Determinants of energy use of manufacturing firms and private households

Petrick, Sebastian

Chapter 1 (Energy Use Patterns in German Industry: Evidence from Plant-level Data): This paper analyzes energy use and CO2 emissions of more than 78 000 German industrial plants between 1995 and 2006. It is the first study to exploit exceptionally rich energy data that were recently matched to official micro datasets. We document that both energy use and intensity are highly dispersed across plants. When isolating the between-sector variation in energy intensity, there is a strong positive correlation with energy use, CO2 emissions and emission intensity. Yet there is no evidence that the scale of an industry determines its energy intensity. The dispersion of energy use across plants of a given sector, normalized by the median, is positively correlated with that of gross output, but not with the median energy use. Similarly, there is no evidence that the median energy intensity is correlated with the within-sector dispersion of energy intensity or with that of CO2 emissions. Looking at the fuel mix across sectors, we find that more energy intensive industries rely more on fuels other than electricity, although the variability among plants in those industries is extremely high. We also demonstrate that average fuel shares are sensitive to the skewness of the underlying distribution and recommend the use of median fuel shares for better representativeness. Chapter 2 (Carbon Efficiency, Technology, and the Role of Innovation Patterns: Evidence from German Plant-Level Microdata): We describe the determinants of energy intensity, carbon intensity, and CO2 emissions in the German manufacturing sector between 1995 and 2007, applying the LMDI index decomposition technique to micro data. We decompose changes in total CO2 emissions from manufacturing to changes in activity level, structural change between sectors, shifting market shares within sectors, energy intensity at the firm level, fuel mix, and emission factors. Our results show that competition between firms within one sector, although so far widely ignored as a driver of emissions and energy use, is energy- and emission-saving. Contrary to wide-spread beliefs, energy intensity improvements at the firm level do not play a significant role in reducing emissions. We use sector-level results on the relative importance of improvements in firm-level energy intensity and intra-sectoral structural change to distinguish two different innovation channels: innovation by technology and by entrants. We show that incumbent firms in a number of sectors, including some of the most energy intensive, do not significantly improve their energy efficiency. Innovation takes place via new entrants instead, rendering policies targeted at incumbents’ firm-level energy efficiency ineffective. Chapter 3 (The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms): We estimate the causal impact of the EU Emissions Trading Scheme on manufacturing firms using comprehensive panel data from the German production census. Semiparametric matching estimators yield robust evidence that the policy caused treated firms to abate one-fifth of their CO2 emissions between 2007 and 2010 relative to non-treated firms. This reduction was achieved predominantly by improving energy efficiency and by curbing the consumption of natural gas and petroleum products, but not electricity use. We find no evidence that emissions trading lowered employment, gross output or exports of treated firms. Chapter 4 (The Impact of Temperature Changes on Residential Energy Consumption): In order to explore the impact of climate change on energy use, we estimate an energy demand model that is driven by temperature, prices and income. The estimation is based on an unbalanced panel of 62 countries over three decades. We limit the analysis to the residential sector and distinguish four different fuel types (coal, electricity, natural gas and oil). Compared to previous papers, we have a better geographical coverage and consider both a heating and cooling threshold as well as further non-linearities in the impact of temperature on energy demand and temperature-income interactions. We find that oil, gas and electricity use are driven by a non-linear heating effect: Energy use decreases with rising temperatures due to a reduced demand for energy for heating purposes, but the speed of that decrease declines with rising temperature levels. We cannot find a significant impact of temperature on the demand for cooling energy.

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Petrick, Sebastian: Determinants of energy use of manufacturing firms and private households. 2014.

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