Energy: A Value Chain Analysis 2020

In this chapter we set the value added of the Energy Value Chain (EVC) in a sequence of accounts. This is a structure used in National Accounts, to present the flow of transactions in the economy of a country in a coherent series. Each of the items in bold in Table 8.1 is calculated from the transactions above it, creating a linked series of key indicators.

This chapter looks at producers in economic activity sectors, rather than specific energy products. The Sequence of Accounts table aggregates the transactions of all sectors in the EVC.

The total output for these sectors was €8.7bn in 2020. This is mostly made up of energy products such as crude petroleum, petrol, gas and electricity. It also includes services such as the supply by wholesalers and retailers of those products at a time and place required by the consumers (businesses, government and households). Furthermore, it includes other products and services of these industries. To give some examples: petroleum products include oil as a lubricant as well as an energy source; wholesalers ‘merchant’ oil, buying and selling it internationally without it ever being used here in Ireland; and petrol stations sell food and drink as well as petrol and diesel.

The intermediate consumption of these sectors was €4.1bn. These are the goods and services that are used up in production by these enterprises. This includes nearly €0.8bn of crude oil that is turned into refined petrol and diesel. The intermediate consumption figure includes fossil fuels as well as all the other goods and services required to run these industries.

Generating and distributing energy added €4.6bn in value to the economy in 2020. This was made up of €1.5bn in labour costs (compensation of employees) and €3.0bn in profits (gross operating surplus). Net taxes and subsidies on production were €0.1bn (product taxes such as VAT are not included here). We saw in the Wholesale, Retail and Taxes chapter that a significant proportion of the labour costs are in wholesale and retail trade.

The operating surplus of €3.0bn includes around €1.6bn in consumption of fixed capital, that is, the wear and tear on long-term fixed assets such as buildings and machinery and equipment used in production. Companies paid €0.3bn in dividends, and another €0.4bn are attributed to overseas owners as reinvested earnings.

Corporation tax and other taxes on income and wealth amounted to €0.1bn, leaving gross saving of €2.0bn. The vast majority of this, €1.8bn was invested in new fixed capital assets. This left these sectors with €0.2bn in net lending, reducing financial liabilities, and increasing financial assets.