Decoupling Emissions from Economic Activity 2020

Introduction

The 2021 Climate Action and Low Carbon Development (Amendment) Act set national sectoral greenhouse gas emissions reduction targets for 2030, based on 2018 emissions. This release uses economic, social and environmental statistics to analyse whether greenhouse gas emissions by the highest emitting sectors have decoupled from economic activity or if economic and social impacts of reducing emissions towards the 2030 targets can be observed.

Climate Action Plan Emissions Ceilings 2030

The Climate Action Plan Emissions Ceilings by sector are shown in Table 8.1. The 2018 baseline emissions data are from the Environmental Protection Agency (EPA) national inventory of greenhouse gas emissions. The EPA collates national greenhouse gas emissions annually. The greenhouse gas emissions inventory is submitted each year by the EPA to the United Nations under the United Nations Framework Convention on Climate Change (UNFCCC) and is used to assess whether Ireland is meeting international emissions targets. It will also be used to determine whether the 2030 Climate Action Plan targets have been met.

Classification of Greenhouse Gas Emissions by NACE

The greenhouse gas emissions reported in the national inventory were distributed across NACE divisions by the CSO according to the correspondences between Common Reporting Format (CRF) codes in the inventory and NACE Rev. 2 divisions. NACE Rev. 2 is the CSO standard classification of industrial activity.

In some cases, there is a one-to-one correspondence between the CRF codes and a NACE Rev. 2 division. If so, the total emissions from the CRF code are attributed to that NACE division. However in many cases, a single CRF corresponds to more than one NACE division. In these cases, emissions are assigned to NACE divisions using data on transport and non-transport energy use by NACE from the CSO Business Energy Use survey, as well as CSO Transport statistics.

In this way, emissions from road transport were distributed to the NACE division of the vehicle user, and emissions from fossil fuel combustion for electricity generation were assigned to the sector of the electricity consumer. Therefore, emissions from electricity generation that would normally be assigned to NACE division 35 (Electricity, gas, steam and air conditioning supply) were redistributed to the final user.

Economic and Employment Data by NACE

Economic data published by CSO National Accounts include a breakdown by NACE. Therefore, NACE analysis of greenhouse gas emissions allows comparisons with economic and employment data by NACE. It allows us to identify the highest emitting NACE sectors and to analyse trends in emissions from these sectors in conjunction with trends in economic indicators such as gross value added and employment.

In this release we use the NACE A64 aggregated structure which combines some NACE divisions into more aggregated categories. For example, NACE divisions 10, 11 and 12 (Manufacture of food products, Manufacture of beverages, and Manufacture of tobacco products) are combined into a single category in the NACE A64 structure. Separately, certain NACE divisions are combined by CSO National Accounts for confidentiality reasons, e.g. Manufacture of basic pharmaceutical products and pharmaceutical preparations (NACE 21) and Manufacture of computer, electronic and optical products (NACE 26).  All of these categories, whether part of the NACE A64 structure or aggregated for confidentiality reasons, are referred to as NACE sectors throughout this release.

Treatment of Households

Although households as consumers do not feature in the NACE classification, we included emissions by households from heating, private cars and other sources. This is in line with the Eurostat treatment of emissions from households as consumers for their environmental-economic accounts module on Air Emissions Accounts, in which emissions are assigned to the emitting production activity (NACE division) or private household consumption activity. As consumption activities do not contribute directly to gross value added or employment in the same way as production activities, Households as consumers cannot be assigned a share of gross value added or employment. When GDP is measured by expenditure, Households as consumers have a large share of the economy. CSO National Accounts data shows that total expenditure of households was 24% of GDP at constant market prices in 2020, as measured by the Expenditure method. A link to the CSO Annual National Accounts release is provided in the section on Data Sources below.

Emissions Intensities

The CSO National Accounts Division has published a release on Economic Intensity of Greenhouse Gas Emissions 2021. This release combined National Accounts data on output and gross value added with greenhouse gas emissions data from Air Emissions Accounts to provide estimates of emissions intensities by sector in units of grams per Euro. Data for 2012-2021 were covered in the release, which included data on gross value added in constant and in current prices. The release also contained data on comparisons with other EU member states.

Data Sources

Greenhouse Gas Emissions Data

EPA Greenhouse Gas Emissions Inventory

The EPA greenhouse gas emissions inventory is the data source for emissions. The breakdown by technical source and sector provided in the inventory is used along with CSO Business Energy Use statistics and CSO Transport statistics to distribute emissions to NACE divisions.

Air Emissions Accounts

As part of the implementation of the UN System of Environmental-Economic Accounting (SEEA), Eurostat, the European statistical office, has developed a series of environmental accounts modules, including the Air Emissions Accounts module. Data for this module are provided by the CSO to Eurostat annually under Regulation (EU) No. 691/2011.

The CSO also publishes an annual statistical release on Air Emissions Accounts. Emissions are adjusted to align with the National Accounts residence principle and are disaggregated by NACE. More information can be found in the Background Notes to the release.

