The impact of economic activity in Asturias on greenhouse gas emissions: Consequences for environmental policy within the Kyoto Protocol framework

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Journal of Environmental Management 81 (2006) 249–264 www.elsevier.com/locate/jenvman

The impact of economic activity in Asturias on greenhouse gas emissions: Consequences for environmental policy within the Kyoto Protocol framework$ Margarita Argu¨ellesa, Carmen Benavidesa, Beatriz Junquerab, a

Departamento de Economı´a Aplicada, Universidad de Oviedo, 33071 Oviedo (Asturias), Spain Departamento de Administracio´n de Empresas y Contabilidad, Universidad de Oviedo, 33071 Oviedo (Asturias), Spain

b

Received 10 June 2004; received in revised form 28 October 2005; accepted 31 October 2005 Available online 23 March 2006

Abstract Climate change is one of the major worldwide environmental concerns. It is especially the case in many developed countries, where the greenhouse gas emissions responsible for this change are mainly concentrated. For the first time, the Kyoto Protocol includes an international agreement for the reduction of the net emissions of these gases. To fulfil this agreement measures designed to reduce or limit current emissions have to be brought into force. Consequently, fears have arisen about possible consequences on competitiveness and future development of manufacturing activities and the need for support mechanisms for the affected sectors is obvious. In this paper, we carry out a study of the emissions of gases responsible for climate change in Asturias (Spain), a region with an important economic presence of sectors with intensive emissions of CO2, the chief greenhouse gas. To be precise, in the first place, the volumes of direct emissions of the said gases in 1995 were calculated, showing that the sectors most affected by the Kyoto Protocol in Asturias are iron and steel and electricity production. Secondly, input–output analysis was applied to determine the direct and indirect emissions and the direct, indirect and induced emissions of the different production sectors, respectively. The results derived from the direct and indirect emissions analysis and their comparison with the results of the former allow us to reach some conclusions and environmental policy implications. r 2006 Elsevier Ltd. All rights reserved. Keywords: Environmental policy; Kyoto Protocol; Environmental regulation; Greenhouse gas emissions; Input-output analysis

1. Introduction World climate change is one of the chief, current, environmental concerns. It is especially the case in developed countries, where the main concentrations of the greenhouse gases responsible for this change are to be found. For this reason, in 1992, the United Nations Conference on Environment and Development (UNCED) was held in Rio de Janeiro (Brazil). Its aim was to consider the possibility of setting up world legislation for the $ This work has been financed by the I+D+I regional Plan of Asturias 2001–2004 under the section for grants to carry out agreed research projects. File No. PC-CIS01-21. Resolution of 26 September 2002. Corresponding author. Tel.: +34 985104972; fax: +34 985103708. E-mail addresses: [email protected] (M. Argu¨elles), [email protected] (C. Benavides), [email protected] (B. Junquera).

0301-4797/$ - see front matter r 2006 Elsevier Ltd. All rights reserved. doi:10.1016/j.jenvman.2005.10.011

climate. Thus, in the same year, the United Nations Framework Convention on Climate Change was drawn up and agreed upon. The text of this agreement was very ambiguous. Therefore, in 1995, in Berlin, the Conference of the Parties to this Framework Convention put forward the need to devise a new tool that would allow the real achievement of the aim of the agreement. This was the starting point for a process of working out a Protocol that would limit the emissions of greenhouse gases. It was in 1997 that this Protocol was adopted in the 3rd session of the Conference of the Parties celebrated in Kyoto. For the first time, there was an agreement to reduce the net emissions of six gases in the industrialized countries (CO2, CH4, N2O, HFC, PFC and SF6). Specifically, the international agreement that emerged from Kyoto set for the period 2008–2012 a reduction of 5.2% of the 1990 emission

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levels of these gases. Towards reaching this objective the Kyoto Protocol offered a variety of mechanisms: ‘emissions trading’, ‘sinks’, ‘joint implementation’, ‘clean development mechanisms’, ‘bubbling’, etc. (Grubb et al., 1999). Each signatory party of the Kyoto Protocol decides how it will implement the agreements of the Treaty. For the European Union as a whole, the aim is to reduce their emissions by 8%, in accordance with Annex B of the Kyoto Protocol. The European Union has adopted a Directive whose implementation must be developed by each Member State. In this way the European Union adopts the targets of the Kyoto Protocol and aims to achieve them by setting up an emission trading system as described in the Directive. On September 7, 2004, an Act approving the National Plan of Emissions Rights Allocation 2005–2007 was published in the Spanish State Official Bulletin. Spain has quantified emission limits in the period 2008–2012, which cannot exceed by more than 15% the emissions levels in 1990 of CO2, CH4 and N2O and the levels in 1995 of HFC, PFC and SF6. However, in 2001 the Spanish emissions were already topping the figure for the base year by 32% (Ministerio de Medio Ambiente, 2003). Implementing the specific regulations of the Kyoto Protocol obliges companies in the European Union to reduce their greenhouse gas emissions. Pollution ceilings are assigned to each firm. Fines for each tonne emitted over the limit range from 40 to 100 euros. In this context, firms have three kinds of instruments to enable the fulfilment of the aims in the fight against pollution (the so-called flexibility mechanisms). In addition, their objective is to help to reduce the costs involved in fulfilling the established legal obligations. These are estimated at about 1000–2000 million euros in the case of Spain (Expansio´n, 2003a). Should the companies use these instruments, it is assumed that it will be cheaper for them to fight against pollution if they limit themselves to adopting internal modernization actions in their installations. The first of these mechanisms is the market for the buying and selling of tradable emission permits. The second consists of the clean development mechanism, which allows companies to make investments to reduce the greenhouse pollution effect in developing countries. For example, a Spanish company could record in its accounts the change from coal to natural gas fuel in a power plant in Colombia. Although it is a different plant, it still remains the same company. This would count as a reduction of its emissions to be in keeping with the limit set. Joint implementation instruments constitute the third action. They are the same as the previous one in that they are clean development investments, with the difference that they are in the OECD (OECD, 1991) countries or in the countries of Eastern Europe. These two mechanisms are still under scrutiny by the European Union and could give rise to sanctions further to those already foreseen for the trading in pollution.

The economic impact of the specific implementation in Spain of the Kyoto Protocol is giving rise to grave concern because of its potential effect on competitiveness and the excessive burden it could cause in certain industrial sectors (ABC, 2003a; El Mundo, 2003). Both the employers (Expansio´n, 2003a) as well as some sectors of the trade unions (Ferna´ndez, 2003) have manifested their concern. That is, Kyoto (or in this case, the European and, hence, Spanish implementation of this Treaty) has lead to an opposing response, especially in the most affected sectors 1 (Expansio´n, 2003c). What emerges from the Kyoto Protocol is the need to initiate actions to reduce greenhouse gases. The specific implementation of this Protocol in the region, for which this empirical study has been carried out, demands a new environmental approach by the companies. This approach includes product definition and a new concept for practical checking procedures to prove that goals have been achieved (Hill, 2001). To these exigencies is to be added the knowledge of the situation with regard to greenhouse gas emission in each region and country. Public Administrations in the European Union, at all levels, have set things in motion with the aim of guaranteeing the fulfilment of the commitment made at Kyoto. Along these lines, in 2002, the Region of the Principado de Asturias approved an official statement in favour of sustainable development and work was begun on setting up a strategy for sustainable development, based on the principles set out in the statement. Point 3 of the latter states: ‘‘Tendencies threatening sustainability, such as climate changey should be identified and studied in order to determine the causal factors, evaluate their impact and evolution in time.’’(Gobierno del Principado de Asturias, 2002). In accordance with this, the aim of this paper is to carry out a study of the emissions in Asturias of those gases responsible for climate change. Greenhouse gas emissions are a particularly relevant problem in this Spanish region where some of the most important industrial sectors are economic activities with large emissions of these gases (specially CO2). Firstly, in Section 2 we calculate the direct emissions of greenhouse gases in the region. Secondly, direct and indirect emissions are estimated via analysis by Type I multipliers. Finally, direct, indirect and induced emissions are obtained using Type II multipliers. A comparative analysis of the results appears in Section 3. In Section 4 we discuss the results and some proposals for environmental policy are offered. 2. Estimate of greenhouse gas emissions in Asturias In this paper the input–output table for Asturias, corresponding to the year 1995 (SADEI, 1998), has been 1

