Peeling the Onion: Analyzing Aggregate, National and Sectoral Energy Intensity in the European Union An Application of the WIOD Database Michael Schymura Centre for European Economic Research (ZEW), Mannheim, Germany 6 th April 202 Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 / 9
Outline Motivation and Research Question 2 Research Approach 3 Part I: Index Decomposition Results 4 Part II: Empirical Investigation 5 Conclusion Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 2 / 9
Motivation and Research Question Introductory Graphs for the EU27-Aggregate 0 7 0 8 2.4.06 Energy Use in Terajoules 6 5.8 Energy Intensity Gross Output in 995 $ 2.2 2.8 Energy Use.04.02 Energy Intensity 5.6 5.4 5.2 5 4.8 4.6 0.98 4.4 Gross Output in 995 $.6 4.2 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 (a) Gross Output (b) Energy Use (c) Energy Intensity Figure: Gross Output, Energy Use and Energy Intensity in the EU27 What do these figures tell us? Shift in the composition of the aggregated European economy? Technology? Regulation, prices, country specific characteristics? Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 3 / 9
Motivation and Research Question Introductory Graphs for the EU27-Aggregate 0 7 0 8 2.4.06 Energy Use in Terajoules 6 5.8 Energy Intensity Gross Output in 995 $ 2.2 2.8 Energy Use.04.02 Energy Intensity 5.6 5.4 5.2 5 4.8 4.6 0.98 4.4 Gross Output in 995 $.6 4.2 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 (a) Gross Output (b) Energy Use (c) Energy Intensity Figure: Gross Output, Energy Use and Energy Intensity in the EU27 What do these figures tell us? Shift in the composition of the aggregated European economy? Technology? Regulation, prices, country specific characteristics? Research Question: What are the drivers of this cleanup? Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 3 / 9
Methdology Research Approach Our Approach Index Decomposition Analysis For the EU27 Aggregate For all 27 European countries 2 Construction of variables to control for: Technological Change Energy Prices Structural Change & Trade Environmental Regulation Country Characteristics 3 Econometric analysis of index values and controls: Cross-Section and Panel Regressions to sort out causalities Various types of estimation procedures Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 4 / 9
Part I: Index Decomposition Results EU27-Aggregate Index Decomposition (Log Mean Divisia Index). 0.9 0.8 0.7 Total Effect Structural Effect Technology Effect 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 Figure: Log Mean Divisia Index Decomposition of Energy Intensity How does the picture(s) look like when individual countries are introduced? Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 5 / 9
Part I: Index Decomposition Results Two Exemplary Countries Index Decomposition (Log Mean Divisia Index) 0.9 0.8 0.7 0.6 0.5 Total Effect Structural Effect Technology Effect Index Decomposition (Log Mean Divisia Index).3.2. 0.9 0.8 0.7 0.6 Total Effect Structural Effect Technology Effect 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 (a) CZE 995 996 997 998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 (b) GER Figure: IDA Results for the Czech Republic and Germany Structure became more energy-intensive in Germany Technology almost unaltered in Czech Repubulic We have performed IDA for all 27 European Countries Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 6 / 9
Part II: Empirical Investigation Factors we control for Panel of 27 European Countries, 995-2009 405 observations 3 dependent variables: Index values for total, structural and technology effect Technlogy Factors: Total Factor Productivity (TFP), Income, Capital Vintaging, Energy Prices WIOD, Barro and Lee (200), Penn World Tables 7.0, Mincerian Returns on Education, Eurostat 2 Structural Factors: Trade Openness, Capital-to-Labor ratios WIOD, CIA World Fact Book, Penn Word Tables 3 Political Factors: Regulation Constructed Policy Index of > 3000 energy policies in the 27 countries (together with FEEM) 4 Country Characteristics: Latitude, Size, EU5, Heating Degree Days, Population Growth CIA World Fact Book, Penn World Tables, Eurostat Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 7 / 9
Part II: Empirical Investigation Results (Schematic) Factor Total Effect Structural Eff. Technology Eff. Exp. Est. Exp. Est. Exp. Est. TFP x PopGrowth x x x Vintaging x x Price x Income Openness x x x x x Cap.-Lab. Regulation x x Latitude x x x x Size x x x HDD EU5 Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 8 / 9
Wrap up and Conclusion Conclusion Some tentative conclusions Extensive study of European energy intensity Usage of WIOD and combination with established data sets Very large heterogeneity in Europe Decline due to improving technology Positive effects from European integration Thank you for your attention! Michael Schymura (ZEW Mannheim) Energy Intensity in Europe 6 th April 202 9 / 9