UK plant level energy data

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UK plant level energy data

• Ralf Martin
• Imperial College, Centre for Economic Perfomance
  (CEP) at LSE and CeRiBA
• CAED Cardiff, 2005

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What this presentation is about

• Discuss newly available plant level data on
  energy demand and prices within UK ARD/ONS
  microdata research lab
• Present initial research results using this data
• Discuss most promising avenues for further
  research

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• Discuss newly available plant level data on
  energy demand and prices
• Present initial research results using this data
• Discuss most promising avenues for further
  research

4
Plant level data on energy

• The ONS Micro Data Research Lab An important
  new source for research on business activity
  (http//www.statistics.gov.uk/about/bdl/)
• So far focus on economic productivity
• Quarterly Fuels Inquiry Data on expenditure and
  quantity of various fuel types
• Allows to develop various energy related research
  routes with plant level data.

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What the QFI surveys
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Observations in QFI
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QFI firms across sectors (2000)
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The problem with entry and exit in the QFI/ARD
sample
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Merging QFI and ARD
Share of observations merged across years
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• Discuss newly available plant level data on
  energy demand and prices
• Present initial research results using this data
• Discuss most promising avenues for further
  research

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In which policy/research areas could this data be
useful?

• 2 spheres of interest
• Environmental Economics/Policy
• how to reduce energy consumption and improve
  efficiency?
• Industrial Economics/Policy
• functioning of energy markets
• predicting energy demand

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Microdata results so far

• On environmental issues
• Energy efficiency spread calculations
• Correlations between energy efficiency and labour
  productivity
• Energy efficiency transition matrices
• CO2 reduction potential
• Sensitivity of energy efficiency on energy price
• Energy efficiency growth decompositions
• On industrial policy
• Fuel price dispersion
• Explaining electricity price dispersion (a bit)
• Some results on NETA

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Energy efficiency spreads

• .an indication of potential efficiency gains?
• Not necessarily
• different plants do different things
• face different prices
• substitute between energy and other factors
• have sunk costs
• Only short term shocks
• Nevertheless have look at spreads

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Results on spreads

• Y/E spreads are larger than Y/L (roughly twice as
  larger)
• Plausible because labour share in revenue 30,
  energy share 2

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• Persistence of the spread?
• Good spread? No persistence?
• Bad spread? Lots of persistence?

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Y/L vs Y/E more evidence on what drives the
spread
Suggests that part of energy efficiency
differences are driven by technology rather than
substituion with labour
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So we have a persistent spread probably driven by
technology.lets take the efficiency improvement
potential idea serious
Y/E
Median

• Examine the potential CO2 reduction if all plants
  were at median energy efficiency level

• Combines information on size of the spread and
  size of plants at the bottom of the spread

• Caveats
• Not clear how that median is a realistic estimate
  of the efficiency frontier
• Not clear what the costs are (especially we have
  not controlled for capital)

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CO2 Reduction potential Results (1000s of tons
of CO2)
About 15 of pollution from industry in 2000
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Fuel price dispersion

• There is dispersion
• No dramatic changes over time

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Electricity price dispersion across sectors
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What explains electricity price dispersion?
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Summary of results

• Energy efficiency spreads are larger than labour
  prod spreads
• Spreads are persistent
• Strong correlation between energy efficiency and
  labour productivity
• Possibly Large pollution reduction potential
• Energy Efficiency is sensitive to energy price
• Price dispersion large but fairly constant across
  time and sectors
• Much of price variation can be explained by
  quantity. Still there are significant regional
  price variations

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• Discuss newly available plant level data on
  energy demand and prices
• Present initial research results using this data
• Discuss most promising avenues for further
  research

Thank you
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Extra slides
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Extra slide Decomposition calculations
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How to influence energy efficiency?
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Extra slide on electricity price dispersion and
NETA
Figure 6 Electricity prices over time (Did the
abolishment of the pool lead to changes?)
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Energy Efficiency Spreads

• An indication for potential efficiency gains?

3 reasons for energy efficiency differences
1. Differences in factor costs (point 2)
2. Differences in technologies (point 3)
3. Substitution between energy and other factors
(point 4)
Different types might require different policies