Electricity companies, oil refineries, metallurgical and chemical industries, cement-makers, paper, tile and ceramic sectors and the leather and textile industries (ABC, 2003b; Expansio´n, 2003b).

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used with some modifications: aggregation of the 60 original production branches into 122 and conversion of the table into euros (Table 1).

2.1. Estimate of direct greenhouse gas emissions The emissions of the gases that form the object of our study arise both from the activity of the different production sectors in the economy and from regional household consumption. A summary of the main sources of pollution in Asturias is shown in Table 2. The emission sources in the production sectors are: the burning of fuel to obtain energy and their own production processes. In order to calculate the emissions from the former, we need to know the actual quantity of fuel j used by sector i (Fij) and the emission factors for each type of fuel (eijk).The emission factor stands for the amount of pollutant k generated when sector i uses a unit of fuel j. The physical emissions from fuel burning in each sector i are obtained from the product F ij
ekij . Added to this are the emissions from the production process, which are obtained by multiplying the emission factor for each sector (nik), that is, the amount of pollutant k generated per unit output in the production process of sector i, by the total output for the sector (Xi): nki
X i . The sum of both products gives as a result the amount of pollutant k generated by the sector i in physical units: (px)k,i. The emissions from consumption in households (pc)k,h result from the burning of fuels for energy purposes. The emission factors for each pollutant and type of fuel (ekhj ) are multiplied by the physical amount of each fuel consumed in households (Fhj). Exceptionally in the case of HFC/PFC gases, emissions from dwellings are unrelated to fuel use, but to refrigerator consumption (see Table 2). Table 3 presents the total direct emissions thus calculated. It can be seen that greenhouse gas pollution in Asturias comes mostly from CO2 emissions which make up 91.7% of the total. The remainder corresponds to methane (4.7%), emissions of N2O (2.6%) and HFC/PFC (1%). Large emitters of CO2 are the coke refineries, which produce the coke needed for iron and steel activities3, and power stations, which generate electricity from coal. Both activities account for 75% of the regional CO2 emissions. They are followed, though at some distance, by household consumption and the remaining industrial activities. For 2 The 60 branches of the Asturian input-output table (IOT) are aggregated as follows: (1) Agriculture, forestry and fishing; (2) coal mining; (3) other mining activities; (4) coke and petroleum refineries; (5) chemical industry; (6) other non-metallic mineral products; (7) metallurgy and manufacture of metal products; (8) other manufacturing industries; (9) electricity, gas, steam and hot water; (10) construction; (11) transport; and (12) other services. 3 In the Asturian IOT the coke production is included in the sector called ‘‘Coke and petroleum refineries’’, not in the sector ‘‘Metallurgy and manufacture of metal products’’, where iron and steel production is. However, most of the coke refineries are in iron and steel factories.

251

methane, arable, livestock farming and coal mining generate 99.4% of the emissions. The agricultural sector is also the main source of N2O emissions (67.2%), followed by the chemical industry (30.4%). Finally, the HFC/PFC emissions arise almost entirely from aluminium production (99.6%). Once the emissions generated by the different production sectors are known (px)k,i the output-pollution coefficients can be determined (mx)k,i . They represent the amount of pollutant k, generated in the production of an output unit of the sector i. They are calculated dividing (px)k,i by the output of sector i (Xi). Thus, it is possible to obtain the matrix k
i of output-pollution coefficients (Mx) set out in Table 4. This table also includes the vector k
1 of consumption- pollution coefficients (Mc). The elements of this vector are the coefficients (mc)k,h, which represent the pollution generated per unit of final consumption. They are obtained by dividing (pc)k,h by the total household consumption (C). Therefore, the total volume of direct emissions (p) is equal to p ¼ px þ pc ¼ M x
X þ M c
C,

(1)

where px and pc are vectors k
1 that represent the total direct emission volumes from the production sector and household consumption, respectively. X is the vector i
1 of sector outputs. 2.2. Estimate of direct and indirect emissions of greenhouse gases: analysis of Type I multipliers The analysis of the direct and indirect effects of each sector on gas emissions gives additional information about the activities responsible for this kind of pollution. The starting point for this analysis is to be found in the Leontief Demand Model. All the production activity of an economy is directed towards satisfying the final demand. Towards this aim, each productive sector demands intermediate inputs from other sectors, which are necessary for its production. The rows of an IOT corresponding to the production sectors show how each one of their outputs is meant to either satisfy the intermediate demand of other sectors or to satisfy the final demand. This can be represented by the following equation: A
X þ D ¼ X,

(2)

where A is the matrix i
i of regional technical coefficients (aR ij ), X is the vector i
1 of sector outputs and D the vector i
1 of the final demand of regional products. Finally aR ij ¼

xR ij , Xj

xR ij being the amount of production obtained in Asturias by sector i which is used by the regional sector j and Xj the output of sector j. The Leontief inverse matrix (I–A)1 relates the sector output to the final demand by way of the following

6655 1036 8979

66 73 0 139

442 2598 21 3062

R. of Spain R. of the World Total

Other nonAsturias metallic mineral R. of Spain products R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Metallurgy and manufacture of metal products

Other manufacturing industries

44,674 34,793 596 80,063

1288

8975 1090 10,065

R. of Spain R. of the World Total

Asturias

Chemical industry

0

Asturias

16 0 16

R. of Spain R. of the World Total

Coke and petroleum refineries

0

Asturias

Other mining activities

162 208 0 370

6497 273 127,026

R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

120,256

Asturias

Agriculture, forestry and fishing

Coal mining

Agriculture, forestry and fishing

Intermediate demand matrix

13,451 8419 2270 24,141

10,978 2125 749 13,853

722 18 0 740

2688 1399 9786

5699

2103 559 2662

0

1043 0 1098

55

0 0 0 0

8379 0 14,721

6342

Coal mining

2027 1622 0 3650

251 302 0 553

1 0 0 1

1213 0 3680

2467

1644 0 1644

0

0 0 0

0

0 0 0 0

0 0 192

192

Other mining activities vas

3424 1964 8 5396

516 198 0 715

320 0 0 320

200 0 293

93

651 196 846

0

0 0 0

0

482 32 161,256 161,770

0 0 2

2

Coke and petroleum refineries

3818 5912 3372 13,102

231 125 287 644

0 0 0 0

16,363 42,193 60,853

2296

1252 10,386 17,724

6086

2767 4182 7338

389

117 0 8656 8772

437 1093 2187

656

9541 8674 1921 20,137

3250 4352 386 7989

22,132 5434 1880 29,446

11,240 8086 19,839

513

9538 4213 13,751

0

13,471 20,314 68,029

34,244

30 0 1409 1439

0 0 2

2

58,914 46,288 7788 112,990

218,745 267,260 151,163 637,168

45,792 15,167 0 60,959

13,454 935 41,182

26,793

26,518 1925 220,014

191,571

57,873 185,032 248,620

5715

257 0 0 257

0 0 42

42

Chemical industry Other nonMetallurgy and metallic mineral manufacture of products metal products

