e&e No 27
Energy and Emissions Matrix: Sectorial Module
Ministry of Science and Technology
of the Emissions of Gases Generating the Greenhouse Effect,
AbstractFrom historical data concerning the participation of several sectors of the economy in the GDP of Brazil; a projection of this participation in the year 2020 of the Agriculture, Industry and Services Sectors in a reference scenario is made. The projection is carried out using a second-degree curve fitted to the historical behavior and the projected value is coupled to the last available data with the help of an integrated Poisson curve. The Brazilian historical values are compared with those of some OECD countries.
The objective of this module is to project for the year 2020 the participation of the Agriculture, Industry and Services macro-sectors for Brazil, according to a reference economic scenario whose variables are presented in Table 1 below.
Table 1: Economic variables of the Reference Scenario for the year 2020
The projection is carried out by extrapolating the Brazilian historical behavior of these sectors, comparing them with what is observed in some OECD (Organization for Economic Cooperation and Development) countries, whose non-aggregated data by sector were available, in order to orient the scenario projection and observing what occurs in the different Brazilian states. In order to project the participation values in the GDP (Gross Domestic Product) of the economic sectors we have used a methodology that aims at permitting a consensus among specialists of the area. It also permits, for economic purposes, the analysis of fuel consumption and emissions of the gases generating the greenhouse effect for different scenarios.
In this first stage we also consider separately the participation of the Energy Sector (usually included in Industry) and the Transport Activity (part of the Services Sector) due to its importance in energy use. It should be noticed that in the structure of the National Energy Balance (BEN/MME), energy is a Sector what is not true in the IBGE (Geographic and Economical Brazilian Institute) structure – which is the source of the GDP values in Brazil.
2. MethodologyThe estimated values are a composition of a projection for the year 2020 of the participation of the sectors fitted to the historical value through the use of a second-degree curve that includes the point of the projected year. Since the fitting using a second-degree curve only eventually includes the last known year, the fitting would present a discontinuity in the curve. In order to prevent this “breach” the coupling of the projected value with the last available data is made using an integrated Poisson curve whose time constant (in years) can be chosen. The program description (and its operation) is presented in an attached Technical Note.
3. Participation of the Macro-Sectors in the GDP
a) Agriculture Sector
Figure 1: Participation of the Sectors in the GDP at Current Prices in Brazil
Figure 1 shows that in Brazil from 1970 to 1986 the variation of the participation of the sectors in the product was restricted to a small increase of the industrial product and a slight decrease of the agricultural product. This last year corresponds, in the international perspective, to the interests shock (drop of interests rate) and to the “cold shock” in the petroleum prices and in Brazil it was the year of the Cruzado Plan, followed by a tentative Brazilian moratorium due to internal and external circumstance.
From 1986 on it occurred a change in the plateau of services participation from 50% to a little less of 60% and a drop of the agricultural and industrial products. Approximately, we could say that until 1986 we had a participation of 11%, 38% and 51% of the Agriculture, Industry and Services Sectors, respectively, while in the second half of the nineties we attained 8%, 33% and 59%.
It should be noticed that in Brazil from the point of view of constant prices, the participation of the agricultural activity was around 11% (see Figure 2). In Figure 1 we show the sectors in a non-aggregated form aiming at the Energy Matrix. The latter considers separately the Transport (included in Services) and the Energy Sectors (included mostly in the Industrial Sector by IBGE). The total participation of Industry + Energy in the GDP, presented in the figure below, can be considered, in a first approximation, as a participation of the Industry Sector. It should be emphasized that part of the product, assigned to the Industry Sector, comes from the public services and is accounted for as services in the IBGE structure.
Figure 2: Participation of sectors at constant prices (IBGE, 1970 to 1990, and IBGE and SE/MME, 1991 to 1999)
The marked regularity of values at constant prices (see Figure 2) and its best correlation with energy data, as will be later verified, make its use attractive in the energy projections. However, there is a difficulty , namely, to maintain in the future a coherent data base, since IBGE does not publish values at fixed base anymore. This approach makes it also difficult the comparison with other countries that use the current prices methodology  ([i])??. In some cases it can be interesting to adopt a mixed approach.
