Applied Energy 44 (1993) 113-130

Carbon-dioxide Production by the UK Economy: An

Input-Output Assessment

Philip W. Gay & John L. R. Proops

Department of Economics and Management Science, University of Keele,
Keele, UK, ST5 5BG

ABSTRA CT

This paper reports the use of an input-output model to examine the

production of carbon dioxide emissions in the UK. The model is based on the
UK. Input-Output Tables for 1984 but at a higher level of aggregation. A
description of the appropriate modifications to the basic input-output model
is followed by an outline of the data used. Some preliminary results on C02
emissions are reported, both in aggregate and disaggregated to 38 sectors, with
intensities per unit of total output and per unit of final demand. The paper
concludes with a discussion of the possibility of using the model to explore the
effect of varying the balance between fossil-fuel and other forms of electricity
generation, and of changing the composition of final demand for goods and
services.

THE GLOBAL GREENHOUSE EFFECT

Recent research into the Earth's climate suggests that the release of
'greenhouse gases' into the atmosphere, particularly carbon dioxide (CO2), is
likely to cause major and potentially irreversible changes in global climate
by the year 2050.1'2'3
It seems that, although a substantial increase in the concentration of
atmospheric CO 2 is unavoidable over the next few decades, there may exist
possibilities for limiting this increase by the adoption of suitable economic
and technological policies on a global scale. 4'5
In order to examine the scope for implementing such policies in the UK,
one needs a framework for modelling the way in which fossil fuels are used in
a modern economy. Such an approach would need to distinguish between
the 'direct c o n s u m p t i o n demand' for fossil fuels, and the 'indirect
113
Applied Energy 0306-2619/92/$05.00 © 1992 Elsevier Science Publishers Ltd, England.
Printed in Great Britain
114 Philip IV. Gay, John L. R. Proops

consumption demand'. For example, households purchase fuels for direct

use (e.g. petrol, heating oil, coal, gas); this constitutes direct consumption
demand. They also purchase goods the production of which has entailed the
use of fossil fuels (e.g. a motor car has entailed large amounts of fossil fuel
use in its manufacture, such as electricity); this constitutes indirect
consumption demand.
The direct consumption demand for fossil fuels can be identified with the
derived demand for these fuels through production; thus we may identify the
indirect consumption demand with 'production demand' for fossil fuels.
This production demand can be further subdivided into 'direct
production demand' and 'indirect production demand'. For example, the
manufacture of a motor car requires fossil-fuel use directly, mainly for space
heating and process heating within car-manufacturing establishments. This
is the direct production demand. However, much fossil fuel is expended in the
manufacture of the steel, glass, plastics, electricity, etc., used as inputs to the
car-making process. This is the indirect production demand.
Our analysis therefore seeks to identify the demand for fossil fuels by
producing sector and by fuel, and decomposed into the direct consumption
demand, direct production demand, and the indirect production demand.
This effectively imputes all fossil-fuel use to final demand. Thus the 'carbon
requirement' per unit output of each sector could be calculated, and
similarly the CO2 production. The ideal tool for such a sectoral analysis and
decomposition is input-output analysis.

DEMAND, PRODUCTION AND INPUT-OUTPUT ANALYSIS

A starting point for this analysis is that many goods are purchased by firms,
for further use and processing, rather than by households, for consumption.
For example, many firms purchase sheet steel, for use in the manufacture of,
for example, cars and washing machines. Thus, the sale of goods by a
manufacturing sector may be divided into two parts. First, there are those
goods sold to households for consumption. We call this 'final demand'. For
sector i this is the quantity of goods Yi. Second, there are those goods sold to
other manufacturing industries, for use in further manufacturing processes.
We call this 'intermediate demand'. For sector i, the quantity of goods sold to
sector j isXij.
Thus we may define the total output by sector i as the sum of final demand
and intermediate demand. For sector i, the total output is X~, i.e.

X,--~X,i+ Y, (1)
J
 Carbon-dioxide production by the UK economy 1! 5

This definition can be converted into a useful modelling equation if we are

willing to make an assumption concerning the relationship between the
inputs into a sector, and the total output from that sector. The assumption
we make, which seems a reasonable approximation in the short to medium
run, is that inputs are proportional to outputs. Thus for the inputs and
outputs of sector j we may write:
Xij = aijX j for all i (2)
Here ai~ is a constant of proportionality. It reflects the technological
requirements of production by sectorj for the inputs from sector i; such ai~
are therefore known as 'technological coefficients'. For example, if sector i is
'motor cars', and sectorjis 'iron and steel', then ali is the (average) quantity of
steel needed to produce one motor car. Or if we express our relationships in
terms of values rather than physical quantities, it is the number of £s worth
of steel needed to produce £100 worth of an average motor-car.
Thus we can rewrite eqn (1) as

