Post on 27-Feb-2021
Benchmarking for sustainable
and economically viable
technology options
Selected industries in Ukraine
Low Carbon Ukraine - Technical Paper No. 2 (August 2013)
Project
“Capacity Building for Low Carbon Growth in Ukraine”
Benchmarking for sustainable and economically viable technology options
Selected industries in Ukraine
Green Growth Technical Paper No. 2
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Contact:
DIW econ GmbH
Dr. Lars Handrich
Mohrenstraße 58
10117 Berlin
Germany
Phone +49.30.20 60 972 - 0
Fax +49.30.20 60 972 - 99
lhandrich@diw-econ.de
www.diw-econ.de
Benchmarking for sustainable and economically viable technology options
Selected industries in Ukraine
Green Growth Technical Paper No. 2
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Table of contents
1. Introduction ..................................................................................................................... 1
2. The benchmarking approach .......................................................................................... 1
3. Benchmarking the non-metallic mineral products industry in Ukraine ............................. 3
3.1 Database ................................................................................................................. 3
3.2 Benchmarking methodology .................................................................................... 4
3.3 Benchmarking results .............................................................................................. 7
3.4 Implications for the minerals industry of Ukraine ...................................................... 9
4. Benchmarking the chemicals and chemical products industry in Ukraine ......................14
4.1 Database ................................................................................................................14
4.2 Benchmarking results .............................................................................................15
4.3 Implications for the chemical industry of Ukraine ....................................................18
5. Conclusions and outlook ................................................................................................20
References ...........................................................................................................................21
Appendix ..............................................................................................................................22
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Executive Summary
To determine green growth potentials in Ukraine a detailed sectoral analysis is necessary.
This includes assessing the economic viability and the environmental sustainability of the
different sectors. The focus of this paper is on the chemicals and chemical products industry
as well as on the non-metallic mineral products industry in Ukraine.
The presented international benchmarking approach identifies the countries that have the
best combination of sustainability and economic viability. That will take into account
comparing the performance of:
High levels of desired outputs such as production volumes (in physical unites) or
revenues (values),
Low levels of undesired outputs like emissions or pollution, and
Low levels of factor inputs like labour or energy use as well as other arising
production costs.
Based on detailed analysis of the structural characteristics of the industries, feasible peer
countries for Ukraine are identified. As a result, a technological yardstick allowing to quantify
the potential for reducing greenhouse gas emissions is determined for each sector. For the
non-metallic mineral products industry a full realisation of this potential would result in
abating 8.2 Mt of CO2 equivalents per year. For the chemicals and chemical products
industry our analysis shows that there is an emission savings potential of at least 1.3 Mt of
CO2 equivalents per year through technical improvement. The analysis also shows an
additional emission savings potential through scale adjustments. However, to identify this
potential further research is needed.
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Green Growth Technical Paper No. 2
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1. Introduction
Developing a low-carbon growth strategy requires an understanding of the mitigation
potential in the most relevant sectors of the economy. Therefore, we apply a sector-specific
analysis of mitigation potentials that takes into account economic viability as well as
environmental sustainability. The methodology applied to the chemicals and chemical
products industry and the non-metallic mineral products industry is the same methodology
we applied to the metal industry in Ukraine in Policy Paper No. 11.
2. The benchmarking approach
The key objective of our benchmarking approach is to identify technology options for a given
industrial sector to best combine sustainability and economic viability. The yardstick for this
comparison is a balanced combination of:
High levels of desired outputs such as production volumes (in physical units) or
revenues (values),
Low levels of undesired outputs like emissions or pollution, and
Low levels of factor inputs like labour or energy use, or production costs.
The focus of the benchmarking approach is on technologies that are currently used in
practice, while theoretical solutions and technologies that are not yet implemented are not
considered. Thus, only technically as well as economically feasible and viable solutions are
considered as benchmarks.