The participation of the value aggregated by the Agriculture Sector in the GDP in OECD countries has clearly decreased in the last three decades. However, we should observe that even in a country with a strong agriculture like the United States presented in 1960 a participation of agriculture in the GDP of only 4%. In 1996 practically all represented countries have participation inferior to 4% in the GDP. The average value of these countries in 1995 was a participation of 2.9% in the GDP. This average value considers the total of the values aggregated in agriculture by these countries, divided by the sum of the GDP of these countries. This corresponds to an average of the participation of agriculture in the product weighted by the GDP of the countries.In Brazil we can infer from the behavior of the curve concerning the participation of the agriculture product in the GDP at current and at constant prices that its decrease is due mainly to the decrease in current prices. On the other hand, in the OECD countries the huge subsidies applied in the European and Japanese agriculture are well known and they have been the object of constant argumentation in the World Trade Organization discussions. Brazil has been reasoning in the preparatory discussions of the Free Trade Area of the Americas – FTAA (ALCA), that in each two dollars income of the American farmer (in the United States) one dollar comes from subsidies. If subsidies became a rule in the developed countries it is possible that in the 20-year horizon of the present work free trade will have some chance of imposing itself in these countries. The great hindrance to the elimination of these subsidies is that they force down the prices of agricultural imports from other countries, mainly those of the third world. This fact renders disadvantageous for the central countries a change in the agricultural policy. Furthermore, the strong internal organization of the agricultural sector in these countries, the concern with unemployment in the sector and considerations regarding not being excessively dependent on foreign countries in food production has contributed to the maintenance of the policy of subsidies to the agriculture in developed countries.
Figure 3b: Participation of the Agriculture Sector in the GDP is descent in most of the developed countries in the studied period.
If we consider the participation of agriculture in 1995 (of which we were able to consider data from various countries) we would have for Brazil : 7.9% in values from IBGE at factor cost, 11.4% at fixed prices of 1980 (recalculated for the 1990 decade ) and 14%, considering the purchase power parity, according to the 1997 Annual Report of the World Bank.
Therefore, it would not be unreasonable to expect in the country and in the world that the agricultural activity would have again a larger participation in the GDP at current prices in the future. Depending, of course, on changes in the factors that determine the present policy of subsidies for agricultural products in the central countries. The values for the OECD countries are at current prices.
Figures 4: Participation of Sector of the Agricultural/Husbandry in the GDP. The states are ordered according to GDP/inhabitant.
Figure 4 shows the participation of the Agricultural Product (at current prices) in the different Brazilian states in the years 1996 and 1997 (IBGE – State Accounts). The states are ordered according to the GDP/inhabitant (represented on the second axis of Figure 4, namely, at the right side) for 1997. The participation of the agricultural product in the GDP does not depend strongly on the per capita income. However, it is noticeable that in the most industrialized state and of larger per capita income, São Paulo , this participation was only 4.4% in 1997.
The evolution of the policy for regional development can contribute to alter the participation of the agricultural product in the GDP. As a first approximation, we are assuming for the reference scenario a participation (calculation based on series at current prices) of 7% of the GDP in 2020.
b) Industrial Sector
The industrial product had also its participation in the GDP reduced in the nineties as compared to the two previous decades. This occurs both in current and constant values, as can be observed in Figures 1 and 2.
The participation of the Industrial Sector (at current prices) has also decreased in most of the developed countries, as shown in Figures 5a and 5b.
Figures 5a and 5b: The participation of Industry in the GDP is descent in most of the OECD countries
For 1995, the average participation of the Industrial Sector in the product of the studied OECD countries (represented in the graphic) was 30% for normalized values (sum of Industrial +Agriculture +Services Sectors =100%).
Since the Brazilian balance of non factor services of the debt shows traditionally a deficit (which is calculated in the external transfer of the National Accounts), the eventual exportable surplus must come from the industrial or agricultural product. The projection of the participation of these sectors should consider in the macro-economic reference scenario the need of generating surpluses. In the future, in an automated run, we can consider that the projected industrial + agricultural product , as a first approximation, will be the sum of commercial surplus projected for 2020 and the industrial +agricultural product necessary to sustain an even commercial balance. As an example, if in an even commercial balance the projected participation of the agricultural sector were 7% and the industrial one 30% (sum 37%), then the estimated participation of these two sectors should be 39% in order to generate a commercial surplus of 2%. This increase would be considered maintaining the agricultural product/ industrial product proportion.
In this aspect, it should be observed that a strongly exporting country like Japan has a participation of the industrial sector much higher than that of a strongly importing country like the United State, as can be seen in Figures 5a and 5b. Incidentally, it should be noticed that the participation of the agricultural product in both countries is about 2% of the GDP and that agricultural products can not have a marked participation, as a percent of the GDP, in the external trade.
