@@ -146,7 +146,7 @@ While the European Green Deal already recognizes that inequalities in income, en
## Income-stratified national household energy and carbon footprints
We first used the EE-MRIO model EXIOBASE for 2015 (version3, industry-by-industry) [@stadler_exiobase_2018] and the European HBS macro-data from EUROSTAT for 2015 [@eurostat_database_nodate] to calculate income-stratified national household energy and carbon footprints (together denoted as environmental footprints in this paper). The EUROSTAT HBS publishes mean household expenditure by income quintile, in purchasing power standards (PPS), by COICOP consumption category, country and year. We chose EXIOBASE as the EE-MRIO for this study because of its European focus, with nearly all countries in the EUROSTAT HBS also found as stand-alone countries in EXIOBASE, its detailed environmental extension data, and its year coverage.
We first used the EE-MRIO model EXIOBASE for 2015 (version3.7, industry-by-industry) [@stadler_exiobase_2018] and the European HBS macro-data from EUROSTAT for 2015 [@eurostat_database_nodate] to calculate income-stratified national household energy and carbon footprints (together denoted as environmental footprints in this paper). The EUROSTAT HBS publishes mean household expenditure by income quintile, in purchasing power standards (PPS), by COICOP consumption category, country and year. We chose EXIOBASE as the EE-MRIO for this study because of its European focus, with nearly all countries in the EUROSTAT HBS also found as stand-alone countries in EXIOBASE, its detailed environmental extension data, and its year coverage.
To integrate HBS data into EXIOBASE we created correspondence tables between the EXIOBASE sectors and the matching COICOP consumption categories used in the HBS. We then used the relative expenditure shares of each income quintile on the COICOP consumption categories in the HBS, to stratify the matching EXIOBASE national household final demand expenditure per sector by income quintile, according to those relative HBS expenditure shares. Using standard input-output techniques we calculated ‘total’ (i.e. direct and indirect supply chain) energy and carbon intensities per EXIOBASE sector, and multiplied them with the now income-stratified EXIOBASE national household final demand expenditure, to estimate the supply chain part of national household energy and carbon footprints by national income quintile.
@@ -92,7 +92,7 @@ The final demand expenditure, and thus the national footprint, is typically disa
In order to stratify the EE-MRIO final demand expenditure and footprint by income quantile, a second data input is needed with information on the income/expenditure distribution. This could be a household budget survey (HBS) stratified by income quantile or, at a more aggregate level, the national income distribution. In this paper we use:
2) HBS: European household budget survey from EUROSTAT, macro-data, from : https://ec.europa.eu/eurostat/web/household-budget-surveys/database [accessed on 22.05.2020] [@eurostat_database_nodate]
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@@ -100,7 +100,7 @@ We discuss each of these in turn, including additional data inputs needed to com
### EXIOBASE
We use standard input-output calculations to calculate 'direct and indirect supply chain' intensity vectors in EXIOBASE [@miller_input-output_1985]. EXIOBASE publishes the A matrix, the final demand matrix, the satellite extensions matrix, and satellite extensions direct from final demand matrix. We use the industry-by-industry (ixi) EXIOBASE data tables from EXIOBASE version3. This means 163 industry production sectors and 6 final demand categories for 49 regions worldwide (44 countries and 5 rest-of-world regions), from 1995 - 2016. All monetary units are in million current Euros. Stadler et al. (2018) [@stadler_exiobase_2018] describe the EXIOBASE version3 compilation procedure in detail, including nine supporting information documents with further detailed information on the compilation of the monetary tables (S1), energy (S2), emissions (S3), and others.
We use standard input-output calculations to calculate 'direct and indirect supply chain' intensity vectors in EXIOBASE [@miller_input-output_1985]. EXIOBASE publishes the A matrix, the final demand matrix, the satellite extensions matrix, and satellite extensions direct from final demand matrix. We use the industry-by-industry (ixi) EXIOBASE data tables from EXIOBASE version3.7. This means 163 industry production sectors and 6 final demand categories for 49 regions worldwide (44 countries and 5 rest-of-world regions), from 1995 - 2016. All monetary units are in million current Euros. Stadler et al. (2018) [@stadler_exiobase_2018] describe the EXIOBASE version3.7 compilation procedure in detail, including nine supporting information documents with further detailed information on the compilation of the monetary tables (S1), energy (S2), emissions (S3), and others.