In economic terms, the best combinations of desired outputs, undesired outputs and inputs
are considered to be efficient. Theoretically, efficiency levels of different technologies can be
measured as well as decomposed into different subcomponents related to technology, scale
and price levels (see Box 1). For practical applications, however, such a comparison is
strongly limited by the availability of data and relevant information. In particular, micro-level
benchmarking of different installations or companies is rather difficult and requires access to
private and often confidential information. Alternatively, one can benchmark the same
industry across different countries. That way, detailed company- or even installation-specific
1 DIW econ (2012): Benchmarking for sustainable and economically viable technology options, The
case of the metal industry in Ukraine; Low Carbon Ukraine - Policy Paper No. 1 (December 2012)
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information is compensated by aggregate information from a range of countries, which is
more easily available. Such an international benchmark allows identifying the countries with
the most efficient technologies in use.
Box 1: The concept of economic efficiency
Efficiency is an economic concept which describes the optimal use of production factors in
production processes. In economic terms, efficiency is evaluated as the relationship
between the quantities of primary factor inputs such as labour, capital or energy (henceforth
inputs) and the specific goods such as steel, chemicals or food (henceforth outputs) which
are produced from these inputs. It is typically defined as either:
The lowest-possible amount of inputs for the production of a given set of outputs (input-
oriented efficiency); or
The highest-possible level of outputs that can be produced from a given set of inputs
(output-oriented efficiency).
Modern efficiency measurement starts by decomposing overall economic efficiency levels
into several subcomponents that can be measured separately:
Technical efficiency describes the ability of a firm to obtain optimal combinations of input
and output quantities;
Scale efficiency describes the ability of a firm to produce at optimal combinations of input
and output quantities while optimising all scale economies; and
Price efficiency is the most restrictive criterion which also reflects the ability of a firm to
combine inputs and outputs in optimal proportions, given their respective price levels.
In this analysis, efficiency will be measured in terms of technical efficiency and scale
efficiency.
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3. Benchmarking the non-metallic mineral
products industry in Ukraine
This section provides the benchmarking approach for the non-metallic mineral industry in
Ukraine. The focus of interest is the relationship between the inputs used in the production
processes in different countries (i.e. labour, capital and energy) and the respective outputs in
terms of the gross output, greenhouse gas (GHG) emissions and non-metallic mineral
products. For ease of notation the non-metallic mineral products industry will be referred to
as minerals industry in the following.
3.1 Database
The two major sources providing data on the minerals industry in different countries are:
the World Input Output Database (WIOD) which has been compiled by a consortium
of scientific organizations with financial support of the European Union2, and
the National Inventory Submissions 2013, United Nations Framework Convention on
Climate Change (UNFCCC)3.
Additional data stems from
the Minerals Yearbook, United States Geological Survey (USGS) Mineral Resources
Program4, and
the SDBS Structural Business Statistics (ISIC Rev 3), Organisation for Economic
Co-operation and Development (OECD) 5
The databases of WIOD and OECD are broken down by various industries that are based on
the ISIC standard of the United Nations Statistics Division. The UNFCCC data base
additionally contains detailed information about industrial products. The data of the USGS
Minerals Yearbook solely refers to mineral and mineral products.
2 http://www.wiod.org/
3http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/7383.php
4 http://minerals.usgs.gov/
5 http://stats.oecd.org/Index.aspx?DataSetCode=SSIS_BSC
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With respect to the countries that are included in the international benchmarking approach,
our intention was to primarily cover technological leaders in the relevant sector. For the
present analysis 18 EU countries and 10 non EU countries are included in the data base (as
listed in Table 1 below) for which the following information is available:
GHG emissions (in thousand tonnes of CO2 equivalent, source: wiod.org),
Energy Use, Emission Relevant (in TJ, source: wiod.org),
Gross Output (in millions of US dollars, source: wiod.org),
Number of persons employed (in thousand persons, source: wiod.org),
Real fixed capital stock (in millions of US dollars, source: wiod.org),
Total production of clinker (in kilo tonnes, source: UNFCCC, USGS),
Total production of glass (in kilo tonnes, source: UNFCCC, OECD),
Production of lime (in kilo tonnes, source: UNFCCC, USGS),
Production of soda ash (aluminium kilo tonnes, source: UNFCCC, USGS)
Ukraine is not included in the WIOD dataset therefore the data (gross output, energy use,
capital stock and persons employed) was gained from national sources.