Xi - y , aijXj + Yi (3)
J
This i n p u t - o u t p u t approach to production was originally devised in the
1930s by Wasilly Leontief. 6 (An excellent modern text on i n p u t - o u t p u t
analysis is by Miller and Blair7). We can now follow Leontief in using a
matrix algebra approach, which allows not only brevity of notation, but the
use of matrix inversion as the representation of the solution of sets
of simultaneous linear equations.
We assume that we disaggregate overall economic activity into n
producing sectors. We now make the following definitions:
y is an n-vector of goods required to satisfy final demand.
x is the n-vector of goods required for total output of the economy.
A is the n-matrix of technological coefficients for the economy.
Thus we can write eqn (3) as
x = Ax + y (4)
Here Ax is the vector of intermediate d e m a n d for the economy.
Reorganisation of eqn (4) gives the alternative formulation:
x = (I - A)- ly (5)
where (I- A)-1 is known as the 'Leontief inverse matrix'.
The Leontief inverse matrix indicates all the direct plus indirect
requirements for production in the economy, which are necessary to satisfy a
116 Philip w. Gay, John L. R. Proops

certain vector of final demand commodities. This is clear if we recall the

matrix expansion:
(I - A ) - ~ = I + A + A 2 -t- A 3 + . . - (6)

Substitution of eqn (6) in eqn (5) gives

x = y + Ay + A2y + Aay + . . .
So we can decompose the total demand for the n goods produced in the
economy as follows:

1. y is required for final demand (i.e. by consumers).

2. Ay is needed to produce the goods y. This is the 'first-round indirect
effect'.
3. A2y is needed to produce the goods Ay. This is the 'second-round
indirect effect'.
4. Aay is needed to produce the goods A2y. This is the 'third-round
indirect effect', etc.

Clearly, intermediate demand is the sum of the first-round, second-round,

etc., indirect effects.
Having established the basic input-output framework for analysing
production in a modern, integrated economy, we now move on to discuss the
application of the input-output technique to the emission of CO 2 by the UK
economy.

THE INPUT-OUTPUT ASSESSMENT OF CO 2 EMISSION

The methodology for relating economic activity to the natural environment

in an input-output framework is well understood, s'9 In particular, when
modelling the use of various fuels by an economy with input--output
methods, the distinction must be made between fuels used by industries, to
allow the production of the total output of those industries, and fuels used
directly by final consumers. For example, the great bulk of the coal that is
used in Britain, is used industrially in the production of electricity. Liquid
hydrocarbon fuels are used both industrially (e.g. in lorry and train fleets, to
power stationary engines, for space heating etc.), and also by domestic
consumers (e.g. for personal transport and home heating).
An advantage of the input-output approach to fuel use is that only
primary fuels need be considered directly. Secondary fuels, such as
electricity, are dealt with automatically within the inter-industry demand
structure.
 Carbon-dioxide production by the UK economy 117

For the study of CO2 emissions derived from the use of fossil fuels, and
other natural resources, the following further information is required.
1. A classification of the fuels which generate CO2 when used for
economic activities. For this study, the initial distinction will be
between solid, liquid and gaseous hydrocarbon fuels.
2. A classification of other natural resources which generate CO2 when
used for economic activities. Examples of these include carbonaceous
clay, used in brickmaking, and limestone, used in cement making and
iron smelting.
3. A vector of CO2 production per unit fuel burnt. This will be
represented by the 3-vector e.
4. A matrix of coefficients of fuel use per unit total output. This will be
represented by the 3 x n matrix C.
5. A matrix of the coefficients of fuel used by consumers, relating
quantities of fuel used to the values of fuels purchased for final
demand. This will be represented by the 3 x n matrix P. As it is
proposed to use only three primary fuels in this study, this matrix will
have only three non-zero elements.
6. A vector of non-fossil fuel-based CO2 emission per total output for
each sector. This will be represented by the n-vector m.

