý Ý
i n i
i i
is 1
js 1
m F
j j
Ž .
q P ?
a ?
e y e ?
ef ? s energy intensity effect
Ý Ý
i i n
i i
is 1
js 1
m F
j j
j
Ž .
q P ?
a ?
e ? ef ? s y s
fuel mix effect
Ý Ý
i i
i n i
is 1
js 1
Ž . Ž
. q
Residuals R
12 Residuals are then divided into 11 combinatorial product terms of the four
variables where each term represents the joint effect of two variables. For example the term which expresses the joint effect of change in output and change in energy
intensity is the following:
m F
j j
Ž .
Ž .
Ž .
R s P y P ?
a ?
e y e ?
ef ? s 13
Ý Ý
13 n
i i n
i i
is 1
js 1
Ž In the same way the rest of the interaction terms R , R , R , R , R , R
,
12 14
23 24
34 123
. R
, R , R
, R are formed.
124 134
234 1234
Ž Under the ceteris paribus condition all variables remain unchanged except of
. Ž
. one each time each term of Eq. 12 expresses the change in CO emissions
2
attributed on the specific variable given that there is no change in the rest of the variables
3. Application study
After the oil crisis, in most EU countries, energy intensities have been consider-
K. Liaskas et al. r Energy Economics 22 2000 383]394 388
Fig. 1. Change in industrial CO emissions.
2
ably reduced. At the same time, efforts for the diversification of the energy mix and shifts towards domestically produced fuels have taken place in order to reduce the
dependence of EU economics on oil. These changes have also influenced the level and composition of energy consumption in the industrial sector. Nevertheless, it is
not clear at what extent the reduction of energy intensities has assisted in controlling CO emissions and if this positive effect was augmented or counter-
2
balanced by changes of other parameters, such as structural changes, fuel mix and production output.
Ž The performed analysis refers to the time period 1973]1993 divided in two
. subintervals and includes 13 countries of the EU. Ireland was excluded because of
missing data while Luxembourg is a particular case with one industrial sector dominating its whole energy system. The data for fuel consumption are taken from
Ž .
OECD Energy Balances OECD, 1994 , the output data from OECD’s STAN Ž
. database OECD, 1995 , while the emission factors are taken from EUROSTAT.
As shown in Fig. 1, with the exception of Greece and Portugal, in all other EU countries CO emissions have considerably decreased during the period 1973]1983.
2
In the next decade the rates of decrease diminish and in many countries CO
2
emissions tend to stabilize or even to slightly increase. The application of the proposed decomposition method gives the results pre-
sented in Table 1. The positive or negative contribution of each factor is expressed on a percentage basis, while the last three columns give the sum of all positive and
negative effects and the corresponding net effect. It is clear that the higher the net effect the more significant the reduction in
CO emissions. It can be seen that the obtained net effect values confirm the
2
K. Liaskas
et al.
r Energy
Economics 22
2000 383
] 394
389 Table 1
Results of the decomposition method
a
Ž .
Country Period
D CO
Positive Negative
Net Decomposition
2
Ž . kt
effect effect
effect Fuel
Output Energy
Structure Residual
intensity mix
UK 1973]1983
y 72 475
18 33
17 16
y 17
83 17
66 1983]1993
y 18 470
y 34
38 9
1 17
66 34
32 SWE
1973]1983 y
9024 y
11 43
36 y
6 y
4 79
21 58
1983]1993 y
39 y
33 y
6 47
y 10
4 50
50 1
POR 1973]1983
2921 y
53 17
2 y
21 7
26 74
y 48
1983]1993 y
421 y
20 16
18 y
25 21
55 45
11 NET
1973]1983 y
17 138 y
10 60
8 12
y 11
79 21
59 1983]1993
6081 y
61 y
19 7
5 8
20 80
y 59
ITA 1973]1983
y 34 549
y 19
40 8
y 17
16 64
36 29
1983]1993 y
5426 y
37 30
10 y
8 14
54 46
8 GRE
1973]1983 1054
y 37
28 13
y 12
y 10
41 59
y 17
1983]1993 474
3 y
60 21
13 y
3 37
63 y
25 GER
1973]1983 y
44 115 y
14 40
16 25
y 5
82 18
64 1983]1993
y 3558
y 45
8 34
12 1
55 45
9 FRA
1973]1983 y
34 532 y
27 45
16 11
y 1
72 28
44 1983]1993
y 10 753
y 15
23 35
1 26
85 15
71 FIN
1973]1983 y
5793 y
31 22
40 3
y 5
65 35
29 1983]1993
147 y
34 30
18 y
17 49
51 y
2 ESP
1973]1983 y
3147 y
37 32
23 y
6 y
2 55
45 10
1983]1993 y
2969 y
45 27
19 1
8 55
45 10
DAN 1973]1983
y 4934
y 23
48 20
6 3
77 23
53 1983]1993
y 3
y 8
y 28
47 4
y 14
50 50
BEL 1973]11983
y 20 208
y 26
52 13
3 6
74 26
47 1983]1993
4486 y
17 y
50 y
4 14
15 29
71 y
41 AUT
1973]1983 y
3604 y
28 42
16 y
3 11
69 31
38 1983]1993
y 655
y 39
25 12
y 6
18 55
45 10
a
Ž .