104,580 321,164 61,392 487,137

44,068 53,753 23,965 121,785

2060 14,855 4361 21,276

27,918 7023 37,822

2880

11,174 377 11,551

0

467 222 968

278

15 0 0 15

209,402 42,619 455,956

203,935

6708 12,174 2672 21,554

54,946 1741 134 56,821

103 95 0 198

1088 102 1273

82

10,514 68,809 130,424

51,101

0 0 0

0

314,004 0 35,339 349,343

0 0 1

1

48,061 62,877 10,910 121,847

90,940 30,789 2359 124,087

107,311 69,906 7542 184,759

12,223 239 18,876

6414

18,441 2185 20,626

0

11,710 1433 27,201

14,058

0 0 0 0

161 5 195

28

Other Electricity, gas Construction manufacturing steam and hot industries water

11,203 48,461 6829 66,494

1488 1243 0 2731

137 42 0 178

592 88 690

10

80,270 15,581 95,851

0

0 0 20

20

1 0 0 1

3 0 4

1

Transport

143,315 211,453 58,391 413,159

2806 5023 330 8158

2583 6485 270 9338

44,076 9566 55,237

1595

50,121 5093 55,214

0

28 0 184

156

9530 70 0 9601

16,966 553 27,138

9619

Other services

449,718 763,802 156,150 1,369,670

428,662 369,509 179,394 977,565

181,228 112,074 14,053 307,355

137,711 70,668 258,509

50,130

221,200 110,413 580,370

248,757

87,376 211,183 353,473

54,915

324,598 310 206,661 531,569

241,844 44,544 627,465

341,077

Intermediate outputs

252

Table 1 Input-output table of Asturias, 1995 (in thousands of euros)

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0 232,838 2630 235,468

1120 117,585 20,040 138,745

964 4246 3469 8678

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Other mining activities

Coke and petroleum refineries

Other non metallic mineral products

Metallurgy and manufacture of metal products

Other manufacturing industries 0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

432,829 1,079,191 296,879 1,808,898

498 18,303 6019 24,820

964 4246 3469 8678

1120 117,585 20,040 138,745

0 232,838 2630 235,468

0 176 0 176

7285 0 1553 8838

81,136 108,708 15,914 205,758

64,749 290,845 149,991 505,585

69,540 23,123 13,873 106,537

2673 3420 2040 8132

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

3616 0 0 3616

GDFCF

61,431 4521 161,478 227,430

9447 1041 18 10,507

14,796 435 0 15,231

1644 0 0 1644

30,707 0 0 30,707

Total Final consumption

20,217 5350 0 25,567

3685 429 0 4114

1578 140 0 1718

6931 0 0 6931

3084 0 0 3084

Public consumption

146,694 30,228 5001 181,924

21,317 4864 0 26,181

15,290 589 23 15,903

45,443 0 0 45,443

27,397 0 0 27,397

126,986 59,463 39,232 225,682

21,171 3119 1023 25,313

12,578 3634 0 16,212

984 0 0 984

22,541 0 0 22,541

58,900 0 0 58,900

132,524 0 0 132,524

4828 0 0 4828

395 0 0 395

7279 0 0 7279

0 0 0 0

84 0 0 84

551 0 0 551

Stocks changes

50,138 31,110 72,713 153,961

12,847 3025 2538 18,410

7712 1228 5 8945

612 0 0 612

15,375 0 0 15,375

123,649 290,845 149,991 564,485

202,064 23,123 13,873 239,060

7501 3420 2040 12,961

395 0 0 395

7279 0 0 7279

0 0 0 0

84 0 0 84

3065 0 0 3065

Total GDCF

585,689 707,055 145,085 1,437,829

132,107 56,536 4905 193,549

62,344 11,787 220 74,351

3373 0 0 3373

30,047 0 0 30,047

556,478 1,370,036 446,869 2,373,384

202,562 41,426 19,892 263,880

8465 7665 5508 21,639

1515 117,585 20,040 139,141

7279 232,838 2630 242,747

0 176 0 176

7369 0 1553 8922

78,071 108,708 15,914 202,693

Domestic final demand

940,096 476,319 351,295 1,767,710

89,276 34,918 2265 12,6459

79,132 14,840 2189 96,161

21,060 0 0 21,060

202,798 0 0 202,798

917,996 0 0 917,996

1,410,859 0 0 1,410,859

186,681 0 0 186,681

96,466 0 0 96,466

15,351 0 0 15,351

6695 0 0 6695

52,920 0 0 52,920

115,774 0 0 115,774

Exports to the rest of spain

548,703 109,030 117,157 774,890

30,264 4680 11 34,955

15,210 1607 0 16,817

3612 0 0 3612

72,673 77,130 10,089 159,892

232,758 0 0 232,758

627,140 0 0 627,140

22,210 0 0 22,210

90,926 0 0 90,926

8284 0 0 8284

3324 0 0 3324

0 0 0 0

2256 0 0 2256

Exports to the rest of the world

461,491 234,446 24,672 720,609

146,023 20,720 0 166,744

43,941 7617 0 51,558

625 0 0 625

4091 0 0 4091

1,150,754 0 0 1,150,754

2,037,999 0 0 2,037,999

208,891 0 0 208,891

187,392 0 0 187,392

23,636 0 0 23,636

10,019 0 0 10,019

52,920 0 0 52,920

118,030 0 0 118,030

Total exports

190,508 158,310 23,898 372,715

126,912 16,321 11 143,244

24,576 11,375 1389 37,340

15,002 0 0 15,002

11,157 3 0 11,160

1,707,232 1,370,036 446,869 3,524,138

2,240,561 41,426 19,892 2,301,879

217,356 7665 5508 230,530

188,907 117,585 20,040 326,532

30,915 232,838 2630 266,383

10,019 176 0 10,195

60,290 0 1553 61,842

196,101 108,708 15,914 320,723

Demand final

1,930,679 561,628 78,746 2,571,053

1,451,070 208,386 4543 1,663,999

40,461 19,022 0 59,483

141,112 0 0 141,112

128,430 0 0 128,430

2,156,951 2,133,839 603,019 4,893,808

2,669,223 410,935 199,286 3,279,444

398,584 119,740 19,561 537,885

239,037 255,296 90,708 585,041

279,672 454,038 113,043 846,753

64,933 87,552 211,183 363,668

384,888 310 208,214 593,411

537,178 350,552 60,458 948,188

Resources uses

5,274,896 2,442,998 1,022,294 8,740,188

2,077,482 358,967 15,314 2,451,763

321,559 73,073 3826 398,457

242,612 0 0 242,612

554,157 77,133 10,089 641,379

M. Argu¨elles et al. / Journal of Environmental Management 81 (2006) 249–264

432,829 1,079,191 296,879 1,808,898

498 18,303 6019 24,820

0 176 0 176

7285 0 1553 8838

Asturias R. of Spain R. of the World Total

Coal mining

212,264 65,539 3016 280,819

81,136 108,708 15,914 205,758

Asturias R. of Spain R. of the World Total

Intermediate Inputs

33,362 4927 0 38,289

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Other services

3941 797 0 4738

Agriculture, forestry and fishing

Asturias R. of Spain R. of the World Total

Transport

2215 0 0 2215

Household consumption

Asturias R. of Spain R. of the World Total

Construction

5857 0 0 5857

Final demand matrix

Asturias R. of Spain R. of the World Total

Electricity, gas steam and hot water

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152,259 0 0 152,259

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Asturias R. of Spain R. of the World Total