From the above, the following can be derived:

7. The vector of total industrial fuel use. This is represented by the
3-vector f. It is clear that
f = C'x (7)
(C' represents the transpose of matrix C.)
8. The vector of total direct fuel use by final consumers. This is
represented by the 3-vector d. This is given by:
d = P'y (8)
From eqns (7) and (8), we see that total fuel use, for each fuel type, is
f + d = C'x + P'y
Substitution for x from eqn (5) gives:
f + d = C'(I - A)- ly + p,y
= [C'(l - A ) - I + p , ] y
Now the total CO2 emission from fuel use (E) is given by:
E = e'[f-I- d]
= e'[C'(I - A ) - I + p , ] y
118 Philip W. Gay, John L. R. Proops

The CO2 emission from non-fuel sources (N) is given by:

N -- m'x
= m'(I - A)- l y
So the total CO 2 emission (T) from all sources is given by:
T=E+N
= e'[C'(I - A)- ~ + P ' ] y + m'(I - A)- ~y
i.e.
T = [e'C'(I - A)- ~ + e'P' + m'(I - A)- 1]y (9)
N o estimates have yet been made o f the values o f the elements o f vector m,
so that the total CO2 production reported in this paper is_ given by
T* = [e'C'(I - A)- 1 + e'P']y (10)
To interpret this equation, we recall the matrix expansion for (I - A)- 1 in
eqn (6):
( I _ A ) -~ = I + A + A E + A 3 + . . .
Substitution of eqn (6) in eqn (10), and rearrangement, gives the following:
T* = e'P'y + e'C'y + e'C'(A + A 2 + A 3 + . . . ) y
Here e'P'y is the CO 2 emission because of'direct consumption demand' for
fossil fuels. This is the CO 2 attributable to direct household heating and
private transport.
The term e'C'y represents CO2 emission because o f 'direct production
d e m a n d ' for fossil fuels. This is the CO 2 emitted by factories to meet the
direct d e m a n d of consumers for goods.
Finally, e ' C ' ( A + A 2 q-Aaq-''')y is the CO 2 emission attributable to
'indirect production demand' for fossil fuels. This is the CO 2 emitted by
factories in meeting the intermediate d e m a n d for goods throughout the
economy.
In order to obtain an estimate o f T*, in its disaggregated form, it is
necessary to estimate e, C, A and P from published statistics.

PRODUCTION OF THE A MATRIX

The basic starting point for the production of the 38-sector A matrix used in
the model is the 102 x 102 flow matrix for the 1984 I n p u t - O u t p u t Tables. 1°
For the purposes of preliminary exploration of the data and the model, it
was decided that a more aggregated version would be appropriate. The 1971
Blue Book 11 includes a s u m m a r y transactions matrix for 1968 based on a
35-sector classification, and a slightly modified version o f this was used to
produce a 36-sector aggregation o f the 1984 flow matrix without having to
split any o f the sectors for the 1984 matrix.
 Carbon-dioxide production by the UK economy 119

In order to be able to explore alternative scenarios for electricity

generation, the electricity sector was disaggregated into three subsectors.
(a) Fossil-fuel electricity generation.
(b) Other electricity generation (which includes nuclear and hydro
stations).
(c) Electricity distribution.
The two generating sectors are assumed to sell all of their output to the
distribution sector, which has no other intermediate purchases. The fuel
inputs to electricity are attributed entirely to fossil-fuel generation, and all
other inputs are split between the two generating sectors in proportion to
their total output. All purchases of electricity by the remaining sectors and
by final demand are supplied by electricity distribution. This resulted in the
use of a 38-sector model with sectors as listed in Table 1.
One further adjustment to the flow matrix was necessitated by the coal
strike of 1984. Consultation with the relevant CSO staff initially suggested
that appropriate account of this had been taken when the input-output
tables were compiled, and it is their belief that the flow matrix as published is
a reasonable representation of what would have happened in a normal year.
Comparison with data on coal use in the 1986 U K Energy Statistics ~2
revealed considerable discrepancies, however, and it was necessary to adjust
the elements relating to the supply of fuel to power stations and also to apply
a scaling factor to the intermediate sales of coal to other industries in order
to produce flows comparable with those obtained from the Purchases
Inquiry 198413 (see below).
The 38-sector A matrix was then derived in the normal way by dividing
inter-industry flows by the industrial gross outputs.

P R O D U C T I O N OF THE C MATRIX

The C matrix contains data on primary fuel use by industry measured in

physical units and disaggregated into three types of fuel: solid, liquid and
gas. Rather than attempt to estimate physical quantities from the monetary
flows recorded in the input--output tables, it was decided to obtain these
estimates from other sources.
The principal source was the Purchases Inquiry 1984,13 which covered,
with some exceptions, all the Activity headings within Divisions 1--4 of the
Standard Industrial Classification Revised 1980. For 213 activity headings,
data are published on fuel use, measured both in value terms and in most
cases physical units, divided into three types of solid fuel, three types of
liquid fuel and two types of gas. For activities, mainly small, where no
physical units were recorded, it was assumed that the price paid by these
 t~

TABLE 1
Values of Output and Fuel Use

Industry Final Total P (coal) P (oil) e (gas) C (coal) C (oil) c (gas)

demand output (tonnes/M) (kls/£g) (kth/£M) (tonnes/£M) (kls/£M) (kth/£M)
(£M) (£g)

