Appendix 5

Monitoring and Methodology of VEEP

The European chemical industry had already embarked in 1992 on a Voluntary Energy Efficiency Programme (VEEP) aiming to reduce the specific energy consumption of the European chemical industry by 15 % between 1990 and 2000. Considering the situation to date and provided that no carbon/energy tax is implemented, the European chemical industry is ready to extend the VEEP till the year 2005 with a target of 20% reduction in specific energy consumption for the period 1990-2005. Such improvements in energy efficiency can only be achieved at increasingly higher unit costs and investments. To undertake these investments, companies need a long-term stability of the business environment in which they operate.

CEFIC will assure a proper monitoring of this Voluntary Energy Efficiency Programme by providing yearly updates of aggregated European data on energy consumption by the chemical industry.

CEFIC developed the following methodology that was endorsed by the CEFIC High Level Strategy Group – Energy in February 1996.

1. Data Sources

CEFIC collects energy consumption data of the chemical industry from national chemicals associations for the following countries: Germany (VCI), France (UIC), United Kingdom (CIA), Italy (Federchimica), Belgium (Fedichem) and the Netherlands (VNCI).
The data for the other EU countries are collected from the International Energy Agency (IEA). Production indices are collected from national chemicals associations, except for Portugal & Greece (Source: Eurostat).

The data sources of national chemicals associations are, in general, the national statistics offices. In some cases, official data on energy consumption are supplemented by enquiries among member companies of chemicals associations.

2. Definition of the chemical industry

2.1 Data collected from associations

National statistics offices have not yet implemented the NACE rev. 1 nomenclature and still report data according to the NACE 1970 nomenclature, though not in a homogenous way - as shown in the table below.

All countries are expected to report more homogenous data according to the NACE rev.1 in the near future.

2.2 Data collected from IEA

Data collected from IEA are according to the ISIC nomenclature. The chemical industry is defined by codes 352, 355, 356 and parts of 351 & 354. Perfect comparability with the NACE is not assured therefore.

Note: ISIC is currently under revision and the new version should permit a satisfactory comparability with Nace rev. 1.

3. Energy Consumption

3.1 Classification of energy sources (fuels)

The Fuels are classified as follows:

• Solid fuels:
  coking coal, steam coal, sub-bituminous coal, lignite, peat, coke oven coke and gas coke, patent fuel and brown coal/peat briquettes and petroleum coke.

• Liquid fuels:
  crude oil, natural gas liquids, refinery feedstock’s, motor gasoline, aviation gasoline, jet fuel, kerosene, gas/diesel oil, heavy fuel oil, naphtha.

• Gaseous fuels:
  natural gas, ethane, LPG, butane, propane, coke-oven gas, blast furnace gas, refinery gas, gas works gas, and town gas. Excluded are those consumed by motor vehicles run by the chemical industry.

• Purchased electricity:
  electricity provided by any supplier outside the chemical industry.

• Self-produced electricity:
  electricity generated within the chemical industry.

Although the IEA uses a slightly different classification (LPG, refinery gas, ethane, propane, butane and petroleum coke being classified as liquid fuels), the data collected from the IEA are reclassified in the same way as above.

3.2 Methodology

The energy sources consumed by the chemical industry can be split into two different energy requirements:

• the consumption of fuels as FEEDSTOCK (raw material)
• the consumption of fuels as FUEL & POWER (energy use).

Are classified as feedstock:
all fuels (solid, liquid and gaseous fossil fuels) used principally for non- energy use, as raw material to produce non-energy goods.

For the production of some non-energy goods, parts of the raw materials are used as energy. These parts, called by-product fuels, should be classified under "fuel & power". However the current format of the statistical enquiries does not make this possible, except for ammonia, for which data reported by the Netherlands, Germany, France and Belgium incorporate an adjustment. For the other countries, data are adjusted by CEFIC according to the following approximation: all gaseous fuels used as feedstock are assumed to be consumed for manufacturing ammonia; 30% of them are transferred to "fuel & power".

Are classified as fuel & power:
all fuels (fossil fuels and electricity) for energy use (heat, power and electricity generation).

• Fossil fuels: Fossil fuels include those quantities used for the auto-production of electricity.
• Electricity = "purchased electricity" plus "self-produced hydraulic electricity" minus "electricity sold to the network".

Note: the data collected from the IEA differ slightly. The definition of electricity by the IEA is "purchased electricity" plus "self-produced electricity". So the IEA does not include under fossil fuels the quantities for the generation of electricity. However this does not affect the total consumption of energy sources as fuel & power.

3.3 Total consumption

The total consumption of energy as fuel & power is the sum of fossil fuels and electricity. Quantities of fossil fuels are measured in tons of oil equivalent (toe). The unit for electricity is the GWh. In order to add them up, quantities of electricity are converted into toe.

Considering the primary energy required for the production of one GWh, the theoretical conversion factor amounts to 9767 GJ per GWh or 0.2332 ktoe per GWh. This theoretical factor is applied to those countries unable to deliver a national conversion factor. The conversion factor actually used for the other countries reflects the fuel mix of national public power stations.

4. CO₂ emissions

4.1 Data collection

As there is no direct measurement of CO₂ emissions, CEFIC calculates these amounts on the basis of energy consumption statistics.

4.2 Methodology

Only the consumption of fuels as energy sources is taken into consideration, using the following working assumptions:

• Solid fuels = 100% steam coal
• Liquid fuels = 100% residual fuel oil
• Gaseous fuels = 100% natural gas (dry)

and applying the CO₂ emission factors reported below.

Example:

Solid (as if steam coal)

The error margin resulting from these simplifying assumptions is weak as CO₂ emission factors are very close within a same class of fuels (see table below)

¹ This value is a default value until a fuel specific CEF is determined.
Source: Greenhouse Gas Inventory Workbook Volume 2; IPCC/OECD Joint programme

4.3 Calculation

• Fossil fuels:
  The amount of solid, liquid and gaseous fuels for energy use and for the generation of self-produced electricity (fuel) is multiplied by the corresponding CO₂ emission factors.
• Electricity:
  The amount of electricity used for the calculation of CO₂ emissions is "purchased electricity" minus "electricity sold to the network".
  That amount of electricity is then broken down into solid, liquid and gaseous fuels according to the average fuel mix of public power stations published in the IEA - OECD "Energy balances of OECD countries" and multiplied by the corresponding CO₂ emission factor for solid, liquid and gaseous fuels.

5. Energy efficiency

5.1 Production index

The production index of chemicals for the European Union is a weighted geometric mean of chemical production indices in volume for the different countries. The weighting coefficients are the 1990 added values expressed in OECD purchasing power parities.

5.2 Calculation

The ratio, i.e. the index of fuel & power consumption divided by the production index, gives the specific energy consumption. A decrease in specific energy consumption means an improvement in energy efficiency.