Note that production data is not completely available for all countries. Nevertheless we can
use this sample of countries for a first assessment of the benchmark analysis. Since the
most recent information for all countries is available for 2007, this year is chosen as base
year for the benchmarking analysis.6
3.2 Benchmarking methodology
Under ISIC the minerals industry is described as “Manufacturing of other non-metallic
mineral products”.7 This includes among others the production of cement, glass and glass
products, ceramic products, lime, plaster as well as articles of concrete, plaster and cement.
For the structural analysis of the minerals industry we will focus on the production of clinker,
lime, glass and soda ash which henceforth is referred to as production:
6 In fact, 2007 is a good choice for a base year since it is the last year before the start of the global economic crises.
7 ISIC Rev 3.1 division 26.
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Clinker is an intermediate product in the production of cement and is made of limestone
and clay or shale. When these raw materials are heated in the cement kilns, they are
formed into lumps or nodules which are called clinker. To produce cement, the clinker -
sometimes together with a small portion of calcium sulphate - is pulverized into fine
powder. This procedure is used to produce Portland and other types of hydraulic
cements.
Lime is calcium oxide or calcium hydroxide and is made out of limestone. The limestone
is heated in different types of lime kilns to decompose the carbonates. Inter alia it is used
as building and engineering material and as chemical feedstock.
Glass production can be divided into four major manufactured products: containers, flat
(window) glass, fibre glass, and specialty glass. The first two types are the most common
ones and are almost completely soda-lime glass. This glass is produced by melting
silicon dioxide, sodium carbonate, and lime with a small amount of aluminium oxide and
other alkalis and alkaline earth.
Soda ash production can be divided into the production of natural and synthetic soda
ash. The natural soda ash is produced from trona or sodium-carbonate-bearing brines
whereas the synthetic soda ash is produced by one of several chemical processes that
use limestone, salt and coal as feedstock. It is commonly used as raw material in glass,
chemicals, detergents, and other important industrial products.
Table 1 gives a first impression of the performance of different countries in the minerals
industry. The first two columns refer to the sustainability (emissions per output) and the third
and fourth column to economic viability (output per capital input) of the production processes
in the different countries.8 For ease of comparison the three top performers in each column
are shaded in grey. With respect to the sustainability (columns i and/or ii) Czech Republic,
Finland, Ireland, the Netherlands and Romania show top performance while Canada,
Romania, Russia, Ukraine and the United Kingdom are the top countries with respect to
economic viability (columns iii and/or iv) . As can be seen in Table 1 the gap between
Ukraine and the leading countries is significantly higher with respect to sustainability as
compared to economic viability.
8 For countries where data on production is not completely available, values for columns ii and iv could not be provided.