1 Agriculture, Forestry & Fishing 3 751.9 15 224.9 0.0 0.0 0.0 0.0 84.7 0.1
2 Coal Mining 20.9 830-6 10000-0 0-0 0-0 7-1 12-4 5-5
3 Mineral Oil Extraction 12575.8 24023.7 0"0 0.0 0'0 0"0 0.0 54.1
4 Oil Processing 6 142-7 12 698.3 0-0 3 236-2 0-0 0-0 430.2 0"0
5 Fossil Electricity Generation 0.0 9 928-9 0-0 0-0 0.0 8 107.0 672.3 7.3
6 Other Electricity Generation 0-0 2 497.8 0-0 0"0 0"0 0-0 0"0 0"0
7 Electricity Distribution 5 928.7 12 426-7 0.0 0-0 0-0 0.0 0.0 0"0
8 Gas 3905.0 12203.3 0.0 0.0 2287-1 0-0 11.0 0-6
9 Water 687.2 1 664.3 0"0 0"0 0-0 0' 1 43.1 2-0
10 Other Mining & Quarrying 48.9 601-9 0.0 0.0 0-0 0.0 310-1 16-8
11 Iron & Steel 1623.0 7 082.6 0-0 0-0 0-0 197.6 94.7 55-4
12 Non-ferrous Metals 1 962-5 3 788.4 0"0 0.0 0"0 100.9 36.4 30.7
13 Bricks 21.9 603.7 0-0 0-0 0-0 253.7 114.0 317-0
14 Cement 125.4 767.5 0-0 0"0 0"0 3 229-9 113'8 62.7
15 Building Materials, Glass, Ceramics 1 472.1 6266-9 0.0 0.0 0.0 55.9 147.6 64.1
16 Chemicals & Fertilisers 12 177.9 20765.7 0"0 0"0 0-0 21.8 86"5 54.6
17 Mechanical Engineering 10 873-2 18112-1 0"0 0-0 0'0 10"2 27"8 17"8
18 Electrical Engineering 14 867-5 21 554-6 0"0 0"0 0.0 3"7 14'8 9"2
19 Shipbuilding 1 547"4 2 123.7 0.0 0-0 0-0 0"3 5frO 8"1
20 Motor Vehicles 8 239"0 10 554"0 0'0 0-0 0-0 31'4 36"3 23"8
21 Other Vehicles 1 184"2 1904"5 0"0 0-0 0'0 0"4 29'3 13"3
22 Other Metal Goods 2 697-0 9 231"9 0-0 0-0 0"0 26"2 35'2 33"5
23 Aerospace 5060-6 5417'8 0-0 0"0 0"0 13"3 22"5 12"9
24 Food 17 366"4 27 120"7 0'0 0.0 0-0 15'9 40"8 14"6
25 Drink & Tobacco 6 131"3 7711'1 0-0 0-0 0-0 9"6 53"7 12'3
26 Textiles 3 353"0 6 523"6 0-0 0-0 0"0 48 "9 67"9 16"9
27 Leather, Etc. 1 128"7 1 567'0 0-0 0"0 0-0 11"5 28"7 8"8
28 Clothing 2669.1 3 480"9 0"0 0"0 0-0 1'5 24"2 6"2
29 Timber & Furniture 3015-2 5 507"8 0"0 0.0 0.0 1"2 41"5 3"7
30 Paper & Printing 4079"2 15714"6 0.0 0.0 0"0 39"7 33'2 23"4
31 Rubber & Plastics 1 802"9 6 468-0 0"0 0'0 0-0 14'6 43"8 23"0
32 Other Manufacturing 1 089"6 2082-5 0'0 0"0 0-0 0"2 17"7 8"7
33 Construction 31 375"1 42 354.3 0"0 0-0 0'0 0"0 18"7 0"0
34 Railways 1 196"3 2 140-2 0"0 0-0 0.0 1 391"3 412"2 0"0
35 Road & Other Inland Transport 3 105-2 8388-1 0-0 0'0 0.0 0"0 784"0 0"0
36 Sea Transport 2 994-2 3 756"8 0"0 0.0 0"0 0"0 381"5 0"0
37 Air Transport 2609-2 4 148'9 0.0 0"0 0-0 0"0 1 506"5 0"0 e~
38 Other Services, commerce, Etc. 88 754"2 157 686-6 0-0 0'0 0-0 8'0 24"4 13"2

Kls = Kitolitres.
Kth = Kilotherms.

