Aggregated Value by Sector and Electricity Consumption

In order to generate one US$, 0.50 kWh of electricity is spent in Brazil. Some industries, like ferroalloys, use about 10kWh to aggregate one US$ to the GDP. In services, only 0.20 kWh is spent to generate one US$ of product.

When the product is inserted in a long production chain, the interruption of its fabrication can generate loses in preceding (upstream) and subsequent (downstream) activities of its production chain. Our first analysis concerns exports of semi-finished products, with few products in the upstream and practically none in the downstream.

It is shown that export interruption or substitution of local production is a way of minimizing the negative impacts of rationing on product generation and tax collection. In a preliminary analysis, the reduction of jobs does not seem to be significant as well.

The electricity consumption distribution is not uniform either per inhabitant or by aggregated value in each sector.

A national policy for restricting electric energy use should involve the minimum number of people and cause the least impact on production, on the Government’s accounts and on the commercial balance.

Rationing and a campaign aiming at rationalizing the use of electricity should be oriented by the sectors where consumption reduction would have the least social and economic impact.

Linear cuts, or even worse, supply interruption means discarding any criterion and a failure of coordination of the area.

It should be remembered that the expected GDP growth for 2001, particularly that of industrial product, is generating the expected demand increase. The worst way to solve the problem is creating recession.

Table 1 that follows shows the aggregated value by Economic Sector compared to Electric Energy consumption in the Sector (1999 data) (US$ of 94).

Sector	Billion of kWh/year	Billion of US$/year	kWh/US$
T O T A L	314,7	606,1	0,52
RESIDENTIAL	81,3	-----	-----
SERVICES	72,5	345,6	0,21
COMMERCE AND OTHERS	71,3	324,8	0,22
TRANSPORT	1,2	20,8	0,06
INDUSTRY	138,5	190,6	0,73
AGRICULTURE AND HUSBANDRY	12,4	47,8	0,27
ENERGY	10,0	14,5	0,69

In Figure 2 we present the energy consumption by aggregated value in the different sectors. In a general way, 0.52 kWh is spent to generate one dollar in the Brazilian economy.

In other words, in order to generate one dollar in the industrial sector, three times more energy is spent than in the services sector and almost three times more than in the agriculture-husbandry sector (1).

(1) The first cuts programmed for the Productive Sector directly affect some services. Suppressing a June celebration in the Northeast seems to be an obvious measure since it is a superfluous activity. However, from the point of view of its economic impact in the region, it may not be the best economic and social option for electricity saving.

In the Industrial Sector the distribution is not uniform either, since there are sectors that are more intensive in electric energy use. Table 2 shows (for 1998) the distribution of aggregated values by industrial category and the kWh of electric energy/ aggregated value ratio.

	Electric Energy	Value Aggregated to the GDP	Intensity of Electricity Use
	Billion of kWh/year	Billion of US$/year	kWh/US$
INDUSTRY	136,4	183,6	0,74
MINERAL EXTRACTION	7,2	2,3	3,15
TRANSFORMATION	129,2	181,3	0,71
NON-METALLIC	7,2	8,2	0,88
METALLURGY	47,0	18986	2,47
PIG IRON AND STEEL	13,9	6,0	2,33
FERROALLOYS	5,3	0,5	10,25
NON FERROUS/ OTHERS .	27,7	12,5	2,22
CHEMISTRY	15,9	17,8	0,89
FOOD AND E BEVERAGE	15,1	22.2	0,68
TEXTILE	6,1	10,2	0,60
PAPER AND PULP	10,9	6,7	1,64
OTHERS	26,9	97,2	0,28
ENERGY	9,6	14,3	0,67

As can be observed, in order to aggregate one dollar in the ferroalloy sector it is necessary 10kWh. In the mineral extraction industry, about 3kWh and in the non-ferrous and others of metallurgy , it is necessary more than 10kWh.

Obviously, a selective cut would affect a lot less the generation of products (and tax collecting) than a non- discriminated cut. In most cases, the question is not that simple, since the products are part of a long production chain. However, in some cases they are available in the international market and its import can be, in the medium run, a way not to disorganize production.

The electric-intensive products have an important participation in the Brazilian exports. In this case, it concerns products in the final national production line and the damage produced can be evaluated by the impact on exports and on the value aggregated to the GDP. Obviously, there are problems relative to commercial commitments that cannot be ignored. e&e is carrying out studies concerning some products of the Brazilian export line in 1999 and 2000 which could have restrictions without affecting the internal production chain.

Preliminarily, we can verify that only two products in our export line represent the following quantities and values (1990-2000 average).

The impact of suppressing these two products from exports on the commercial balance was estimated to be 1.4 billion dollars, which represents 1.9 % of exports and less than 0.2% of the GDP. If adopted during 4 months, these values would be divided by 3 and they would represent a reduction of 4.1 TWh/year in the industrial consumption, which represents about 10% of the industrial consumption in the region.

There is also the hypothesis of importing these and other inputs. In this case, one could attain even larger reductions. In the case of the Northeast, soda production consumes 15% of electric energy used in the industry or almost 70% of the industrial rationing foreseen for the region.

Selective rationing in industry and other sectors of the economy is the way to minimize the negative effects on the GDP, tax collecting and unemployment. When this restriction is applied to exports one can guaranty that there will not be an internal cascade effect caused by the interdependence of the sectors. This is valid above all for primary and semi-manufactured products where the chain preceding the final product is short. Import of electric-intensive products as a substitution for those produced for internal consumption is also an intelligent way of importing contained electric energy.