For each year, we first load the A matrix and calculate the Leontief inverse (the inverse of the A matrix). We load the final demand matrix and calculate total output ($x$) by pre-multiplying the Leontief inverse ($L$) by the row sums of the final demand matrix ($Y$):
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@@ -138,9 +138,9 @@ $$
The environmental extensions we use are emissions of CO2-equivalence (in kilograms) and 'gross total energy use' (in terajoules). We create the CO2-equivalence extension by summing together the greenhouse gases CO2, CH4, N2O, SF6, HFCs, and PFCs, from combustion, noncombustion, agriculture and waste. We use Global Warming Potential (GWP) values for a 100-year time horizon taken from the IPCC Fifth Assessment Report [@myhre_g._anthropogenic_2013 (p.73-79)]: 28 for CH4, 265 for N2O and 23500 for SF6 (HFCs and PFCs are in CO2-equivalence already in the EXIOBASE environmental extensions).
The 'gross total energy use' extension in EXIOBASE converts final energy consumption in the International Energy Agency (IEA) energy balance data from the territorial to residence principle following System of Environmental Economic Accounting (SEEA) energy accounting principles. In their Supporting Information 2, Stadler et al. (2018) [@stadler_exiobase_2018] describe the compilation of the energy extensions in EXIOBASE version3. Energy supply and use tables from the IEA are converted from the territory to the residence principle before being allocated to the EXIOBASE industries and final demand categories.
The 'gross total energy use' extension in EXIOBASE converts final energy consumption in the International Energy Agency (IEA) energy balance data from the territorial to residence principle following System of Environmental Economic Accounting (SEEA) energy accounting principles. In their Supporting Information 2, Stadler et al. (2018) [@stadler_exiobase_2018] describe the compilation of the energy extensions in EXIOBASE version3.7. Energy supply and use tables from the IEA are converted from the territory to the residence principle before being allocated to the EXIOBASE industries and final demand categories.
The conversion to the residence principle means that the EXIOBASE energy extensions refer to the functional border of a country's economy. In this case, the system border is defined by the 'residence' of the agent. This means that energy supply and use from international transport by ships, airplanes, fishing vessels, cars and trucks is allocated to the resident units of a country, independent from where these activities take place. In EXIOBASE version3, because emissions from these transport activities are estimated from the energy extensions via emission factors, the emissions extensions follow the residence principle as well.
The conversion to the residence principle means that the EXIOBASE energy extensions refer to the functional border of a country's economy. In this case, the system border is defined by the 'residence' of the agent. This means that energy supply and use from international transport by ships, airplanes, fishing vessels, cars and trucks is allocated to the resident units of a country, independent from where these activities take place. In EXIOBASE version3.7, because emissions from these transport activities are estimated from the energy extensions via emission factors, the emissions extensions follow the residence principle as well.
#### Environmental extensions direct from households
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@@ -319,7 +319,7 @@ flextable(labels) %>%
### Country and year coverage
The EXIOBASE version3 industry-by-industry is available for the years 1995 to 2016, albeit with the caveat that the original data series ends in 2011, the 2012-2016 estimates are based on trade and macro-economic data, and caution is advised when analysing trends over time. The EUROSTAT HBS is available for the years: 1988, 1994, 1999, 2005, 2010 and 2015, although not all countries are available for all years, and the years 1988, 1994, and 1999, in particular, have many missing countries. Table S5 shows the country and year coverage between EXIOBASE and the EUROSTAT HBS for the years 2005, 2010 and 2015. Rows with black text show countries that are represented in EXIOBASE, and an 'x' for those years where the necessary EUROSTAT HBS data also exists for that country. Rows with red text show countries where EUROSTAT HBS data exists, but who are not represented individually in EXIOBASE (they are in 'rest-of-world' categories in EXIOBASE).