to
122 Philip W. Gay, John L. R. Proops

purchasers was the same as the average price paid by all purchasers for
which both price and quantity data were available. This probably leads to a
slight over-estimate of fuel use in these cases. The fuel use by quantity in
these eight categories was aggregated to give total amounts of solid, liquid
and gas. The important activities of Divisions 1--4 of the SIC, not covered by
the purchases inquiry, were dealt with as follows.
Opencast coal working was assumed to use similar technology (per tonne
extracted) to gravel extraction. Extraction of mineral oil and natural gas was
covered by the 1986 U K Energy Statistics. 12
Data on energy use by the other SIC divisions (agriculture, construction,
distribution, transport, services) was obtained from the 1968 Energy
Statistics 12 and the 1976-1986 Transport Statistics. 14
These data relating to sectors of the SIC were then aggregated to the 102
sectors of the 1984 Input-Output Tables, ~° and then further aggregated to
36 sectors as in the case of the A matrix, with final adjustment to 38 sectors as
before. Division of each element of the 3 x 38 matrix thus obtained by the
corresponding element of the total output sector produced the 3 x 38 matrix
C, which shows primary fuel use per unit of total output.
The model also requires a matrix P, which contains the fuel use per unit
final demand. The three non-zero elements of this matrix were estimated
using data published in the 1986 Energy Statistics 12 and the 1976-1986
Transport Statistics. ~4 In the same way as the elements of the C matrix
depend upon the technology of production, the elements of P depend upon
the composition of final demand; for example, the liquid fuel element is an
aggregation of fuel oil used for heating and petroleum products used as
motor fuel.
Finally, the model requires a vector of CO2 emission per unit of fuel burnt.
Simplifying assumptions here were
(a) Solid fuel is 60% carbon by weight, and generates 2.2 tonnes CO2 per
tonne of fuel.
(b) All liquid fuel consists of molecules with eight carbon atoms, and
generates 2.6 tonnes CO2 per thousand litres of fuel.
(c) All gas consists of methane, and generates 5.4tonnes CO2 per
ktherm.

APPLICATION OF THE M O D E L

As mentioned above, the initial application of the model was a simplified

version which took no account of CO2 emissions from non-fuel sources. The
tables contain the basic data and some results of applying the model.
 Carbon-dioxide production by the UK economy 123

In Table 1, the 'Total output' and 'Final demand' columns are simply the
equivalent sections of the 1984 Input-Output Tables, aggregated to the 38-
industry level as described above. It will be noticed that the two electricity-
generating sections have zero final demands.
The next three columns are the columns of the P matrix, for the three fuels.
As explained above, P has only three non-zero elements, representing the
fuel delivered to final consumers per £M of final demand.
The next three columns record primary fuel use per unit of gross output by
industry (i.e. matrix C). These represent the fuel delivered to each industry,
per £M of total output. Once again, the entries for the electricity sectors are
worth commenting on. The distribution side of electricity is recorded as
using no fossil fuel at all, which is clearly an undestimate. The same is true of
'Other electricity generation'.
Table 2 shows the various contributions to the total CO2 emission. The
first column corresponds to e'P, the direct consumption demand for fossil
fuels. This is the tonnes of CO2 emitted per £M of demand by consumers for
fuel. This column contains only three non-zero elements, one for each type of
fossil fuel.
The second column corresponds to e'C, the direct production demand for
fuel. This is the tonnes of CO2 emitted directly by each industry, per £M of
final demand for the output of that industry.
The third column corresponds to e ' C ( A + A 2 + - . - ) , the indirect
production demand for fuel. This is the tonnes of CO2 emitted throughout
the rest of the economy for each industry, per £M of final demand for the
output of that industry.
The fourth column is the sum of the first three, and is the total 'CO2
intensity' per £M final demand, for each industry.
It is noteworthy that the great majority of industries are 'responsible' for
much more CO2 production indirectly than directly. The only industries
which do not follow this pattern fall into four groups. First, industries 3 and
4, related to oil production and processing. Second, fossil-fuel electricity
generation (Industry 5). Third, bricks and cement (Industries 13 and 14).
Finally, transport (Industries 34-37). This indicates how crucial it is to use an
approach which takes economic interrelations into account when analysing
CO2 production.
The next four columns show the CO 2 production that takes place. In each
case the corresponding 'intensity' has been multiplied by the final demand
for goods and services, for each industry.
Below these four columns are the total CO2 emissions attributable to
direct consumption demand, direct production demand and indirect
production demand for fuels, both in absolute terms and as percentages of
the overall total. We see once more the importance of the indirect demand
 to