Electricity, gas steam and hot water

Construction

Transport

Other services

Intermediate Inputs 1,559,502 0 0 1,559,502

Coal mining

304,088 168,535

472,622

67,704

540,326

722,250

61,259

6445

4868 331,362

Agriculture, forestry and fishing

25,503 6552

32,055

276,979

309,034

589,853

40,750

236,229

2300 44,813

Primary inputs matrix

Gross wages Employers0 contribution to social security Compensation of employees Gross operating surplus Gross value added at factor costs Value of commodities at production prices Fixed capital consumption Net operating surplus Production taxes Operating subsidies

1,559,502 0 0 1,559,502

0 0 0 0

4,843,030 1,698,282 346,503 6,887,814

3,875,514 101,726 0 3,977,240

228,151 35,509 0 263,660

0 0 0 0

0 0 0 0

6,402,532 1,698,282 346,503 8,447,316

5,435,016 101,726 0 5,536,742

228,151 35,509 0 263,660

63,273 0 0 63,273

152,259 0 0 152,259

202 0

20,203

8869

64,040

38,473

29,072

9401

6693 2708

1,616,438 337,890 165,904 2,120,232

196,662 15,937 0 212,599

8171 4565 0 12,737

1,278,258 0 0 1,278,258

0 0 0 0

GDFCF

550 0

165

11,652

266,951

39,521

11,817

27,704

17,906 9798

Coke and petroleum refineries

Total Final consumption

Other mining activities vas

Public consumption

1,821,168 337,890 165,904 2,324,962

196,890 15,937 0 212,827

8171 4565 0 12,737

1,278,258 0 0 1,278,258

59 0 0 59

Total GDCF

872 34

17,669

11,493

231,318

77,357

29,162

48,195

36,387 11,808

1517 852

71,511

18,976

405,910

180,228

90,487

89,741

64,941 24,800

10,851 723

397,525

118,862

2,712,031

944,321

516,387

427,934

293,744 134,190

4,031,640 0 0 4,031,640

306,379 0 0 306,379

278,328 0 0 278,328

0 0 0 0

644,190 0 0 644,190

Exports to the rest of spain

1,103,234 0 0 1,103,234

58,491 0 0 58,491

57,844 0 0 57,844

0 0 0 0

0 0 0 0

Exports to the rest of the world

9890 7914

245,923

56,174

2,146,833

709,004

302,096

406,908

305,054 101,853

12,764 59

302,020

114,695

1,321,972

547,082

416,715

130,367

85,085 45,283

27,831 2064

183,490

33,576

1,412,511

691,902

217,066

474,836

359,694 115,142

5333 53,487

233,820

100,252

934,448

561,732

334,073

227,660

168,639 59,021

Transport

5,134,874 0 0 5,134,874

364,871 0 0 364,871

336,173 0 0 336,173

0 0 0 0

644,190 0 0 644,190

Total exports

Other Electricity, gas Construction manufacturing steam and hot industries water

8,223,700 2,036,172 512,406 10,772,279

5,631,907 117,662 0 5,749,569

236,323 40,074 0 276,397

1,341,531 0 0 1,341,531

152,200 0 0 152,200

Domestic final demand

Chemical industry Other non Metallurgy and metallic mineral manufacture of products metal products

204,731 0 0 204,731

228 0 0 228

0 0 0 0

0 0 0 0

59 0 0 59

Stocks changes

188,072 60,719

1,760,495

569,168

7,629,239

5,058,186

2,329,663

2,728,523

2,075,146 653,378

Other services

13,358,574 2,036,172 512,406 15,907,153

5,996,778 117,662 0 6,114,440

572,495 40,074 0 612,569

1,341,531 0 0 1,341,531

796,390 0 0 796,390

Demand final

265,051 502,027

3,475,495

1,145,725

18,437,355

9,697,167

4,621,220

5,075,947

3,742,879 1,333,068

Intermediate outputs

18,633,470 4,479,171 1,534,700 24,647,341

8,074,259 476,630 15,314 8,566,203

894,054 113,147 3826 1,011,026

1,584,144 0 0 1,584,144

1,350,547 77,133 10,089 1,437,769

Resources uses

254

63,273 0 0 63,273

Household consumption

Final demand matrix

Table 1 (continued )

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395,756

 11,967

383,789

310

208,028

208,338 1099 0

547,340

 13,578

533,762

346,571

59,728

406,299 3416 3981

730 8127

537,178 350,552

60,458 948,188

Asturias Rest of Spain

Rest of World Total

Asturias Rest of Spain

Rest of World Total

208,214 593,411

384,888 310

186 1285

213,832

266,521

Source: SADEI (1998).

Available resources at producer prices

VAT on commodities

Gross value added at market prices Production value at producer prices Sales to final demand Distributed domestic production Imports from rest of Spain Imports from rest of World Total imports

211,183 363,668

64,933 87,552

0 32

298,714 11 21

211,183

87,531

64,923

681

64,242

38,675

113,043 846,753

279,672 454,038

470 29,693

537,388 0 29,223

112,573

424,815

279,672

12,171

267,501

40,071

90,708 585,041

239,037 255,296

2125 14,477

331,720 193 12,159

88,583

243,137

238,845

6689

232,156

78,195

19,561 537,885

398,584 119,740

420 1261

138,222 182 659

19,141

119,080

398,402

 8173

406,575

180,894

199,286 3,279,444

2,669,223 410,935

909 4057

606,747 583 2565

198,377

408,370

2,668,640

 53,519

2,722,159

954,449

603,019 4,893,808

2,156,951 2,133,839

35,931 172,897

2,593,852 29,891 107,075

567,088

2,026,764

2,127,060

 21,749

2,148,809

710,980

10,089 1,437,769

1,350,547 77,133

0 24,861

87,222 24,861 0

10,089

77,133

1,325,686

 8991

1,334,677

559,787

0 1,584,144

1,584,144 0

0 97,858

0 97,858 0

0

0

1,486,286

48,008

1,438,279

717,670

3826 1,011,026

894,054 113,147

0 18,069

1,13,996 15,093 2976

3826

110,171

878,961

 7333

886,294

513,578

15,314 8,566,203

8,074,259 476,630

262 273,054

478,794 259,904 128,88

15,052

463,742

7,814,355

57,763

7,756,592

5,185,539

1,534,700 24,647,341

18,633,470 4,479,171

41,033 645,670

5,801,291 433,090 171,546

1,493,667

4,307,624

18,200,380

0

18,200,380

9,460,192

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M. Argu¨elles et al. / Journal of Environmental Management 81 (2006) 249–264 255

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256

Table 2 Main emitting sources of greenhouse gases in Asturias

Energy

CO2

CH4

N2O

HFC / PFC

Burning fossil fuels for energy, such in mobile as in stationary sourcesa

Burning fossil fuels in mobile sources

Burning fossil fuels in mobile sources

Mining and coal management Industrial processes

Cement and aluminium production

Agricultural activities

Coke production

Nitric acid production

Enteric fermentation Manure management

Manure management Burning of agricultural waste Farming land

Burning of agricultural waste Other emission sources

Aluminium production

Sewage treatment

Leaks in transport refrigeration systems Leaks occasioned when the refrigerators are destroyed

a

Emissions generated in the steel industry are included here.

