Are We Moving Towards an Energy-efficient Low-carbon Economy? An Input-output LMDI Decomposition of CO2 Emissions for Spain and the EU28

79 Pages Posted: 22 Jan 2021

See all articles by Dario Serrano-Puente

Dario Serrano-Puente

UB School of Economics; Institut d'Economia de Barcelona (IEB)

Date Written: January 20, 2021

Abstract

Spain is on a path towards the decarbonization of the economy. This is mainly due to structural changes in the economy, where less energy-intensive sectors are gaining more relevance, and due to a higher use of less carbon-intensive primary energy products. This decarbonization trend is in fact more accentuated than that observed in the EU28, but there is still much to be done in order to reverse the huge increases in emissions that occurred in Spain prior to the 2007 crisis. The technical energy efficiency is improving in the Spanish economy at a higher rate than in the EU28, although all these gains are offset by the losses that the country suffers due to the inefficient use of the energy equipment. There is an installed energy infrastructure (in the energy-consumer side) in the Spanish economy that is not working at its maximum rated capacity, but which has very high fixed energy costs that reduce the observed energy efficiency and puts at risk the achievement of the emissions and energy consumption targets set by the European institutions. We arrive to these findings by developing a hybrid decomposition approach called «input-output logarithmic mean Divisia index» (IO-LMDI) decomposition method. With this methodological approach, we can provide an allocation diagram scheme for assigning the responsibility of primary energy requirements and carbon-dioxide emissions to the end-use sectors, including both economic and non-productive sectors. In addition, we analyze more potential influencing factors than those typically examined, we proceed in a way that reconciles energy intensity and energy efficiency metrics, and we are able to distinguish between technical and observed end-use energy efficiency taking into account potential rebound effects and other factors.

Keywords: CO2 emissions, energy efficiency, decomposition analysis, input-output, LMDI

JEL Classification: C67, O13, Q4, Q5

Suggested Citation

Serrano-Puente, Dario, Are We Moving Towards an Energy-efficient Low-carbon Economy? An Input-output LMDI Decomposition of CO2 Emissions for Spain and the EU28 (January 20, 2021). Banco de Espana Working Paper No. 2104, Available at SSRN: https://ssrn.com/abstract=3770096 or http://dx.doi.org/10.2139/ssrn.3770096

Dario Serrano-Puente (Contact Author)

UB School of Economics ( email )

c/ John M. Keynes, 1-11
Barcelona, 08034
Spain

Institut d'Economia de Barcelona (IEB) ( email )

c/ John M. Keynes, 1-11
Barcelona, 08034
Spain

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