TABLE 2
C O 2 Intensities and C O 2 P r o d u c t i o n

Industry e'P e' C e' C(A + Total e'Py e'Cy e'(A + yA 2 Total
(tonnes (tonnes A 2 +...) CO 2 (ktonnes (ktonnes +A3...)y C02
C02/£M) C02/£M) (tonnes intensity C02) C02) (ktonnes (ktonnes)
C02/£M) (tonnes C02)
C02/£M)

1 Agriculture, Forestry, Fishing 0"0 220.9 817.9 1 038.8 0-0 828.8 3 068.6 3 897.4
2 Coal Mining 22 000-0 77-4 1 408-3 23 485-7 459.7 1.6 29.4 490-8
3 Mineral Oil Extraction 0-0 292-0 129.4 421-4 0.0 3 671.7 1 627.4 5299.1
4 Oil Processing 8 414.1 1 118.6 546-8 10079.5 51 685.3 6 871-1 3 359.0 61 915-4
5 Fossil Electricity Generation 0"0 19 622.9 486.6 20 109.5 0-0 0-0 0.0 0-0
6 Other Electricity Generation 0"0 0-0 144.6 144.6 0-0 0-0 0"0 0.0
7 Electricity Distribution 0"0 0.0 17 339"4 17 339-4 0"0 0.0 102 800-1 102 800-1
8 Gas 12350-2 31-6 293-2 12675.0 48227-4 123.5 1 145-1 49496.0
9 Water 0"0 123-1 1 474.7 1 597.9 0-0 84.6 1 013.4 1098.0
10 Other Mining & Quarrying 0-0 897.1 1 443.4 2 340-5 0.0 43.9 70.6 114'5
11 Iron & Steel 0-0 980-3 1613.9 2 594.2 0.0 1 591.0 2619.3 4210-4
12 Non-Ferrous Metals 0-0 482-2 1 134-5 1 616-7 0"0 946-2 2 226.5 3 172.7
13 Bricks 0.0 2 566-3 1 138.7 3 705-0 0.0 56-1 24.9 81.0
14 Cement 0"0 7 740.6 2 204.4 9 945.0 0"0 970.3 276.3 1 246.6
15 Building Materials, Glass, Ceramics 0-0 853-0 1664.6 2 517.6 0'0 1255.7 2 450-6 3 706.3
16 Chemicals & Fertilisers 0.0 568-1 1079-7 1.647.8 0-0 6 917.9 13 1 4 8 . 4 20066.3
17 Mechanical Engineering 0-0 190.7 746-4 937-2 0.0 2 073"8 8 116"2 10190-0
18 Electrical Engineering 0-0 96-3 546.3 642"5 0.0 1 431"3 8 121"8 9553-1
19 Shipbuilding 0-0 174'3 794.3 968-6 0'0 269'7 1 229-1 1498.8
20 Motor Vehicles 0-0 291'7 816"0 1 107-7 0'0 2 403'6 6 722"7 9 126'3
21 Other Vehicles 0"0 148'8 763'1 911-9 0"0 176-2 903-7 1079.9
22 Other Metal Goods 0'0 330" 1 1 074"7 1404-8 0.0 890-2 2 898-5 3 788.7
23 Aerospace 0"0 157"2 498 "4 655-6 0-0 795-5 2 522-2 3 317-7
24 Food 0.0 220"1 884"0 1 104.0 0-0 3 821"7 15351-5 19 173.3
25 Drink & Tobacco 0-0 227"0 797"4 1 024-4 0-0 1 391-5 4 889"4 6 280"9
26 Textiles 0-0 375"3 699"7 1 075"0 0.0 1 258"4 2 346"2 3604.6
g.
27 Leather, Etc. 0"0 147"3 536"3 683'6 0.0 166.2 605-3 771.6
28 Clothing 0-0 99 "9 438"6 538'4 0"0 266"6 1 170"6 1 437-2
29 Timber & Furniture 0-0 130'3 687"2 817"5 0"0 392'8 2072'1 2464.9
30 Paper & Printing 0-0 300-0 687'1 987-2 0.0 1 224'0 2 803-0 4 026"9
31 Rubber & Plastics 0"0 270-4 928"5 1 198"9 0.0 487"6 1 674.0 2161-6
32 Other Manufacturing 0.0 93-8 597'2 690"9 0'0 102"2 650'7 752-8
33 Construction 0-0 48"5 833-6 882-2 0-0 1 523-1 26 154.7 27 677.9
34 Railways 0"0 4 132-6 1 655-6 5 788"3 0-0 4 944-0 1 980.7 6 924-7
35 Road & Other Inland Transport 0.0 2 038-4 494-9 2533"3 0-0 6 329"5 1 536.8 7 866.4
36 Sea Transport 0-0 992'0 380"9 1 372-8 0-0 2970-1 I 140.4 4110"5
37 Air Transport 0"0 3916"8 691"0 4 607"8 0"0 10219"9 1 803'0 12022-9
e~
38 Other Services, Commerce, Etc. 0"0 152'1 548"7 700"8 0"0 13 497"5 48 701.0 62198-5
Total 100 372-4 79 998-0 277 253.2 457 623"6
% 21-9 17-5 60.6 100-0 e~

to
126 Philip W. Gay, John L. R. Proops

TABLE 3
CO2 Intensity by Industry (Ranked)