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Table 1: Comparison of capital and emissions intensities across countries, year 2007
2007 Emissions per
revenue
Emissions per volume of production
Revenue per capital stock
Volume of production per capital
stock
(tons of CO2-e per thousand
US-$)
(tons of CO2-e per ton of mineral product)
(US-$ per US-$)
(tons of mineral product per
thousand US $)
(i) (ii) (iii) (iv)
AUSTRALIA 1.08 0.83
AUSTRIA 0.85 1.15 1.42 1.05
BELGIUM 1.43 1.04 1.05 1.44
BRAZIL 1.56 0.94
CANADA 1.09 2.05
CZECH REPUBLIC 0.85 0.60 1.05 1.48
DENMARK 1.17 1.25 1.26 1.18
FINLAND 0.61 0.82 1.77 1.32
FRANCE 0.77 0.98 1.68 1.32
GERMANY 0.78 0.92 1.46 1.22
HUNGARY 1.48 0.97 1.03 1.56
INDIA 3.32 0.58
IRELAND 0.73 0.55 1.09 1.44
ITALY 1.07 1.13 1.00 0.95
JAPAN 0.81 0.85 0.69 0.66
SOUTH KOREA 1.30 1.33
NETHERLANDS 0.32 0.89 1.64 0.60
POLAND 1.41 0.97 1.52 2.21
PORTUGAL 1.34 0.88 1.13 1.73
ROMANIA 3.82 0.70 1.27 6.99
RUSSIAN FEDERATION 5.04 1.14 1.79 7.91
SLOVAKIA 1.33 0.88 1.72 2.58
SPAIN 1.35 1.29 1.23 1.28
SWEDEN 0.94 0.97 1.59 1.54
TURKEY 1.45 1.16
UKRAINE 4.41 1.26 1.09 3.80
UNITED KINGDOM 0.85 0.93 1.95 1.78
UNITED STATES OF AMERICA 1.65 1.57
Source: DIW econ based on wiod.org, UNFCCC, USGS,
OECD, State Statistics Service of Ukraine
However, the comparison of different indicators does not yet allow for deriving overall
conclusions. In fact, it must be emphasized that:
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First, output can be measured as value or in physical quantities (i.e. in millions of Dollars
or in tons of output). However, minerals industries produce a range of different products
such as cement, lime and glass based on different production processes. Hence, a
feasible output measure must consider the relevant structural characteristics.
Second, the costs of production (inputs) do not only include capital but also other key
inputs such as labour and energy.
Third, the comparison of different indicators does allow the identification of the leaders in
each respective category, but not necessarily the identification of those countries that
perform relatively well in all categories. However, the objective of the benchmarking
analysis is to identify the best combinations of both, sustainability as well as economic
viability.
In order to determine the countries with the most-efficient combinations of inputs and outputs
(i.e. the most efficient technologies) we apply a specific empirical estimation technique, the
Data Envelopment Analysis (DEA). This is a well-established methodology for estimating
different efficiency measures (as described in Box 1 above) based on a large variety of
different input and output measures. For benchmarking the minerals industries, we consider
the use of capital, labour and energy as key inputs and gross output and emissions as
output.
3.3 Benchmarking results
Our benchmarking analysis of the minerals industry identifies the countries that operate at an
efficient scale and are able to produce the highest volumes of outputs with the lowest levels
of emissions from a given set of inputs (output-oriented efficiency measures of technical
efficiency und scale efficiency (see Box 1)). All efficiency estimates are given as indices
ranging from zero to one, where one stands for being efficient. For example, a technical
efficiency score of one for a given country of the sample indicates that in no other country
within our sample the minerals industry produces more outputs from the same combination
of inputs. Likewise, a technical efficiency score below one suggests that at least in one other
country the minerals industry is capable to produce higher outputs from the same inputs.
Similarly, a scale efficiency score equal to one indicates that the country’s minerals industry
is producing at efficient scale while a score of less than one indicates that other countries are
better in utilizing scale economies.
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Figure 1: Overall efficiency levels (technical efficiency & scale efficiency) of minerals industries in selected countries (in 2007)
Source: DIW econ
Figure 1 shows the outcome of the DEA regarding the overall efficiency levels (technical
efficiency & scale efficiency) of the minerals industries in selected countries. The results for
the technical and scale efficiency are shown in the appendix. The overall performance of the
selected countries is as follows:
In 8 of the 28 countries in the sample (Australia, Canada, Finland, France, Ireland,
Japan, the Netherlands and Slovakia) the minerals industry operates fully efficient.
These countries determine the technology frontier of the international minerals industry in
2007.