Table 3 Total direct emissions by production sector and household consumption, 1995 (metric kilotons carbon dioxide equivalent) CH4

CO2

Agriculture, forestry and fishing Coal mining Other mining activities Coke and petroleum refineries Chemical industry Other non-metallic mineral products Metallurgy and manufacture of metal products Other manufacturing industries Electricity, gas steam and hot water Construction Transport Other services Households consumption Total

N2O

HFC/PFC

Emissions

% / Total

Emissions

% / Total

Emissions

% / Total

Emissions

% / Total

114.2 3.7 1.1 13,328.6 1022.8 2019.4 596.5 1232.9 12,443.6 16.5 61.8 640.4 2812.3 34,293.8

0.33 0.01 — 38.87 2.98 5.90 1.74 3.59 36.28 0.05 0.18 1.87 8.20 100.00

996.6 746.7 — 1.2 — — — — — — 0.2 5.8 4.1 1754.6

56.80 42.56 — 0.07 — — — — — — 0.01 0.33 0.23 100.00

651.8 — — — 294.5 — — — — — 0.8 — 22.1 969.2

67.25 — — — 30.38 — — — — — 0.08 — 2.29 100.00

— — — — — — 379.3 — — — 0.0 — 1.3 380.6

— — — — — — 99.65 — — — 0.01 — 0.34 100.00

Source: SADEI (1998, 2002) and own calculations.

formula: X ¼ ðI  AÞ1
D.

(3)

The elements of the Leontief inverse matrix (bij) represent the output of sector i needed, directly or indirectly, to produce a final demand unit in sector j. If the sectors produce to meet a determined final demand, the pollution they generate (px1 ) can also be attributed to that final demand. That is px1 ¼ M x
ðI  AÞ1
D ¼ M x1
D,

(4)

where M x1 is the matrix k
i of Type I output-pollution multipliers. Each element of this matrix (eki) is the amount of pollutant k directly or indirectly attributable to a final

demand unit in sector i. Thus, Type I multipliers allow for the calculation of direct and indirect emissions attributable to each one of the production sectors. Hence, emissions attributed to a said sector i are not only those for which its production activity is directly responsible, but those generated by the production activity of other economic sectors satisfying the intermediate input demand of sector i. Indeed, all these emissions are attributed to the final demand of sector i. The matrix M x1 in the case of Asturias is set out in Table 5. Vector p, representing the total emissions of pollutants, can now be expressed as follows: p ¼ px1 þ pc ¼ M x1
D þ M c
C.

(5)

0.0095 0.0924 0.0000 0.0000

0.2125 0.0883 0.0039 0.0000

0.0171 0.0000 0.0000 0.0000

CO2 CH4 N20 HFC/PFC

Coal mining

1.3276 0.0967 0.0002 0.000001475

Agriculture, forestry and fishing

0.6202 0.1156 0.0051 0.000000180

1.0234 0.0021 0.0002 0.000000509

Other mining activities

4.2787 0.0000 0.0040 0.0000

49.0752 0.0033 0.0000 0.000000319

5.0665 0.0000 0.0000 0.0000

6.4385 0.0023 0.0040 0.000000203

0.5716 0.0000 0.0000 0.0000

6.3081 0.0021 0.0000 0.000000515

5.3433 0.0027 0.0001 0.000036159

Other non-metallic Metallurgy and mineral products manufacture of metal products

0.2235 0.0000 0.0000 0.000032968

1.0085 0.0120 0.0005 0.000000840

Other manufacturing industries

9.2137 0.0000 0.0000 0.0000

Other non Metallurgy and Other Electricity, metallic mineral manufacture of manufacturing gas steam products metal products industries and hot water

Chemical industry

Chemical industry

Coke and petroleum refineries

47.6579 0.0002 0.0000 0.0000

Other mining Coke and activities petroleum refineries

Table 5 Matrix of Type I output-pollution multipliers (Mx1)

CO2 CH4 N20 HFC/PFC

Coal mining

Agriculture, forestry and fishing

0.0692 0.0000 0.0000 0.000000013

12.2779 0.0241 0.0001 0.000001945

0.8869 0.0009 0.0000 0.000002163

Electricity, gas Construction steam and hot water

0.0104 0.0000 0.0000 0.0000

Construction Transport

Table 4 Matrix of output-pollution coefficients (Mx) and of consumption-pollution coefficients (Mc). Direct emissions by unit of production and consumption

0.3236 0.0007 0.0000 0.000000167

Transport

0.0793 0.0000 0.0000 0.0000

Other services

0.3866 0.0011 0.0000 0.000000121

Other services

0.4083 0.000028692 0.000010378 0.000000043

Household consumption

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M. Argu¨elles et al. / Journal of Environmental Management 81 (2006) 249–264

Direct and indirect emissions per production sector and final consumption appear in Table 6, expressed in carbon dioxide equivalent kilotons and as a percentage of the total emissions of each pollutant k. In the case of CO2 the main sectors of pollution are ‘‘Metallurgy and manufacture of metallic products’’ (35%), which includes the iron and steel industry and aluminium production, and ‘‘Electric energy, gas, steam and hot water’’ (28.5%). With regard to methane, 75% of the emissions are caused by ‘‘Agriculture, forestry and fishing’’, ‘‘Other manufacturing industries’’ and ‘‘Electric energy, gas, steam and hot water’’, with each of the three sectors responsible for a similar amount. Once again the primary sector of the economy is the main emitter of nitrous oxide, with 32% of the total emission. It is followed by ‘‘Other manufacturing industries’’ with 28% and the ‘‘Chemical industry’’ with 24.4% of the total emissions. Finally, the chief generator of HFC/PFC is ‘‘Metallurgy and manufacture of metallic products’’ as a result of aluminium production. This sector emits 91.7% of the total. In Table 7, the direct and indirect emissions of the production sectors appear divided into final demand sectors. In this way it is possible to see how the emissions are distributed among the different kinds of final demand, with exports being the area responsible for a greater percentage of emissions. 2.3. Estimate of direct, indirect and induced emissions of greenhouse gases: analysis of Type II multipliers The conventional Input–output analysis of direct and indirect effects stems from the fact that each production sector uses inputs from other sectors to carry out its production and thus meet its final demand. This analysis is completed with the inclusion of induced effects. To do this one must take into account that the sectors use the labour

factor in their production process. This labour factor derives from households, who receive income in exchange. The income obtained is used by the households to pay for their consumption and so the emissions coming from this consumption can be attributed, ultimately, to the production sectors. The part of household consumption financed by income from labour obtained in the regional production sectors must be considered endogenous to the system in order to incorporate the induced effects. The household sector is thus treated as another production sector, with its output being the labour factor sold to other sectors, and its input the consumer spending. A broader matrix of inter-industrial transactions (X*), is thus built with an additional column and row. In the column the household inputs are collected, made up by their domestic consumption (of regional products) (C R i ). The output of the household sector dedicated to other regional production sectors, whose value corresponds to the labour income paid for each one of these sectors (W), is included in the row. Starting from X* a broader matrix of regional, technical coefficients is constructed (A*) again including an additional column and row. The relation between household consumption of products from each sector i and total domestic consumption (CR) form the elements of the new column. The elements of the new row are calculated as the relation between the income from labour paid by each sector and their production volume, Xi. This way it is possible to obtain the Leontief inverse matrix Type II: (I–A*)1 Therefore, household consumption is no longer considered exogenous as a whole. A part of it, that part financed by the incomes from labour paid by the regional production sectors, is endogenized. The coefficients of consumption-pollution (mc)k,h of the vector Mc are divided