Industry CO 2 intensity
(tonnes/£M)

2 Coal Mining 23 485-7

5 Fossil Electricity Generation 20 109"5
7 Electricity Distribution 17 339-4
8 Gas 12 675"0
4 Oil Processing 10079"5
14 Cement 9 945-0
34 Railways 5 788'3
37 Air Transport 4 607"8
13 Bricks 3 705-0
11 Iron & Steel 2 594"2
35 Road & Other Inland Transport 2 533'3
15 Building Materials, Glass, Ceramics 2517'6
10 Other Mining & Quarrying 2 340.5
16 Chemicals & Fertilisers 1 647-8
12 Non-Ferrous Metals 1 616.7
9 Water 1 597.9
22 Other Metal Goods 1 404.8
36 Sea Transport 1 372"8
31 Rubber & Plastics 1 198-9
20 Motor Vehicles 1 107.7
24 Food 1 104"0
26 Textiles 1 075-0
1 Agriculture, Forestry, Fishing 1 038"8
25 Drink & Tobacco 1 024'4
30 Paper & Printing 987'2
19 Shipbuilding 968"6
17 Mechanical Engineering 937-2
21 Other Vehicles 911'9
33 Construction 882'2
29 Timber & Furniture 817"5
38 Other Services, Commerce, Etc. 700"8
32 Other Manufacturing 690"9
27 Leather, Etc. 683"6
23 Aerospace 655"6
18 Electrical Engineering 642"5
28 Clothing 538'4
3 Mineral Oil Extraction 421'4
6 Other Electricity Generation 144"6
 Carbon-dioxide production by the UK economy 127

TABLE 4
Total CO 2 Production by Industry (Ranked)

Industry Total CO 2 %
(ktonnes C02)

7 Electricity Distribution 102 800"1 22"5

38 Other Services, Commerce, Etc. 62 198"5 13-6
4 Oil Processing 61 915"4 13"5
8 Gas 49 496"0 10"8
33 Construction 27 677.9 6-0
16 Chemicals & Fertilisers 20 066"3 4-4
24 Food 19 173"3 4.2
37 Air Transport 12 022'9 2"6
17 Mechanical Engineering 10 190"0 2"2
18 Electrical Engineering 9553-1 2.1
20 Motor Vehicles 9 126-3 2"0
35 Road & Other Inland Transport 7 866"4 1'7
34 Railways 6 924"7 1"5
25 Drink & Tobacco 6 280'9 1'4
3 Mineral Oil Extraction 5 299.1 1.2
11 Iron & Steel 4210'4 0-9
36 Sea Transport 4 110.5 0"9
30 Paper & Printing 4 026"9 0"9
1 Agriculture, Forestry, Fishing 3 897.4 0"9
22 Other Metal Goods 3 788-7 0"8
15 Building Materials, Glass, Ceramics 3 706"3 0"8
26 Textiles 3 604-6 0-8
23 Aerospace 3317-7 0'7
12 Non-Ferrous Metals 3 172"7 0'7
29 Timber & Furniture 2 464-9 0-5
31 Rubber & Plastics 2 161"6 0'5
19 Shipbuilding 1 498'8 0"3
28 Clothing 1 437.2 0"3
14 Cement 1 246-6 0"3
9 Water 1 098-0 0"2
21 Other Vehicles 1 079"9 0-2
27 Leather, Etc. 771'6 0"2
32 Other Manufacturing 752"8 0"2
2 Coal Mining 490.8 0-1
10 Other Mining & Quarrying 114-5 0-0
13 Bricks 81 "0 0-0
6 Other Electricity Generation 0-0 0"0
5 Fossil-Fuel Electricity Generation 0-0 0"0
Total 457 623"6 100.0
128 Philip HI. Gay, John L. R. Proops

for fuels in the production of C O 2. Over 60% of U K C O 2 emissions are

attributable to indirect demand for fossil fuels. Slightly less than 22% of the
emission is directly attributable to household demand for fossil fuels.
To get a clearer view of the 'guilty' industries in CO2 emission, the total
CO2 intensity is shown in Table 3, ranked by size. The upper ranking is much
as one might expect, with energy production and distribution at the top,
except for 'Other (non-fossil fuel) electricity generation', at the very bottom.
In the middle ranks we find 'Water' above 'Other metal goods', which is
rather surprising. Even more surprising is to find that 'Agriculture, forestry
& fishing' is more CO 2 intensive than 'Shipbuilding and mechanical
engineering'.
Finally, in Table 4, we rank total CO 2 emission by industry. We remind
the reader that this relates to fuels used by consumers directly, by industries
directly and by industries indirectly. This ranking is both absolute and as a
proportion of total CO2 emissions.