There are two significant methodological differences between the emissions data published in Air Emissions Accounts and that published in this release. First of all, emissions were not adjusted to the residence principle in this release. This was because the Climate Action Plan targets are based on territorial, rather than resident, emissions. Secondly, emissions from electricity generation are assigned to NACE 35 in Air Emissions Accounts. In this release they were redistributed to the final user, based on data from the CSO Business Energy Use survey.

Business Energy Use Survey

The CSO Business Energy Use data are the basis for the NACE distribution of emissions from transport fuel use, non-transport fuel use and electricity consumption.

CSO National Accounts Data

Output and Value Added by Activity

Data on gross value added were obtained from CSO National Accounts, who publish an annual release on Output and Value Added by Activity. In this release we used gross value added at constant 2020 basic prices. The National Accounts release contains the following explanations:

• Gross Value Added (GVA) is conceptually the same aggregate as Gross Domestic Product (GDP). They both measure the added value generated in an economy by the production of goods and services. The difference between the two concepts is that GDP is measured after including product taxes (e.g. excise duties, non deductible VAT, etc.) and deducting product subsidies while GVA is measured prior to adding product taxes but includes product subsidies.
• Value added at basic prices is the value generated by any unit engaged in production and the contributions of individual sectors or industries to GDP. It is measured at basic prices, excluding taxes less subsidies on products.
• The constant price series is chain linked annually and referenced to the year 2020. This means the chain linked data for the year 2020 are the same as the current price data for the year 2020.

Further results and further details on definitions, classifications and data sources used to measure gross value added can be found in the Background Notes to the National Accounts release.

Annual National Accounts

The CSO Annual National Accounts release also contains data on gross value added. It contains estimates of GDP using the Income method, the Expenditure method and the Output (also known as the Production) method. The Expenditure method shows the share of the economy that can be attributed to households from the perspective used in that approach. The Background Notes to the Annual National Accounts release contains a link to a detailed methodology on the compilation of the data. The data on employment in this release were obtained from the CSO National Accounts Division. NACE classification of the data is based on sector of main employment.

Supply and Use Tables

Supply and Use tables are used in this release to show interactions between NACE sectors. The Supply and Use tables are a highly detailed framework for presenting data on National Accounts. Due to the extent of the data input required to compile Supply and Use tables, they are published with a three-year time lag. Hence we have used 2019 data in this release. Data for 2020 will be published by the CSO later this year.

CSO Demographic Data

The demographic data published in this release are from Census 2016 and CSO publications on life expectancy and population projections. Detailed Census 2022 results will be published this year and will be used in the next release.

CSO Environmental Taxes and Subsidies

The CSO publishes annual statistical releases on Environmental Subsidies and Similar Transfers, Environment Taxes, and Fossil Fuel Subsidies. These releases show the extent to which these fiscal instruments are being used to encourage behaviours that could reduce emissions, e.g. electric vehicle subsidies.

Data from CSO Agriculture Division

Data on farm workers were taken from the CSO Census of Agriculture 2020. One annual work unit (AWU) is 1,800 hours or more of labour input per person per annum. Data on livestock numbers and livestock unit coefficients were obtained from the CSO Agriculture Division. Table 8.2 shows the livestock unit coefficients used in this release.

CSO Building Energy Ratings and Metered Electricity Consumption Data

Building Energy Ratings data and Metered Electricity Consumption data are published by the CSO Environment and Climate Division, from data provided by the Sustainable Energy Authority of Ireland and ESB Networks. Data on the energy ratings of households and on the main space heating fuel used by households are based on dwellings that have had a Building Energy Rating audit carried out. Metered electricity consumption assigned to households can sometimes include some small commercial customers (newsagents, farms, etc.). Hence the total consumption by the residential sector is an over-estimate.

These and other energy-related releases published by the CSO can be found here.

CSO Survey of Income and Living Standards

The CSO Survey of Income and Living Standards provides data on the type and prevalence of deprivation experienced by households in Ireland.

CSO Transport Data

Vehicle licensing data are published by the CSO Transport Division as part of the annual Transport Omnibus. Data on Road Traffic Volumes from the Transport Omnibus were also used to assign emissions from road transport to private households.

Emissions Trading Scheme Data

Data on the Emissions Trading Scheme are obtained from the EPA. Some NACE codes were added or amended for this release. Information on reliefs from carbon tax is published by Revenue. Mineral oils and peat are eligible for full relief from the carbon component of mineral oil tax and the solid fuel carbon tax respectively, when they are used in a facility covered by a greenhouse gas emissions permit. Partial relief from natural gas carbon tax and solid fuel carbon tax is available for natural gas and coal used in facilities covered by greenhouse gas emissions permits. These fuels are taxed at the minimum rate specified in the EU Energy Tax Directive. Mineral oils for use in a facility covered by a greenhouse gas emissions permit are not exempt from the non-carbon component of mineral oil tax. 

Release Frequency

The release will be published on an annual basis.

Revisions

The data are subject to revision.