Table 6 Total direct plus indirect emissions by production sector and household consumption, 1995 (metric kilotons carbon dioxide equivalent) CH4

CO2

N2O

HFC/PFC

Emissions

% / Total

Emissions

% / Total

Emissions

% / Total

Emissions

% / Total

Agriculture, forestry and fishing Coal mining Other mining activities Coke and petroleum refineries Chemical industry Other non-metallic mineral products Metallurgy and manufacture of metal products Other manufacturing industries Electricity, gas steam and hot water Construction Transport Other services Households Consumption

121.6 80.0 10.3 1517.1 1216.3 1371.1 11,972.0 1721.8 9778.0 1189.8 185.3 2318.2 2812.3

0.36 0.23 0.03 4.42 3.55 4.00 34.91 5.02 28.51 3.47 0.54 6.76 8.20

476.0 122.5 0.5 2.1 9.1 9.4 126.5 430.1 403.3 24.5 7.8 138.6 4.2

27.13 6.98 0.02 0.12 0.52 0.54 7.21 24.51 22.98 1.40 0.45 7.90 0.24

310.9 3.3 0.6 0.1 236.7 2.8 45.1 274.1 12.4 17.9 2.5 40.7 22.1

32.07 0.34 0.06 0.02 24.42 0.29 4.65 28.28 1.28 1.84 0.26 4.20 2.29

0.2 0.4 0.0 0.0 0.2 0.5 349.2 6.2 6.7 12.5 0.4 3.1 1.2

0.05 0.10 — — 0.05 0.13 91.75 1.62 1.75 3.29 0.11 0.82 0.33

Total

34,293.8

100.00

1754.6

100.00

969.2

100.00

380.6

100.00

Source: SADEI (1998, 2002) and own calculations.

ARTICLE IN PRESS

4763.9 107.7 168.7 98.8 61.25 60.02 52.72 60.61

31,481.5 1750.5 947.0 379.3 15.13 6.15 17.81 26.05

M x2 ¼ M x
ðI  A Þ1

(6)

19283.3 1050.7 499.2 229.9

Pollution generated by the production sectors (px2 ) is calculated as follows: (7)

where is the vector of pollution-consumption coefficients (mc*)k,h, corresponding to the exogenous part of household consumption. The vector p, which represents the total polluting emissions, can now be expressed as p ¼ px2 þ pc2 ¼ M x2
DðhÞ þ M c
C.

Source: SADEI (1998,2002) and own calculations.

1663.8 39.6 24.5 23.1 12.74 28.10 24.33 1.53 4010.0 491.9 230.4 5.8 CO2 CH4 N20 HFC/PFC

(8)

M c

5.29 2.26 2.59 6.09 1.91 2.06 1.12 0.21 602.9 36.1 10.6 0.8

3.68 1.40 1.44 5.51

px2 ¼ M x2
DðhÞ ,

1157.6 24.5 13.6 20.9

% Emissions % Emissions

%

% Emissions % Emissions

Emissions

100.00 100.00 100.00 100.00

Emissions Emissions %

%

Total direct plus indirect emissions

into two parts: the coefficients of the household outputpollution (mx)k,h and the coefficients of consumptionpollution (mc*)k,h. The latter are calculated for the part of household consumption that is still exogenous, that is, it is derived from sources of income other than labour. In Asturias the part of the total household consumption (C) financed by labour income is 73.69% and the exogenous part 26.30%. The coefficients (mx)k,h are calculated as 0.7369
(pc)k,h/W. The coefficients (mc*)k,h are 0.2630
(pc)k,h/C. Once the coefficients (mx)k,h are known, it is possible to construct the matrix k
(i+1) of the output-pollution coefficients, now enlarged by a new column corresponding to the said coefficients (M x ). When this matrix is multiplied by Leontief’s inverse Type II, we obtain the matrix k
(i+1) of Type II output-pollution multipliers (M x2 ) (see Table 8):

pc2 ¼ M c
C,

Gross domestic fixed capital formation

Stocks changes

259

where D(h) is the final exogenous demand. In order to obtain the final demand, the endogenous part of household consumption must be subtracted. Pollution generated by exogenous household consumption (pc2 ) is calculated as follows:

Public consumption Household consumption

Table 7 Total direct plus indirect emissions desagregated by final demand sectors (metric kilotons carbon dioxide equivalent)

Exports to the rest of Spain

Exports to the rest of the World

M. Argu¨elles et al. / Journal of Environmental Management 81 (2006) 249–264

(9)

The direct, indirect and induced emissions per production sector and final consumption are shown in Table 9. For gas, the main polluting sectors are the same as for direct and indirect emissions. A comparative analysis is made in the next section. Finally, the total direct, indirect and induced emissions per final demand sectors appears in Table 10. As with Table 7 it can be seen that the majority of emissions of the different pollutants can be attributed to exports. 3. Comparative analysis of the results obtained In this paper emissions of greenhouse gases have been distributed in three different ways. Firstly, the direct emissions from each production sector and the final consumption were calculated; secondly, the direct and indirect emissions of the production sectors; and, finally, the direct, indirect and induced emissions attributable to each one of the latter. In each case the results obtained vary, giving rise to a different participation by the different

ARTICLE IN PRESS

1.0035 0.0032 0.0001 0.000000270 0.8045 0.0023 0.0001 0.000000282 1.4497 0.0028 0.0001 0.000002299 12.9448 0.0264 0.0001 0.000002106 1.3824 0.0133 0.0006 0.000000930 5.7305 0.0040 0.0001 0.000036252 6.7816 0.0037 0.0001 0.000000629 6.8333 0.0037 0.0041 0.000000298 49.3462 0.0042 0.0000 0.000000385 1.3936 0.0034 0.0002 0.000000598 3.2505 0.1034 0.0004 0.000001938 0.8367 0.1163 0.0051 0.000000232 CO2 CH4 N20 HFC/PFC

Household consumption Other services Construction Transport Electricity, Metallurgy and Other manufacture of manufacturing gas steam and hot metal products industries water Other nonmetallic mineral products Chemical industry Other mining Coke and activities vas petroleum refineries Coal mining Agriculture, forestry and fishing

Table 8 Matriz of Type II output-pollution multipliers (Mx2)