C O M M E N T S ON THE RESULTS

Before further considering the results, it is worth noting some features of

them which arise out of the way in which the model is constructed. The
reason why the two electricity generating sectors appear to make no
contribution to total CO2 (final column of Table 2) is that these sectors have
no final demand and, as can be seen from the algebraic presentation, this
column is obtained by multiplying the CO2 intensity per unit final demand
by the final demand vector. The entries (20 109-5 and 144.6) in the first
column are the amounts of CO 2 per unit of supply from the generating
sectors to the distribution sector, and the entry of 17 339 for electricity
distribution is a weighted average of these.
The intensities per unit final demand for coal mining, oil processing and
gas are dominated by the direct components, i.e. the CO 2 generated when
these fuels are burnt by consumers.
The results themselves are most easily discussed with reference to Tables 3
and 4. It will come as no surprise that almost one quarter of U K CO2
emissions result from electricity generation, and therefore the highest
reduction could be achieved by switching entirely to non-fossil-fuel
generation. As has already been mentioned, the oil-processing total is
derived from final demand use of oil-based fuels, and does not therefore
include fuel used in the transport sectors and elsewhere.
The large amount of CO2 associated with 'Other services', etc. is mainly a
reflection of the fact that as a result of the aggregation to 38 sectors, this
sector accounts for over 30% by value of the transactions in the whole U K
 Carbon-dioxide production by the UK economy 129

economy. This point applies to all of the entries in the table: the total amount
of CO2 associated with any sector is the product of the intensity per unit final
demand and the level of final demand. The reason why products such as
bricks, which are quite fuel-intensive, do not appear to contribute much to
total CO2 is that bricks do not figure very prominently in final demand.
Most of CO2 generated in brick making will be recorded as indirect CO2 for
the construction industry.
The overall total CO2 emission of 457 million tons is lower than
alternative estimates which have been made (e.g. 601 million tons for 1985).
It should be remembered that this is a preliminary estimate for a year when
some important components of the data were of poor quality. In addition to
discrepancies arising out of the data, it is possible that our use of a single
emission coefficient for each fuel (thereby implying homogeneity) may have
had some effect.

F U R T H E R DEVELOPMENTS

There are several extensions to the model which will be explored in later
stages of the research:
1. Examination of the effect of switching entirely to non-fossil-fuel
electricity generation.
2. Consideration of some alterations to the pattern of final demand, e.g.
reduction in fuel demand as a result of efforts to save energy,
substitution of public transport for private cars for some journeys,
etc. An important possibility here is the use of elasticities of consumer
demand to predict the effect of price changes resulting from the
taxation of primary fossil fuels.
3. Incorporation of the non-fuel sources of CO2.
4. Incorporation of capital effects, e.g. if there were a switch to nuclear
and estuarial barrage generation of electricity, increased amounts of
cement would be required during the construction phase, which in
the short run would increase CO 2 emission.
5. A common criticism of input-output analysis is that it uses a snap-
shot of the state of technology at particular time. It would be useful to
repeat the exercise for different years and for other countries.
6. The model presented is capable of use for other pollutants. Those,
such as sulphur dioxide, which are fuel-derived, can be analysed
simply by replacing the three coefficients of vector e. Other pollutants
would require more substantial data modifications.
7. It is intended to run a more disaggregated version of the model when
it has been thoroughly explored at the current level of aggregation.
130 Philip W. Gay, John L. R. Proops

. In the above analysis, exports are treated as part of final demand, and
imports are ignored. This needs correction, as some CO2 emission by
the U K economy is to meet the demand for goods by overseas
consumers and industries. Similarly, much U K consumption of
goods (both final and intermediate) is met by imports. If the true
picture of U K 'responsibility' for global CO2 emission is to be
obtained, then the emission by the U K attributable to exports should
be subtracted, and allocated to the nations importing UK-
manufactured goods. Conversely, the CO 2 emission taking place
overseas to satisfy U K demand for imports should be added on. The
calculation of the additional CO 2 emissions because of imports is not
a simple calculation, and is the subject of collaborative research with
colleagues at the University of Heidelberg, Germany.

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