Among the inefficient countries, two different subgroups can be identified based on the
additional results for technical efficiency and scale efficiency as shown in the Appendix:
in Germany, the United Kingdom and the United States, the minerals industries are
technically efficient but operate at a too large scale (i.e., underutilization of available
production capacities), while
in Austria, Belgium, Brazil, Czech Republic, Denmark, Hungary, India, Italy, Korea,
Poland, Portugal, Romania, Russia, Spain, Sweden, Turkey and Ukraine, the
minerals industry is also technically inefficiency.
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For all countries where the minerals industry does not operate at full efficiency, the analysis
provides insights for possible improvements. For example:
The overall efficiency level for the German minerals industry is estimated at 85% due to
operations at an inefficient scale. Likewise, overall efficiency of the British minerals
industry equals 95% due to inefficient scales of operation. This suggests that the
German industry could produce the same output at only 85% of its current scale (i.e. its
current input levels), whereas the British industry could reduce its current input levels by
roughly 5%.
The overall efficiency level for the minerals industry in the Czech Republic is estimated at
55% due to technical inefficiency (technical efficiency score of 0.99, see Appendix) and
inefficient scales of operation (scale efficiency score of 0.56, see Appendix). This
suggests that
the industry could produce the same output at only 55% of its current scale (input
levels), and
given operations at an efficient scale (input levels), output could be increased by 1%
(=1-0.99).
Ukraine only reaches a technical efficiency score of 0.85. In addition, it operates at a too
large scale (scale efficiency 0.65). Thus, overall efficiency only reaches 0.55. As can be seen
in Figure 1, Ukraine belongs to the low performers of the benchmark.
3.4 Implications for the minerals industry of Ukraine
The DEA identifies peer countries for each inefficient country. For Ukraine, Finland and the
Netherlands, which both operate fully efficient, are identified as peer countries. However the
applied DEA is fairly coarse as it does not take into account the structural characteristics of
the minerals industries of the countries. Hence, an additional approach to identify peer
countries is to analyze the output composition and to determine those countries as peer
countries that have a similar structure and are either overall efficient or at least technically
efficient.
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Figure 2: Structural characteristics of the minerals industry in different countries
a) Output composition in kilotons
Source: DIW econ
b) Structure of minerals manufacturing
Source: DIW econ
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The most relevant structural characteristics of the minerals industries across the different
countries are shown in Figure 29. Figure 2 a) gives a first impression of the total output of the
non-metallic minerals production. All 21 countries shown in the figure produce clinker. With
the exception of the Netherlands all countries produce lime. Soda ash is only produced by 10
countries (i.e. France, Germany, Italy, Japan, the Netherlands, Portugal, Spain, Romania,
Russia, and Ukraine).
More important than the total production output of the minerals industry is its structure
(Figure 2 b). Ukraine’s output composition is made up of 63% of clinker, 26% of lime, 7% of
glass and 5% of soda ash. The only other countries that produce all 4 products are France,
Germany, Italy, Japan, Portugal, Spain, Romania and Russia. France, Germany, Romania
and Russia have a very similar output composition to the one of Ukraine, whereas the output
composition in Italy, Japan, Portugal and Spain is only slightly similar to the one of Ukraine.
The results of this comparison are summarised in Table 2. Out of the group of countries with
very similar output composition to the one of Ukraine (i.e. France, Germany, Romania and
Russia), France is overall efficient and Germany is technically efficient. With respect to the
slighter similar countries, (i.e. Italy, Japan, Portugal and Spain), only Japan is overall
efficient. All other countries identified as very similar or slightly similar to Ukraine in terms of
output composition are operating at an inefficient scale.
9 For Australia, Brazil, Canada, India, Korea, Turkey and USA no complete production data is available, therefore they will not be part of the further analysis.
