Energy: A Value Chain Analysis 2020

This chapter provides an analysis of productivity in the Energy Value Chain¹ (EVC) in 2020. Productivity analysis measures how efficiently the inputs of labour and capital are combined to create output in the economy. The EVC includes a wide variety of sectors from Electricity, Gas & Steam to those working in the Wholesale & Retail sectors, with some of these sectors being highly productive compared to others. Company-level analysis is provided by size class as well as by ownership, to provide better insight into productivity within the EVC.

There were 18 large companies, 42 medium companies and 764 small and micro companies in 2020. Of these companies, 49 were foreign-owned and the remainder domestic. As well as company size, their productivity is also analysed by ownership, foreign and domestic. This refers to the ownership of corporations resident in Ireland, rather than whether they are trading internationally; some indigenous energy production is by foreign-owned corporations.

Figures 9.1 and 9.2 show Gross Value Added (GVA) shares within the EVC by size class and by ownership. Large companies accounted for the majority of GVA (81%) in the EVC in 2020, while the Medium and Small & Micro categories accounted for similar-sized shares. Looking at GVA by ownership, Domestic companies accounted for 67%, with the remainder being attributed to Foreign companies.

Figures 9.3 and 9.4 decompose employment in the EVC by size class and by ownership. Large companies accounted for 58% of employment, although this was considerably lower than their share of GVA (81%). Small & Micro-sized companies accounted for 28% of employees, while the remaining 13% of employees worked for Medium-sized companies. Similar to the GVA shares, 70% of the employment can be explained by Domestic companies.

Productivity

Figure 9.5 compares labour productivity between sectors in the EVC, further broken down by size-class. Labour productivity is measured as GVA per employee and reflects how efficient each sector and size-class was in terms of their use of labour. Companies involved in extraction and energy generation are generally more capital-intensive than distribution companies, and therefore tend to have higher labour productivity.

Large companies in the Electricity, Gas & Steam sector were the most productive in the EVC in 2020, with labour productivity of €301,000 per employee. This was followed by Medium companies at €241,000 per employee and Small & Micro at €157,000 per employee.

Large companies engaged in the Extraction of Coal, Gas, Oil & Peat were the next most productive at €134,000 per employee, with Small & Micro companies earning €44,000 per employee.

The Wholesale & Retail sectors involved in the buying and selling of fuel recorded GVA per employee of under €100,000. Large companies in the sector were responsible for GVA per employee of €63,000 while Medium companies recorded GVA per employee of €79,000. The results show productivity does not differ greatly between the two size classes in the sector.

Productivity by Ownership (Foreign/Domestic) is shown in Figure 9.6. Across all economic activities, Foreign corporations had the highest productivity. Extraction of Coal, Gas, Oil & Peat recorded the highest labour productivity (Foreign: €1.5m per employee, Domestic: €35,000 per employee). As this sector includes oil refining, GVA per employee in Foreign companies was twice that of Domestic companies. Domestic companies in the Electricity, Gas & Steam sector recorded the largest GVA per employee among all Domestic companies in the EVC at €264,000 euro per employee, although Foreign companies (€460,000 per employee) were more productive in the sector.

GVA per employee for the Wholesale & Retail sector recorded similar levels across both foreign and domestic companies at €70,000 per employee and €45,000 per employee respectively.

Emissions

To complement the productivity analysis the environmental impact of the energy related sectors is also analysed with Figure 9.7 presenting emissions per employee.

While Electricity, Gas & Steam was the second most productive sector after Extraction of Crude Petroleum & Natural Gas, this sector was the largest emitter of CO2 per employee, with emissions of 625 kilotonnes of CO2 equivalent (ktCO2e) per employee in 2020. Emissions in the Electricity, Gas & Steam sector are largely associated with electricity generation which relies heavily on fossil fuel products. This has been declining in recent years with the transition towards renewable generation sources.

The Coke & Refined Petroleum Products sector was responsible for emissions of 176 ktCO2e per employee, associated with oil refining. Compared to the Oil and Electricity sectors, the Mining of Coal & Lignite sector had relatively low emissions per employee at 16 ktCO2e per employee in 2020. This sector had the lowest emission in the EVC because even though it involves extraction of fossil fuels, it does not include the burning or transformation of these fuels.

Figure 9.8 compares emissions per employee for the Electricity, Gas & Steam sector across selected EU countries from 2017 to 2020. Ireland had emissions of 625 ktCO2e per employee in 2020, slightly above the EU average of 574 ktCO2e per employee. While Ireland’s Electricity, Gas & Steam sector had higher emissions than several of the countries shown, it was still far below countries such as Netherlands (1,161 ktCO2e per employee) Estonia (960 ktCO2e per employee) and Portugal (859 ktCO2e per employee).

¹The sectors included for this chapter are NACE 05, 06, 0892, 19, 35, 4730 and 4761.