In Figure 6 is presented the participation of the Industrial Sectors in the GDP of OCDE countries at current prices. The values of the OECD (weighted average) and the arithmetic average of the values of the countries are shown. It should be noted that for the first and last years of the considered period, the number of countries for which values are available is smaller than for the remaining years.
The relatively regular behavior of the weighted averages (where the influence of the United States is enhanced) is not much different from the arithmetic average and shows that the Industrial Sector participation is descent in the central countries . Naturally, this reduction in the participation has an inferior limit that will show itself with time.
Figure 6: Participation of the Industrial Sector in the GDP in the OCDE countries . The value indicated as average corresponds to the arithmetic average and is less influenced by the strong participation of the United States in the OCDE (about half of the total GDP).
c) Services Sector
In the OECD countries and in Brazil the smaller participation (in current values) of the Industrial and Agricultural Sectors has been (obviously) compensated by a larger participation of the Services Sector. From the energy point of view this fact is relevant since, except for Transport, Services have a low energy/product ratio. On the average, in the OECD countries studied, this participation reached 67% in 1995. In current values, the participation of Services in the Brazilian GDP was about 58% in the last years of the nineties.
Figure 7: Participation, at current prices of Sectors in the GDP of Brazil.
In Figures 8a and 8b we show the evolution of the Transport activity as part of the GDP for OECD countries. The participation of Transport was slightly descent or stable in all OECD countries studied.
But the participation in the GDP of the Services included in the commercial and public activities was ascent in all countries and represented more than half of the calculated economic product at current prices, as shown in Figures 9a and 9 b.
Figures 8a e 8b: The participation of the Transport activity was descent or stable in the last decades for OCDE countries.
Figures 9a e 9b: The participation of commercial and public services increased in all OCDE countries and in some of them reached 70% of the GDP.
a) Current Prices
In Figure 10 are shown the extrapolations of the data concerning the participation of the sectors in the product, considering the values for 2020 in Table 2. Once a macro-economic scenario and the participation in the GDP, coherent with this scenario, are defined, it is possible to determine the value of the product for each sector, as shown in Figure 11.
Table 2: Structure of Participation in the GDP ( current prices) historical and extrapolated
In order to complete the effective frame, in the IBGE classification, it is necessary to make some hypothesis concerning indirect taxing. In this case, it was assumed a taxing equal to the average of the 10 last available years.
Figure 10: Extrapolation of the participation in the GDP, at current prices, in Brazil.
A similar procedure will be adopted relative to the industrial product, aiming at defining the participation of the different activities in this sector .
b) Constant Prices
Even though the current prices structure presents the previously mentioned advantages, it may be useful, as we have pointed out, to use the constant prices structure in applications, as the present one, that aims at linking the economic activity to energy consumption.
In what follows, we present the alternative projection of participation of the different sectors in the product at constant prices. The methodology is analogous to that adopted for projection at current prices. In order to have a correspondence in terms of relative participation, it is necessary to have a transformation factor that depends on relative prices.
The factor used is the relationship between the participation at constant and current prices. For 1999, the factors are indicated in Table 3. Theoretically, the values for 1980 are equal to 1.
3: Participation in the GDP at Current and Constant Prices ,
We could then obtain the evolution of the participation in the GDP at constant prices shown in Figure 12. In this figure we can see a participation in the product more “well behaved” than that shown in Figure 7 (at current prices) and consequently of better predictability.
Figure 12: Participation of Sectors in the GDP at constant prices.
At the present stage of the work we will use the transposition from the current prices structure to that of constant prices assuming that the price structure does not vary much in 2020 relative to that of 1999. The methodology that was adopted permits to easily modify this hypothesis. By applying the adjustment in both participation independently, it results that when we define values for participation at current prices/constant prices for 2020 we are defining the path of evolution of this participation and consequently a path of relative prices which is shown in Figure 13 for our present hypothesis.
For the OECD countries it is also observed that the variation in participation at current prices and at constant prices reflects a particular behavior in the participation in the GDP and less changeable when we use the constant prices series. Even not having available an exactly coincident series , in Figure 14 we are representing the behavior of participation of the Agriculture, Industry and Services Sectors.
The re-normalized data for 1970 and 1995 are shown in Table 4. We can deduce that a large part of the variation observed in the participation of the sectors is due to changes in the relative prices assigned to the products of the sectors. It is interesting to emphasize not only the participation decrease assigned to prices of the Agriculture Sector but also that of the Industrial one.
Table 4: Variation in Participation of Sectors in the GDP (OCDE countries)
Figure 14: Participation in the GDP of OCDE of Services, Industry and Agriculture (secondary axis at right)
In Table 4 it was necessary the participation of the sectors so that the sum would reach 100% (differences smaller than 2%) because completely coherent data was not available both at current and constant prices. 