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Table 2: Comparing the minerals industry of Ukraine with other countries
2007 Countries with a
structurally similar output composition
Efficiency score
(technical efficiency) (overall efficiency)
Austria 0.97 0.84
Belgium 0.96 0.95
Czech Republic 0.99 0.55
Denmark 0.99 0.97
Finland 1.00 1.00
France X 1.00 1.00
Germany X 1.00 0.85
Hungary 0.99 0.77
Ireland 1.00 1.00
Italy x 0.91 0.68
Japan x 1.00 1.00
Netherlands 1.00 1.00
Poland 0.93 0.74
Portugal x 0.95 0.60
Romania X 0.97 0.97
Russia X 0.92 0.87
Slovakia 1.00 1.00
Spain x 0.85 0.71
Sweden 1.00 1.00
United Kingdom 1.00 0.95
Key Strong similarity
Slight similarity
Source: DIW econ
The following countries come into consideration as peer countries for identifying sustainable
and economically viable technology options for the Ukrainian minerals industry.
Purely based on the efficiency benchmarking (DEA)
Finland,
Netherlands,
Based on the efficiency benchmarking (DEA) as well as on similarity of output structure
France,
Germany,
Japan.
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Figure 3 presents the indicators of emission intensity (CO2-eq per volume of production) and
economic viability (revenue per capital stock). The reversed direction of the bars for emission
intensity illustrates that emissions are an undesired output.
Figure 3: Comparison of Ukraine with peer countries
Source: DIW econ
The countries identified as peer countries differ in their emission intensity and economic
viability, which is also caused by different structural characteristics. France and the
Netherlands show similar performances in economic viability but the Netherlands have a
lower emission intensity. Japan shows the worst performance with respect to economic
viability but has the second lowest emission intensity out of this sample of peer countries.
Finland shows the best performance in economic viability as well as in sustainability. With
exception of Germany, which is only technically efficient, all peer countries for Ukraine
operate fully efficient. In 2007, emissions per unit of production in the minerals industries in
Ukraine were 35% higher than in Finland, illustrating a great difference in the technology
levels between Finland and Ukraine in this sector. This shows that there is a very high
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potential of saving emissions in Ukraine which would allow abating 8.2 Mt10 CO2 equivalents
per year.
4. Benchmarking the chemicals and chemical
products industry in Ukraine
A benchmark like the one implemented for the non-metallic mineral products industry can
also be applied to the chemicals and chemical products industry in Ukraine. The same
relationships between the inputs (i.e. labour, capital and energy) and the outputs (gross
output, greenhouse gas (GHG) emissions and chemicals and chemical products) are of
interest. For ease of notation the chemicals and chemical products industry will henceforth
be referred to as chemicals industry.
4.1 Database
As described above the two main sources providing data, now on the chemicals industry in
different countries are:
the World Input Output Database (WIOD) which has been compiled by a consortium
of scientific organizations with financial support of the European Union11, and
the National Inventory Submissions 2013, United Nations Framework Convention on
Climate Change (UNFCCC)12.
For the analysis of the chemicals industry 21 EU countries and 11 non-EU countries are
included in the database (as listed in Table 3 below) for which the following information is
available:
GHG emissions (in thousand tonnes of CO2 equivalent, source: UNFCCC13),
Fuel combustion (in TJ, source: UNFCCC14),
Gross output (in millions of US dollars, source: wiod.org),
10 35% of 46 Mt CO2 equivalent emitted in the minerals industry in Ukraine in 2007.
11 http://www.wiod.org/
12http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/7383.php
13 For countries not included in UNFCCC database and for the USA, data from WIOD was taken
14 For countries not included in UNFCCC database and for the USA, data from WIOD was taken
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Number of persons employed (in thousand persons, source: wiod.org),
Real fixed capital stock (in millions of US dollars, source: wiod.org),
Unfortunately, there is no complete database on production data (physical output) for
chemicals or chemical products. The UNFCCC database provides production data for 28 of
the 32 countries on different chemicals. However, due to confidentiality it is incomplete. The
United States Geological Survey (USGS) Mineral Resources Program provides data on
Ammonia but no data for any other relevant chemicals. Alternative data sources are the
Eurostat Production of Manufacturing Goods (Prodcom) database15, the Eurostat Structural
Business Statistics (SBS)16 or the OECD Structural Analysis (STAN) database17. The
Prodcom database provides data for the 28 EU countries plus Iceland, Norway and Turkey
for different chemicals. The Eurostat SBS database provides data for the 28 EU countries
plus Albania, FYR of Macedonia, Norway and Switzerland on various industries that are
based on the statistical classification of economic activities. The STAN database provides
data for 32 OECD countries and various industries based on the ISIC standard. The last two
databases only provide data in monetary outputs. For all mentioned databases the problem
of confidentiality arises so that no representative database can be provided.