The EXIOBASE version3.7 industry-by-industry is available for the years 1995 to 2016, albeit with the caveat that the original data series ends in 2011, the 2012-2016 estimates are based on trade and macro-economic data, and caution is advised when analysing trends over time. The EUROSTAT HBS is available for the years: 1988, 1994, 1999, 2005, 2010 and 2015, although not all countries are available for all years, and the years 1988, 1994, and 1999, in particular, have many missing countries. Table S5 shows the country and year coverage between EXIOBASE and the EUROSTAT HBS for the years 2005, 2010 and 2015. Rows with black text show countries that are represented in EXIOBASE, and an 'x' for those years where the necessary EUROSTAT HBS data also exists for that country. Rows with red text show countries where EUROSTAT HBS data exists, but who are not represented individually in EXIOBASE (they are in 'rest-of-world' categories in EXIOBASE).
```{r tableS5, tab.cap = "**Table S5: Country and year coverage between EXIOBASE and the EUROSTAT HBS. Rows with black text show countries that are represented in EXIOBASE, and an 'x' for those years where EUROSTAT HBS data also exists for that country. Rows with red text show countries where EUROSTAT HBS data exists, but who are not represented individually in EXIOBASE (they are in 'rest-of-world' categories).**"}
The EUROSTAT HBS is reported in purchaser price (consumers report their expenditure in the prices they paid) while we use EXIOBASE version3 in base price. Because we decided to keep the EXIOBASE production sector shares the same (and just stratify by income quintile within each production sector), which also keeps the total footprint the same, this distinction between purchaser price and base price does not matter. The 'alternative method' section of this document shows that, in the alternative methodology where we break the EXIOBASE production sector shares and keep the consumption category shares of the HBS, the distinction between purchaser price and base price does matter.
The EUROSTAT HBS is reported in purchaser price (consumers report their expenditure in the prices they paid) while we use EXIOBASE version3.7 in base price. Because we decided to keep the EXIOBASE production sector shares the same (and just stratify by income quintile within each production sector), which also keeps the total footprint the same, this distinction between purchaser price and base price does not matter. The 'alternative method' section of this document shows that, in the alternative methodology where we break the EXIOBASE production sector shares and keep the consumption category shares of the HBS, the distinction between purchaser price and base price does matter.
In the methodology used for the main paper, once we have multiplied HBS 'pps hh' per income quintile by the sectoral shares in 'pm', to get sectoral expenditure per income quintile in 'pps hh', we include the fact that sector 1 and sector 2 have base price to purchaser price ratios that are different. The base price to purchaser price ratio for sector 1 ('s1 bp') is 0.5, whereas for sector 2 ('s2 bp') it is 1 (ie. there are no trade, transport, tax or subsidy margins in sector 2). This results in sectoral expenditure per income quintile in 'pps hh' now expressed in base price ('s1 pps hh bp' and 's2 pps hh bp') (Table S6).
While the EUROSTAT HBS is compiled for cross-country comparison purposes and aims for harmonization, there remains imperfect harmonization in the frequency of surveys, timing, content and structure between countries and years [@eurostat_eu_2020]. Some types of households may also be excluded from the samples, including super-rich households, for example in Germany, which excludes households with over €18,000 monthly net income [@eurostat_eu_2020]. Sensitive goods and services, such as alcohol, may be under-reported in household budget surveys, while expenditure on infrequent purchases such as a vehicle may create artificially large expenditure differences between households depending on the timing of the survey [@eurostat_eu_2020]. The EUROSTAT HBS macro-data also does not report direct foreign purchases, and we assumed that the expenditure shares between income quintiles of direct final demand for foreign goods and services was the same as direct final demand for domestic goods and services.
We used EXIOBASE as the EE-MRIO for this study because of its European focus, with nearly all countries in the EUROSTAT HBS also found as stand-alone countries in EXIOBASE, its detailed satellite extension data, and its year coverage (specifically version3, industry-by-industry), but there are well known limitations when using and selecting an EE-MRIO [@moran_convergence_2014]. The production sectors in EXIOBASE are harmonized across countries and years, but needing to map the EUROSTAT HBS to EXIOBASE meant that the most recent year of 2015 could only use the industry-by-industry version of EXIOBASE version3. This version assumes fixed product sales. Furthermore, because EXIOBASE version3 is extrapolated beyond 2011, caution should be used when comparing results over time. This, and the fact that harmonization guidelines in the EUROSTAT HBS have changed over time, were the justification for presenting only the 2015 results in the main paper, and presenting 2005 and 2010 results only here in the SI. We also show 2010 results using the product-by-product version of EXIOBASE version3 in the final section of this SI document.