1.4017 0.0049 0.0002 0.000000338

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260

sectors and the consumers in the total emission of pollutants. In the first place it is important to remember that CO2 is responsible for most of the greenhouse gas pollution in this region, being 91.7% of the whole. This percentage is higher than that corresponding to Spain or to the European Union. For the former, national emissions of CO2 in the period 1990–2000 were 79.5% of the total of this type of gas, whereas in the EU the percentage was 80.3% (IHOBE, 2002). That CO2 makes up such a large share of the total emissions in Asturias is closely linked to the production structure. The production of iron and steel, metallurgy and the production of electricity in coal-fired power stations, all of which are highly CO2-intensive production processes, are strongly present in the region. Thus, 39% of the emissions correspond to the ‘‘Coke and petroleum refineries’’ which include the coke production mainly used in steel-making. This is followed by the production of electrical energy with somewhat more than 36%. Following with a much lower percentage, household consumption accounts for 8.2% and ‘‘Other non-metallic mineral products’’ for about 6% (see Table 3). These percentages are modified when the direct and indirect emissions for each production sector are estimated (see Table 6). Now, the branch of ‘‘Metallurgy and manufacture of metallic products’’, with direct emissions of CO2 below 2%, is responsible for 35% of the emissions. At the same time, coke refineries, responsible for direct emissions, drop to 4.4%, since their coke production is a basic input of the iron and steel industry. Electricity generation, second in order of importance in responsibility for CO2 pollution, has its share cut from 36% to 28.5%. This is due, once again, to output being an input for the remaining production sectors. Nevertheless, it is still the second highest emitter of this gas. This is due to a great extent to the fact that a large part of its production, approximately 48%, is not used within the region, but exported to the rest of Spain. It is worth noting the slump in emissions corresponding to the branch ‘‘Other non-metallic mineral products’’. Cement production is an important part of this and it is a product used as an input by other production sectors, especially construction, whose emissions increase. Because, when calculating direct, indirect and induced emissions, a part of household consumption was endogenized, the exogenous consumption is reduced and, as a result, its CO2 emissions are now 2% of the whole. By attributing CO2 emissions to the different production sectors, an increase in the sectors that pay more income for labour to households would be expected. Comparing the results from Table 9 with those from Table 6, it is those sectors that bear a heavy weight in the regional economy, ‘‘Metallurgy and manufacture of metal products’’, ‘‘Construction’’ and the service sector, which see a more significant increase. Methane accounts for 4.7% of the total gas emissions in Asturias. This figure is lower than the Spanish (10.5%) and the European ones (9.3%), both estimates for the time

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Table 9 Total direct plus indirect plus induced emissions per production sector and household consumption, 1995 (metric kilotons carbon dioxide equivalent) CH4

CO2

N2O

HFC/PFC

Emissions

% / Total

Emissions

% / Total

Emissions

% / Total

Emissions

% / Total

Agriculture, forestry and fishing Coal mining Other mining activities Coke and petroleum refineries Chemical industry Other non-metallic mineral products Metallurgy and manufacture of metal products Other manufacturing industries Electricity, gas steam and hot water Construction Transport Other services Households consumption

114.1 178.5 14.0 1525.5 1285.2 1469.2 12837.5 1919.1 8856.7 1877.2 325.3 3152.0 739.5

0.33 0.52 0.04 4.45 3.75 4.28 37.43 5.60 25.83 5.47 0.95 9.19 2.16

333.1 119.2 0.7 2.7 14.5 16.8 189.5 387.5 379.7 76.7 19.7 213.5 1.0

18.98 6.80 0.04 0.15 0.83 0.96 10.80 22.08 21.64 4.37 1.12 12.17 0.06

217.2 6.9 0.7 0.5 238.4 6.6 77.2 242.1 27.5 44.2 9.0 93.1 5.8

22.41 0.71 0.08 0.05 24.59 0.68 7.97 24.98 2.84 4.56 0.93 9.60 0.60

0.1 0.4 0.0 0.0 0.3 0.6 350.0 5.6 6.2 12.8 0.5 3.7 0.4

0.03 0.11 0.01 0.01 0.07 0.16 91.96 1.46 1.63 3.37 0.13 0.96 0.10

Total

34,293.8

100.00

1,754.6

100.00

969.2

100.00

380.6

100.00

Source: SADEI (1998, 2002) and own calculations.

period 1990–2000 (IHOBE, 2002). The agricultural sector, with 57% of the total direct emissions, and coal mining, with 42.5% are responsible for the emissions in this region (see Table 3). When these percentages are compared with direct and indirect CH4 emissions as seen in Table 6, it can be observed that the share of these two sectors in the total emissions is considerably reduced. Once more, the reason lies in the fact that their output is used as an input in other production sectors. ‘‘Other manufacturing industries’’, the heading under which the regional food and agricultural industry is found, is responsible for 24.5% of methane emissions. It is followed by electricity generation with 23%, which basically uses regional coal and, at a greater distance, ‘‘Metallurgy and manufacture of metal products’’ (7.2%), which are also coal-consumer industries, and ‘‘Other services’’ (7.9%). The inclusion in the last sector of hotels and catering, which is a consumer of primary sector products, could explain this increase. Analysing the results of the direct, indirect and induced emissions (see Table 9) and comparing them with the previous ones, it is clear that the share of services, construction and metallurgy activities in the total emissions of CH4 increases. The emissions of nitrous oxide account for 2.6% of the total emissions in Asturias. It is a small percentage, especially when it is compared to the 8.3% and 9.1% levels of Spain and the EU, respectively, in the period 1999–2000 (IHOBE, 2002). The main direct emitters of N2O are the primary sector (67.2%) and the chemical fertilizer industry (30.3%). Once again, when the results corresponding to the direct and indirect emissions are analysed (see Table 6), a decrease in these two sectors can be noticed (32% and 24.4%) as well as a sharp increase in ‘‘Other manufacturing industries’’ (28.2%). The explanation for the observed changes, both in the direct and indirect effects and the direct, indirect and induced ones, is similar to that offered in the case of methane.

The emissions of the remaining gases (HFC/PFC) are practically insignificant, 1% of the total. Their quantity is even lower than that of N2O and they correspond basically to the aluminium industry included in the branch ‘‘Metallurgy and manufacture of metal products’’ (99.6%). The weight of this branch is reduced to 91.7%, when direct and indirect emissions are under consideration, while other branches, notably construction, rise. These changes would arise from the use of aluminium as an input in other production sectors, with the remainder being exported from the region. 4. Conclusions and environmental policy implications The previous results may be summarized as follows: (a) CO2 is, by far, the greenhouse gas most responsible for pollution in Asturias. It has a much higher percentage than in the rest of Spain or the EU. The production structure of the region provides the explanation for this fact. (b) Sector responsibility for carbon dioxide is radically modified when direct and indirect emissions for each production sector are assessed, and the intermediate demands for inputs for each production sector are taken into consideration (what is happening is that the economic consequences of greenhouse gas emissions are allocated to one group of sectors, while others are exempt. The latter are the ones that, in their production processes, use as inputs the outputs of the companies operating in the sectors most affected by the regulations from the Kyoto Protocol). (c) A large part of the production from the sectors causing these emissions is not consumed within the region, but is exported to the rest of Spain.

ARTICLE IN PRESS

100.00 100.00 100.00 100.00 33,553.7 1753.5 963.4 380.3 15.52 7.99 19.22 26.10 5208.1 140.0 185.1 99.3 63.14 67.81 59.13 60.98 21,185.2 1189.0 569.7 231.9 3.68 1.72 1.71 5.51 1235.7 30.2 16.5 21.0 7.63 5.97 5.99 6.32

Source: SADEI (1998, 2002) and own calculations.