5. Use of Sectorial Results
Our methodology uses the evaluation of equivalent energy in each sector from the evolution of the energy/product coefficients. The consumption distribution in equivalent energy of the different energy sources of final energy permits to project consumption in final energy (using coefficients that reflect the relative efficiency of the energy sources) for each sector.
The use of emission coefficients relative to the different sources of final energy and the hypothesis concerning the distribution of primary sources and the efficiency in the transformation process (mainly in electricity generation) permits to obtain emission coefficients by sector.
Project : Supply of Tools for Evaluating the Emission of Gases Generating the Greenhouse Effect Coupled to a National Energy Matrix.
Executor : Economia & Energia – NGO
Report of the 3rd Step : Sectorial Module
Coordinator : Carlos
Augusto Feu Alvim Technical Staff ;Carlos Feu Alvim Aumara Feu (*) Eduardo
Marques Frida Eidelman Omar Campos Ferreira Othon Luiz Pinheiro da Silva
 The series at constant prices (1980 base) for the nineties was reconstituted due to changes in the methodology of the National Accounts of the IBGE which, following the National Accounts System (1993) of the United Nations, has changed the series calculation at constant prices from fixed base (1980) to movable base of the previous year.
 The Federal District – DF, with the largest GDP/inhab is not and should not be considered a state for statistic purposes. The data of the Federated Unit does not correspond as well to an urban agglomeration due to the fact that a large part of the population economically linked to the DF lives outside its limits.
 It should be noted that it would be interesting to calculate the influence on the participation of the sectors in the product of two factors: the relative prices (it can be verified using the constant prices series) and the transfer of activities included in industry to the services sector due to outsourcing. Services of accounting, cleaning and surveillance are examples of activities that change from one classification to another in outsourcing. In Brazil, the behavior of the industry participation at constant and current prices show that the influence of relative prices is an important factor in the evolution of participation of the three economic sectors studied.
 The sum does not include Western Germany and the Netherlands. In the current GDP by sector , data from 1994 on for Canada, from 1995 on for Sweden and from 1996 on for Denmark are missing. In what concerns constant prices, data for Sweden from 1995 on and for Denmark from 1996 on are missing .
 The sum of the participation of agriculture + services + industry by sector does not equal 100% because the “non specific” sector was not included in none of the three aggregated sectors (agriculture, services and industry).
[i] As could be verified in the specialized publications (see IBGE Seminars), there are good reasons to abandon the constant prices approach. One of them is that products change their nature. For example, it would be very difficult to compare an automatic vise of 2000 to a vise produced in the seventies or eighties. How can we compare a microcomputer produced in 1980 to one fabricated in 1990 or 2000? However, this is not the case of the agriculture sector which is the special object of the present work.
Another reason would be the methodological change in calculating the constant prices series from fixed base to movable base relative to the previous year. The prices at movable base relative to the previous year are an advantageous surrogate to those at fixed base but they are not directly comparable. At the fixed base each product is considered with its price in the base year (in the National Accounts 1980 was used as base year). In the new methodology, the production of each sector is considered as a function of prices in the previous year. For each sector, it is calculated an index whose variable weighting takes into account the participation of the product in the year that is being measured and the prices in the previous year. Due to this methodology, it is generated a product based on the previous year whose sum of the parts may be different from the calculated GDP. The latter is calculated according to a general index based on production in current values corrected by a general deflator of prices.
In the case of goods and services balance (external transfers) there was a similar problem that was circumvented by a portion that considered the differences between internal and external prices. At the end of the eighties and beginning of the nineties, a discrepancy of several percent points was generated in the external trade balance (current prices X constant prices) which was around 8% of the GDP. It is interesting to note that when the fixed base system was abandoned (1991) the deep changes in external trade prices (losses in the terms of trade) resulted in surplus in the Commercial Balance at fixed base and deficit at current prices in Brazil.In what concerns the change from fixed base to movable base we quote the comments from the IBGE publication System of National Accounts of Brazil, GDP Annual Preliminary Results of 1999 and Quarterly Results of 2000: “ this change brings some advantage as the use of updated weighted structures that incorporate not only the movement of traded volumes but also the price variations that is ignored when a fixed base is adopted in one year. On the other hand, when it is necessary to link one series to the fixed base in one year the addition property is no longer valid, i. e. , an aggregated variable can no longer be obtained from the combination of its components.”
Graphic Edition/Edição Gráfica:
Tuesday, 11 November 2008.