4.2 Benchmarking results
Due to the lack of detailed production data, a structural comparison of the sector is not
possible. Nevertheless it is possible to identify the efficient countries in a first step of the
analysis. Table 3 gives an overview of the performance of the different countries in the
chemicals industry. Because of the lack of production data there is only one column for the
sustainable performance (column i) and one for the economic viability (column ii). In addition,
the third column contains a ratio on emissions per energy use. For ease of comparison the
three top performers in each column are shaded in grey. With respect to the sustainable
indicator Italy, Slovenia and Sweden show top performance, while China, France and Turkey
are the best countries with regard to economic viability. The lowest emissions per energy
used are in Korea, Slovenia and the USA. The gap between Ukraine and the top performers
in the chemicals industry is fairly large.
15 NACE Rev. 2 version http://epp.eurostat.ec.europa.eu/portal/page/portal/prodcom/data/database
16 Annual detailed enterprise statistics on manufacturing, NACE Rev. 1.1 D http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/data/database
17 ISIC Rev. 3 version of STAN http://www.oecd.org/industry/ind/stanstructuralanalysisdatabase.htm
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Table 3: Comparison of different countries in the chemical industry, year 2007
2007 Emissions per
revenue Revenue per capital
stock Emissions per
Energy use
(tons of CO2-e per thousand US-$) (US-$ per US-$)
kilotons CO2-eq per TJ Energy
(i) (ii) (iii)
Australia 0.85 0.90 0.14
Austria 0.17 1.76 0.09
Belgium 0.30 1.67 0.09
Brazil 0.41 0.79 0.07
Bulgaria 2.40 2.21 0.10
Canada 0.41 2.11 0.10
China 0.79 3.73 0.07
Czech Republic 1.65 1.23 0.10
Estonia 1.30 1.73 0.16
Finland 0.40 1.79 0.20
France 0.19 3.96 0.09
Germany 0.21 1.80 0.07
Greece 0.44 1.76 0.09
Hungary 1.06 0.48 0.15
India 0.80 0.92 0.11
Italy 0.16 1.33 0.08
Japan 0.22 0.81 0.07
Korea 0.18 2.53 0.05
Lithuania 6.13 1.69 2.26
Netherlands 0.43 2.09 0.10
Poland 0.80 2.21 0.20
Portugal 0.52 1.58 0.10
Romania 2.96 1.82 0.13
Russia 1.45 1.38 0.25
Slovakia 1.32 2.21 0.12
Slovenia 0.11 1.31 0.06
Spain 0.23 1.60 0.07
Sweden 0.09 1.85 0.06
Turkey 0.18 3.09 0.22
Ukraine 1.83 1.06 0.12
United Kingdom 0.25 1.31 0.10
United States of America 0.38 1.84 0.05
Source: DIW econ based on wiod.org, UNFCCC,
State Statistics Service of Ukraine
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Here it also occurs that the comparison of single indicators does not allow any conclusion on
the overall performance. Of interest is the ideal combination of sustainable performance and
economic viability. For this reason the DEA is applied again, defining capital, energy and
labour as key inputs and gross output and emissions as output. Figure 4 presents the results
of the DEA for the overall score.