CO2 CH4 N20 HFC/PFC

1565.0 106.0 46.2 1.8

4.66 6.05 4.80 0.48 5.36 10.47 9.154 0.61 1799.6 183.5 88.2 2.3

2560.1 104.8 57.7 24.0

Emissions % Emissions % Emissions % % Emissions % Emissions

Emissions

%

Emissions

Total of direct plus indirect plus induced emissions Exports to the rest of the World Exports to the rest of Spain Stocks changes GDFCF Public consumption Household consumption

Table 10 Direct plus indirect plus induced emissions desagregated by final demand sectors (metric kilotons carbon dioxide equivalent)

%

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If we look at the previous conclusions and the fears about impact on competitiveness4 in the region that we are studying in this paper, some implications for economic policy can be drawn. We are conscious that a lot of other factors influence these industries’ competitiveness. However, our aim is to focus on the specific effects derived from the implementation of actions for Kyoto Protocol fulfilment. Nevertheless, we must first establish the context in which the implications shown have to be set. It must be noted that the sectors most affected by the Kyoto Protocol implementation in Asturias are iron and steel, and electricity production in coal-fired power stations. The firms in these sectors have been suffering from important competitiveness problems for a long time. The regulation developed to implement the Kyoto Protocol could increase these problems with its enforcement. Sectors using intermediate products from Asturian CO2-intensive processes could be confronted with higher prices, as some studies suggest (Sijm, 2004). But these sectors could buy inputs from cheaper suppliers. The production of iron and steel is a mature sector, with companies competing in an international scope. Most of the Asturian iron and steel is produced by Arcelor-owned facilities. This company’s capital comes from Spain, France and Luxembourg. Nowadays, it is competitive in the international markets. However, its spokesmen (unionists and managers) agree when they express their concern about the consequences of Kyoto Protocol on firm competitiveness. Kyoto may increase these companies’ costs either through the purchase of tradable emission permits or through the investment on emission-abatement equipments. However, it is difficult for companies to increase their sale prices, because non-Kyoto countries could likewise improve their relative competitive position against Arcelor. We have to consider that the most important markets that Arcelor exports to are mainly the Middle East, Turkey and Mexico. Certain kinds of products are exported to South-East Asia and North Africa. Likewise, the United States market may decrease because of import limitations. This is a context where the main customers are located in non-Kyoto countries. The problem is still more serious if we also consider that the countries Arcelor exports to are very close to other countries that have increased their iron and steel production in 2004 and are not subject to the constraints derived from the Kyoto Protocol: China (23.2% and its market share is already 26%), Brazil (5.7%), and Turkey (11.9%). These data support the idea that the Kyoto Protocol may influence negatively the competitiveness in the iron and steel industry (Arcelor, 2004). The differences based on Kyoto may even lead the company to relocate its facilities. 4 However, even with this being the majority position, the literature has not been able to reach an acceptable consensus on the nature of the influence of the hardening of environmental legislation on competitiveness (Kalt, 1988; Tobey, 1990; Lowe, 1992; Lowe and Yeats, 1992; Sorsa, 1994; Oosterhuis et al., 1996; Hitchens, 1999).

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Electricity is a homogeneous product. The competitive strategy in this industry’s companies is cost leadership, it cannot be stored and traded and it requires a dedicated infrastructure, which is expensive over long distances. As a result, the competition from non-Kyoto countries is not important, because Spain shares borders only with other Kyoto signatories. However, the loss of relative competitiveness may come from other less CO2 emission-intensive sources than coal-fired power stations (gas-fired power stations, wind energy, among others). In consequence, Asturian power stations lose competitiveness because the Kyoto Protocol is more harmful in this industry’s companies than in facilities located in other regions that use raw materials, such as gas. This may lead Asturian companies to lose an important percentage of their national market, and even in Asturias, where consumers might buy electricity produced in other regions. The input–output analysis presented in this paper shows how the output from polluting sectors (and pollution that they produce) is used by other, less directly polluting sectors, to produce products for final consumption. These results help illustrate how higher production costs for polluting industries arising from environmental regulations may flow through the economy in the form of higher input prices to other industries and consumers, thereby distributing the burden of the environmental regulation. In this way, although the weight of the Kyoto Protocol falls on the sectors that are the ‘‘source emitters’’, there would not be differences between ‘‘direct emitters’’ and ‘‘non-direct emitters’’. However, these differences appear between different direct emission sectors because some of them will be able to pass on the costs of complying with GHG abatement policies to their customers, and others will not. The latter will have problems of competitiveness, as we have explained in the case of the iron and steel and the electricity production sectors in Asturias. So, as some authors (Dean and Brown, 1995) show, the application of environmental regulations in order to achieve Kyoto aims is more difficult in some companies. This effect would worsen competitiveness in some companies (Cropper and Oates, 1992). Moreover, environmental regulation fulfilment could be more difficult in certain regions (Hitchens, 1999). For example, these differences might occur between Spanish regions with gas-fired power stations versus regions with coal-fired power stations, such as Asturias. Besides, these regions may be seriously affected if industries that pollute more with greenhouse gas emissions (a case is Arcelor in Asturias) are not able to pass on the costs of complying with Kyoto Protocol inquiries to their customers. The idea that the companies most affected by the Kyoto Protocol do not suffer undue economic or social hardship leads to the discussion of sectorial versus horizontal actions for environmental protection5. Nevertheless, our conclu5 These actions are not directed to all the firms, as a whole, but to certain particular industries. In fact, the Spanish National Plan of Emission

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sions do not reject the importance of horizontal-type actions. However, they make it clear that some sectors need special treatment in the support programs to carry out environmental investments. Finally, it is relevant to consider the territorial impact of the Kyoto Protocol. There will be regions more affected than others because of their productive structure. In order to avoid the problems of competitiveness derived from Kyoto, the firms have options that the regions have not. For example, a company can relocate their installations to another non-signatory country. The firm will continue being competitive, but the region will face important adjustment costs in terms of jobs and wealth. There should be, then, a special support policy for the affected territories. However, the main aim of this paper is not to predict the competitiveness trend in the Asturian industry in general, but to determine those industries the Kyoto Protocol implementation exerts more influence on. Several consequences may come from our results, even possible facility relocations. They will be the subject of future work. Likewise, a complete analysis of the main competitive effects in the iron and steel and electric industries requires the consideration of a lot of factors. These issues exceed the aims of our research. Acknowledgments We thank the referees’ for their comments and suggestions, because we think they have improved remarkably the contents and writing of this article. References ABC, 2003a. La UE suavizara´ las medidas contra el cambio clima´tico para no perjudicar a la industria. ABC, 13 December, 38. ABC, 2003b. Espan˜a se esfuerza por cumplir el Protocolo de Kyoto. ABC, 21 December (Especial Energı´ a), VI. Arcelor, 2004. Memoria 2004, http://www.arcelor.es. Cropper, M.L., Oates, W.E., 1992. Environmental economics: a survey. Journal of Economic Literature XXX, 675–740. Dean, T.J., Brown, R.L., 1995. Pollution regulation as a barrier to new firm entry: Initial evidence and implications for future research. Academy of Management Journal 38 (1), 288–303. Expansio´n, 2003a. CEOE insta al Gobierno a rebasar el techo de contaminacio´n de Kyoto, Expansio´n 21 October, 51. Expansio´n, 2003b. Kyoto enfrenta a las empresas ele´ctricas, Expansio´n 18 November, 8. Expansio´n, 2003c. Kyoto desvela a los ‘lobbies’. Expansio´n 16 December, 16. Gobierno del Principado de Asturias, 2002. Estrategia de Desarrollo Sostenible del Principado de Asturias. Documento 1. Planteamiento General. Principado de Asturias, Oviedo.

(footnote continued) Rights Allocation for the period 2005–2007 explicitly recognizes that the fiscal system can contribute to the reaching of the Kyoto Protocol objectives, insofar as it is a part of a combination of instruments to reduce the emissions (2 D a).

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