Energy: A Value Chain Analysis 2020

While the previous chapter focused on the suppliers of energy products and their sources, the chapter below will focus on where energy products are used in the economy, looking at businesses, households and exports of these goods.

Table 6.1 below gives a profile of the consumers for the €16.9bn worth of energy products supplied in 2020. Businesses used €9.6bn (57%), while households consumed close to €6.2bn (37%). Gas, oil and electricity explain over 90% of the total energy consumed. Energy products totalling €779m, predominantly refined oil, were exported. Government consumed €281m of energy products in 2020.

The pie charts below break down household spending and business spending into the main energy products consumed. In 2020, households spent €3.1bn on oil (50% of their energy expenditure). This includes spending on petrol and diesel for transport as well as home heating kerosene and diesel. Oil was a smaller component of business energy spending, making up 32% of this. Electricity costs at €2.3bn were 38% of households’ energy spending, while businesses spent €3.9bn on electricity (41%). Electricity uses include lighting, powering electrical machinery such as lasers and supplying the needs of data centres, as well as heating. Households spent €690m on gas for home heating and cooking (11% of spending on energy products). Businesses spent €2.5bn on gas and crude petroleum (26% of spending on energy products) and this was mainly used by companies in electricity generation and refineries.

 

Crude Oil, Natural Gas and Refined Petroleum

Figures 6.3 and 6.4 graphs energy use by product rather than by user. Crude oil and natural gas are grouped together in the System of National Accounts (SNA) as they are both engaged in energy extraction. Refined Petroleum, as the product of a different industry, is grouped under a different heading (with coke, an insiginificant energy source in 2020). Comparisons of business (inter-industry) and household use of crude petroleum and natural gas as well as well as coke and refined petroleum are shown in Figures 6.3 and 6.4, with business accounting for 78% of the gas and crude petroleum. Households explain 22% of the consumption of this energy product. As natural gas and crude petroleum is an input for refineries and electricity generation, companies in the energy value chain are much larger users of it than households.

The use of refined petroleum products was evenly split between households and businesses with both spending €3.1bn on this energy product.

Figure 6.5 shows a breakdown of the industries that consumed €2.5bn of gas and crude oil in 2020. Oil refineries in Ireland (NACE 19) consumed €843m worth of crude oil in the production of petrol, diesel and similar products. Electricity, Gas & Steam used €896m of gas in 2020 as an input for electricity generation. Manufacturing used a combined total of €396m of gas and crude oil for heating and operating machinery. The remaining sectors, which include Wholesale & Retail and Public Administration, Mining & Quarrying among others, accounted for €321m of crude oil and gas usage. All results are inclusive of excise and other taxes. Note that, for this analysis, the onward sale of gas by wholesalers and retailers is not included in their consumption, but in the consumption of the ultimate customer i.e. Households, Government or Non-profit activities.

Figure 6.6 decomposes the €3.1bn of refined oil consumed by businesses into economic activities. Transport was by far the largest consumer of oil at €1.5bn, which include Public Transport companies, Hauliers and Taxis among others. Agriculture (€189m) and Public Administration, Education & Health (€245m) were the next largest consumers of oil. These industries used oil for the operation of farm machinery and as well for the heating of schools and public buildings. A relatively small amount (€118m) of refined oil was used for electricity generation. Manufacturing used €289m of oil in the production of goods, while Distribution, Hotels and Restaurants consumed €305m worth of oil. The remaining sectors accounted for €256m.

In Table 6.2 below, Households spent €690m on gas and €3.1bn on oil in 2020, mainly for home heating and transport. As we saw in Figure 6.6, a large proportion of businesses’ use of refined petroleum was also related to transport. Although the number of electric and hybrid vehicles being licensed is increasing, it is from a very low base. According to the Department of Transport¹, in 2020 there were 2.2m private cars taxed for road use of which less than half of one percent did not rely on petrol or diesel.

Electricity

Businesses consumed 61% (€3.9bn) of the electricity produced while households consumed 36% (€2.3bn) as shown in Figure 6.7. The remaining electricity consumed (3%) can be explained by government consumption, changes in inventories and exports.

 

Electricity was the largest energy product used by businesses (€3.9bn) and the second largest energy product used by households (€2.3bn) after oil. Looking at Figure 6.8 below shows that the Manufacturing sector was the largest user of electricity among businesses in 2020 at €942m. The Distribution, Hotels & Restaurants sector were also large users of electricity at €630m. The Information & Communication Technology (ICT) sector consumed €672m of electricity as this sector includes large data centres, as seen in the Metered Electricity Consumption publication. The Public Administration, Education & Health sector used €419m of electricity, with the remaining sectors accounting for €644m.

Coal, Peat and Firewood

Coal, Peat and Firewood consumption as a fuel amounted to €283m in 2020. These were among the least significant energy products consumed in Ireland.

Table 6.3 below shows households spent €133m on coal, peat and firewood in 2020 for home heating. Businesses spent €150m, while government consumed €9m. Commercial peat harvesting came to an end in 2021 and in 2020 stocks of briquettes and other peat products were being wound down: inventories were reduced by €55m during the year.

Figure 6.9 below gives a disaggregated view of the €150m consumed by businesses. Over €83m was used by the electricity sector as an input for generation purposes. This was largely the use of peat, a source that has since been phased out. Manufacturing consumed €11m of coal, peat and firewood, while Agriculture consumed €50m.

¹Bulletin of Vehicle and Driver Statistics, Department of Transport (2023)