Figure 4: Overall efficiency levels for chemical industries in selected countries (in 2007)
Source: DIW econ
The results of the DEA concerning the overall efficiency are shown in Figure 4. Out of the 32
countries of the sample only four countries are overall efficient (i.e. Estonia, France,
Lithuania and Turkey). As can be seen in Figure 5 the technical efficiency scores are very
similar (with the exception of India all countries have a score above 0.9). Although Ukraine
has a score of 0.93 it still belongs to the lower third. This indicates that there still is a huge
potential for improvement regarding the technology level. The fairly low score of scale
efficiency is an indicator for a great underutilization of available production capacity in this
sector. The low scale efficiency of 0.30 leads to a low overall efficiency score of 0.28. (The
results of the scale efficiency can be seen in the Appendix)
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Figure 5: Technical efficiency levels for chemical industries in selected countries (in 2007)
Source: DIW econ
4.3 Implications for the chemical industry of Ukraine
Since the chemical industry is a very heterogeneous industry, emissions per output are not a
useful indicator for the emission savings potentials. Therefore, the savings potentials are
calculated directly from the DEA. The DEA identifies Slovenia and Sweden as peer countries
for Ukraine. Both countries are only technically efficient because they operate at too large
scale (scale efficiency: Slovenia 0.95, Sweden 0.98). Nevertheless, both countries could be
used as peer countries for the technology levels.
The technical efficiency score of the chemical industry in Ukraine amounts to 0.93 and
indicates that given current input levels output levels need to increase by 7 percent to reach
technical efficiency. This implies an emissions reduction potential for the chemical industry in
Ukraine of around 1.3 Mt18 CO2 equivalents per year (see Figure 6) which can be achieved
through technical improvements for which Slovenia and Sweden could serve as an example.
The scale efficiency of 0.30 indicates that the savings potential through structural
adjustments amounts to 70 percent of the current input level. Through improving the scale
efficiency there is an even larger potential of saving emissions for the chemical industry in
18 7% of 19 Mt CO2 equivalent emitted in the minerals industry in Ukraine in 2007.
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Ukraine which would allow abating 13.6 Mt19 CO2 equivalents per year. This high reduction
potential is the result of a fairly coarse DEA as it is based on highly aggregated data. This
entails that the chemical industries of the different countries are treated alike, not taking into
account the structural differences of the chemical industries. This is in particular relevant for
the manufacturing process of chemicals as, for example, basic chemicals are very energy
intensive. The determined emission savings potential of 7% through technical improvement
can be seen as a minimum reduction potential.20 The very low scale efficiency indicates
additional emissions avoidance potential through scale adjustments. However, to quantify
this potential we need to take into account the structural differences of the chemical industry
in a further, more detailed analysis.
Figure 6: Emissions saving potential for the chemical industry in 2007 in Gg
Source: DIW econ
19 70% of 19 Mt CO2 equivalent emitted in the chemical industry in Ukraine in 2007.
20 Note that relative to other countries in our sample, Ukraine is among the countries with lowest
efficiency score, i.e. highest potential for emission reduction (see Figure 5).
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5. Conclusions and outlook
The developed international benchmark takes into account environmental sustainability and
economic viability. Thus, it is possible to not only identify countries that have a good
performance in single aspects of efficiency like emissions intensity or profitability, but also to
determine those countries that have the best combination of sustainability and economic
viability. The combined performance can be measured using the economic concept of
efficiency for a given industry in different countries and used for comparison. The structure of
the respective sector plays an important role in this process.
An even more detailed analysis of the sector especially concerning the subsectors and their
influence on the efficiency score should be carried out. Here it is necessary to establish a
representative database on chemical products. The development of the benchmark over time
should also be analysed.
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References
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http://minerals.usgs.gov/minerals/pubs/myb.html
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http://www.wiod.org/database/ea.htm
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Appendix
Figure A1: Technical efficiency levels of minerals industries in selected countries (in 2007)
Source: DIW econ
Figure A2: Scale efficiency levels of minerals industries in selected countries (in 2007)
Source: DIW econ
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Figure A3: Scale efficiency levels of chemical industries in selected countries (in 2007)
Source: DIW econ