The sign y in the decomposition results indicates that the corresponding factor is opposite to the reduction of CO emissions.
2
K. Liaskas et al. r Energy Economics 22 2000 383]394 390
Fig. 2. Energy intensity effect on the reduction of industrial CO emissions.
2
trends observed in Fig. 1 presenting the changes of CO emissions over time. With
2
the exception of France, which shows an increase of the net effect value in the second time interval, in all other EU countries the sum of factors having a
beneficial influence on the reduction of CO emissions diminishes. Respectively,
2
the relative contribution of adverse factors increases. For facilitating a comparative evaluation between countries as regards the
relative impact of each separate factor Figs. 2]5 are constructed. Fig. 2 shows the contribution of the energy intensity effect on the reduction of CO emissions. It
2
can be seen that during the period 1973]1983 all the examined countries have achieved to decrease their industrial energy intensity and this improvement is
found to be the most important factor that led to the reduction of CO emissions.
2
In most of the examined countries the value calculated for the energy intensity effect is equal or higher than 40, while Finland and Portugal present the lowest
values. In the next decade, the relative impact of the energy intensity effect has Ž
decreased and in some countries Belgium, Netherlands, Sweden, Greece and .
Denmark becomes negative, meaning that industrial energy intensity has in- creased in these countries.
The other factor explaining the reduction of CO emissions is the change in the
2
fuel mix. Fig. 3 shows that fuel substitutions in the industrial sector have benefi- cially influenced the reduction of CO emissions and that in most countries this
2
effect becomes more important in the second time period under consideration. This is because of the growing environmental concern, which during the 1980s
resulted in increased shares of cleaner fuels, especially of natural gas. The only exception is Belgium where the shift towards coal had a small but negative impact
on CO emissions.
2
K. Liaskas et al. r Energy Economics 22 2000 383]394 391
Fig. 3. Fuel mix effect on the reduction of industrial CO emissions.
2
The beneficial impact of changes in energy intensity and fuel mix has been to a large extent offset by the output effect. Fig. 4 shows that, in almost all countries,
the increase of the industrial output has a negative effect on CO emissions.
2
Moreover, this negative impact has increased in the 1980s, when the European industry has overcome the problems caused by the energy and economic crisis.
Fig. 4. Output effect on the reduction of industrial CO emissions.
2
K. Liaskas et al. r Energy Economics 22 2000 383]394 392
Fig. 5. Structural effect on the reduction of industrial CO emissions.
2
Only in United Kingdom in the first time period, the decline of CO emissions was
2
owed to some extent to the decrease of the industrial output. Greece shows also in the 1980s a low but positive value of the output effect.
Things are more complicated in the case of structural effects. As shown in Fig. 5 no clear trend is discernible in the values assigned to this factor. There are
Ž .
countries Germany, Belgium, Netherlands, Denmark, UK and France where changes in the sectoral mix have positively influenced CO emissions, although in
2
the two last countries this impact tends to disappear in the second time period. In Ž
. other countries Portugal, Sweden, Italy, Austria the structural effect is negative
Ž over the whole examined period, while in the rest it is either negligible as in
. Finland or turns from positive to negative values or vice-versa. Nevertheless, in all
cases the calculated values vary at relatively low levels indicating that structural effects have not had a significant influence on the changes of CO emissions in EU
2
countries. The same remarks hold true for the interaction terms, which present both positive and negative values varying mostly at low levels.
4. Conclusions
