Analysis of the importance of structural change in non-energy intensive industry for prospective modelling: The French case
Introduction
It is well known that change in aggregate energy intensity is caused by structural and technological effects. In recent years, a considerable number of analyses have studied their impacts on industrial energy intensity over time (Cortuk and Singh, 2011, Chen et al., 2011, Sauramo and Maliranta, 2011, Al-Salman, 2008, Ma and Stern, 2008, Chòliz and Duarte, 2006, Ramirez et al., 2005, Enevoldsen et al., 2007; Ussanarassamee and Bhattacharryya, 2005; Zhang, 2003; Fagerberg, 2000; Farla et al., 1998; Gardner and Elkhafif, 1998; Sinton and Levine, 1994; Gardner, 1993; Huang, 1993; Li et al., 1990; Ang, 1987; Boyd et al., 1987; Motamen and Schaller, 1985; Sterner, 1985; Jenne and Cattell, 1983). In France, the non-energy intensive industry (NEI) group represented almost 40% of total energy consumption in industry in 2005, compared to 30% for 1993. For both electricity and natural gas, we observe a respective increase in consumption from 45% to 55% and from 40% to 45% (Seck, 2012). Thus, NEIs possess a large share of the technical pool for energy savings.
Under the ESC mechanism (Energy Savings Certificate), energy operators are required to achieve a certain amount of energy savings per 3-year period. A failure to achieve these objectives incurs penalties. To avoid double counting with the European ETS (Emission Trading Scheme, or mechanism for trading emissions of CO2), the ESC cannot be applied to sites that come under the national quota allocation plan (PNAQ, which are generally the energy intensive industries (EIs)). NEIs are thus a priority target for energy operators. They are expected to play an important role in reducing the aggregate energy intensity of industry in the long term because of their economic importance (80% of value added in French industry) and have relatively high growth rate. However, these sectors have been neglected in energy analyses, despite the continuing policy focus on energy efficiency and the many reports and books written on the topic. This oversight encouraged us to do long-term modelling exercises with a bottom-up model like MARKAL/TIMES (The Integrated MARKAL-EFOM System developed by ETSAP (Energy Technology Systems Analysis Programme) under the aegis of the International Energy Agency (IEA)) (Seck, 2012; Seck et al., 2013, Seck et al., 2015; Djemaa, 2009; Gargiulo, 2009; Loulou and Labriet, 2007; Loulou et al., 2004, Loulou et al., 2005; Fishbone and Abilock, 1981, Fishbone et al., 1983).
These models will aim to inform energy companies on how much to invest in new technology so as to facilitate its incorporation and achieve the expected energy savings. Thus, it would be wise to analyze the importance of structural effects in energy efficiency studies in order to take them into account in modelling exercises and avoid skewed results. A deeper understanding of the sources of aggregate intensity change can help to improve the quality of energy demand forecasting. Energy demand forecasts that can explicitly take into account important effects of structural change will be more useful in policy making than those that cannot (Sinton and Levine, 1994). Past trends in aggregate energy intensity can help us better understand the current situation and have an influence on future decisions aimed at reducing energy use. This paper examines the relative contributions of technological and structural effects on change in aggregate energy intensity in the NEI group in France from 1996 to 2005. The paper is broken down as follows: Section 1 shows the level of disaggregation detail considered, the data and sources used in the analysis, along with a presentation of the decomposition method, which allows us to analyze the influence of structural and technological effects on changes in aggregate energy intensity; Section 2 deals with a way to distinguish between non-energy intensive and energy intensive industries in the industrial perimeter by using criteria which could explain their difference through a data mining approach; Section 3 presents the results of the analysis of the influence played by structural change on the evolution of the aggregate energy intensity.
Section snippets
Data and methodology
This article uses economic data published by EUROSTAT on the industrial sector (manufacturing industry) for France (value added, production value, energy costs). The data on energy consumption, employment and number of production sites came from the internal database ENERVISION of EDF R&D departments designed by EPI (Eco-Efficiency and Industrial Processes) and ICAME (Business Innovation, Market Analysis and their Environment) at the 4-digit level of NACE rev 1.1 (Statistical Classification of
Segmentation of the French industry
Each industry has its own structure and characteristics, which explains why in several articles; studies were conducted to distinguish segmentation into several families of an industrial perimeter. Most analyses distinguish them by considering some major energy-intensive industries and combining the rest into another group, or by basing their study on economic characteristics and/or energy in each sector. In their study of the Taiwanese manufacturing sector, Li et al. (1990) disaggregated the
The relative importance of structural and technological change
Fig. 6 below shows that the non-energy intensive industries have an important weight in the final energy consumption and value added of the industry in major European countries. They represent approximately 40% on average of the total final energy consumption for almost 75% of the total value added in the EU-27 industry. This weight of NEIs in final energy consumption is rather heterogeneous with values oscillating between 15% (as in Luxembourg with an industry which is dominated by iron and
Conclusion and policy implications
We can conclude that the structural effect was the overwhelming factor (75%) in improving energy performance in the period 1996–2005 within the non-energy intensive industry in France. Energy prices also played a stimulus role in enhancing that same energy performance, either through technical progress (energy efficiency) or through a structural effect with slower growth for some major sectors as we have seen. Note that technical progress was only a dominant factor in the NEI industry during
Acknowledgement
This research was supported by the Chair Modelling for sustainable development, driven by MINES ParisTech, Ecole des Ponts ParisTech, AgroParisTech, ParisTech, the FI3M and the Fondation de l'Ecole des Ponts ParisTech supported by ADEME, EDF, Renault, Schneider electric and Total.
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