We used EXIOBASE as the EE-MRIO for this study because of its European focus, with nearly all countries in the EUROSTAT HBS also found as stand-alone countries in EXIOBASE, its detailed satellite extension data, and its year coverage (specifically version3.7, industry-by-industry), but there are well known limitations when using and selecting an EE-MRIO [@moran_convergence_2014]. The production sectors in EXIOBASE are harmonized across countries and years, but needing to map the EUROSTAT HBS to EXIOBASE meant that the most recent year of 2015 could only use the industry-by-industry version of EXIOBASE version3.7. This version assumes fixed product sales. Furthermore, because EXIOBASE version3.7 is extrapolated beyond 2011, caution should be used when comparing results over time. This, and the fact that harmonization guidelines in the EUROSTAT HBS have changed over time, were the justification for presenting only the 2015 results in the main paper, and presenting 2005 and 2010 results only here in the SI. We also show 2010 results using the product-by-product version of EXIOBASE version3.7 in the final section of this SI document.
THe correspondence between the EUROSTAT HBS COICOP consumption categories and the industry production sectors in EXIOBASE is not one-to-one. Both the EUROSTAT HBS and EXIOBASE are limited in their consumption category/production sector level of detail. The share of each consumption category/production sector in the total amount of expenditure is also not identical between the HBS and EXIOBASE. As discussed in the 'methods for main paper results' section of this SI document, there are alternative methods for stratifying the EXIOBASE household final demand expenditure: one that keeps the EXIOBASE production sector shares of total expenditure intact, and one that keeps the HBS consumption category shares of total expenditure intact. Our results in the main paper use the first method, keeping the EXIOBASE sectoral shares of total expenditure intact, which means that the total footprint is identical to when it is calculated in EXIOBASE without any stratification by income quantile. The alternative method, on the other hand, results in a different total footprint because a different amount of final demand expenditure in each sector is multiplied by the same original 'direct and indirect supply chain' intensities, but stays faithful to the original HBS consumption category shares of total HBS expenditure. We show the alternative method below, and some results in the last sections of this SI document. We also stay at a relatively aggregated level for our energy and carbon footprints, as our primary goal was to connect aspects of the aggregate European household environmental footprint distribution with the decarbonisation and minimum energy requirement scenarios. Work specifically investigating distributional aspects of the European carbon footprint, sometimes at a finer sectoral level than we do here, can be found in the refs. [@ivanova_unequal_2020], [@gore_t._confronting_2020], [@sommer_carbon_2017] and [@bianco_understanding_2019].
We ran the same analysis for the years 2015, 2010 and 2005. We presented only 2015 in the main paper as we focused more on the distributional aspect of the environmental footprints and their relationship to decarbonisation scenarios and minimum energy, rather than the time component. As mentioned in the 'limitations' section above, caution is needed when comparing the EUROSTAT HBS data over time, as well as the version of EXIOBASE we used (version3, industry-by-industry). We also estimated the environmental footprints per European expenditure decile using the product-by-product version of EXIOBASE for the year 2010, and then the year 2015 again using the alternative methodology that was explained in the supplementary methods sections in this document above.
We ran the same analysis for the years 2015, 2010 and 2005. We presented only 2015 in the main paper as we focused more on the distributional aspect of the environmental footprints and their relationship to decarbonisation scenarios and minimum energy, rather than the time component. As mentioned in the 'limitations' section above, caution is needed when comparing the EUROSTAT HBS data over time, as well as the version of EXIOBASE we used (version3.7, industry-by-industry). We also estimated the environmental footprints per European expenditure decile using the product-by-product version of EXIOBASE for the year 2010, and then the year 2015 again using the alternative methodology that was explained in the supplementary methods sections in this document above.
We show each of these in turn in the format of Figure 1 from the main paper: 1) the year 2005 using the main paper method and EXIOBASE industry-by-industry version, then 2) the year 2010 using the main paper method and EXIOBASE industry-by-industry version, 3) the year 2010 using the main paper method but EXIOBASE product-by-product version, and finally 4) the year 2015 using the alternative methodology and EXIOBASE industry-by-industry version.
