FRAMEWORK AND CONCEPTS
ENVIRONMENTAL ACCOUNTING FRAMEWORK
The energy account integrates environmental and economic data following guidelines set out in the System of Integrated Environmental Economic Accounting (SEEA) which is a satellite system of the System of National Accounts (SNA). Environmental accounts extend the boundaries of SNA accounting to include environmental stocks and flows not considered by conventional SNA accounting.
Supply and use framework
The supply and use tables, which are a cornerstone of the Australian System of National Accounts, provide the data framework for the energy account. The supply table records the total supply of energy products within the economy (including imports) and the use table records the total use of energy products within the economy and for export. The supply and use tables can be compiled in both physical and monetary terms. In this publication,
Supply is composed of:
- Domestic production
- Imports
Use is composed of:
- Household use
- Business use
- Exports
- Inventory changes.
The supply and use methodology is based on the fundamental economic identity that supply of products equals use. A feature of the supply and use system is that the supply and use of each product are, as far as possible, independently calculated. A formal and systematic process of data confrontation is used to resolve discrepancies between supply and use. This generally involves making choices about which components are based on the most suitable and reliable data.
Residence principle
The
National Accounts are based on the residence principle, whereas energy balances are based on the territory principle. Accordingly, in energy accounts all economic agents of a country are included regardless of whether they are operating within the national territory or abroad. This means that energy purchased by Australian residents while operating abroad is taken into account. For example, bunkering of gasoline and fuel oil by ships and the purchase of motor fuels by tourists abroad are included. In the
National Accounts and the energy accounts these types of purchases are recorded as imports. These types of transactions, where purchased by non-residents operating within Australia, are recorded as exports. Both imports and exports of energy are shown separately in the energy accounts.
Information contained in this publication ideally follows the residency principle as applied for example within the
Australian System of National Accounts. Nevertheless, certain transactions, such as energy use in Australia by non-residents and energy use overseas by Australian residents do not follow this principle. Although the net effect of treating these transactions on a residency basis rather than on a territory basis is considered relatively small, the ABS is currently reviewing available data to determine whether a more complete compliance with the residency principle is possible.
Bunkering
In the energy balances, bunkering refers to the supply of petroleum products to ships and aircraft engaged in international transport services. These are essentially purchases of jet fuel by airlines and of fuel oil and gasoline by shipping operators. Bunkering is not recorded as a separate category in the energy account. Supply to national companies is part of the intermediate use of Water transport and Air transport, while supply to foreign companies (sea vessels, aircraft) is part of exports. Where Australian operators purchase fuel from overseas bunkers (for their aircraft or vessels), these purchases are treated as fuel imports in the energy account. This accords with the
National Accounts' residence principle, described above. In contrast, energy balances make no distinction between supply of fuel from a bunker to resident companies or foreign companies.
In the preparation of this account no adjustment for bunkering and the use of Australian fuel by foreign companies, or the reverse, has been made. While the difference between these two measures is considered to be small, the ABS is currently reviewing the available data to assess whether it is possible to account for this energy use in future releases.
Gross energy flow accounts
Gross energy flow accounts provide a detailed overview of all energy flows occurring within the national economy. Physical data can be combined with price information to calculate monetary energy values which can then be used to analyse differentials in unit prices paid by industry for various energy commodities.
The gross energy flow accounts, however, have an important disadvantage. In any aggregation of data by industry /energy carrier, totals will be subject to double counting. When primary energy sources are converted into secondary energy sources (for example the conversion of coal into electricity), some energy products are double counted with respect to the total energy use or total energy production of industries or the whole economy. The total gross energy use by industry is therefore not equal to the total 'net' energy consumption, which is the energy that is consumed for 'final purposes' and can no longer be used for any other energetic purposes. In practice, differences between gross and net flows tend to be significant only for that small number of industries undertaking significant energy conversion, such as suppliers of secondary energy products.
Like the monetary supply and use tables of the National Accounts, the supply and use of each energy product is balanced. Thus, the main accounting identity underlying the gross flow accounts for energy is the following:
Imports + Domestic production = Exports + Intermediate use + Final use by consumers - Inventory changes
Energy flows can be recorded in both physical and monetary terms. The gross energy accounts are thus hybrid accounts as described in chapter four of SEEA-2003. Gross energy accounts are fully consistent with national accounting principles and with relevant monetary measures from the National Accounts.
This publication contains physical gross energy flow accounts. Monetary gross energy flow accounts will be included in the publication containing National Greenhouse and Energy Reporting System (NGER) based Australian Energy Statistics data to be released in early 2012.
Net energy flow accounts
Net energy flow accounts record only energy 'entering' the economy (imports and extraction) and energy 'leaving' the economy (exports, energy used for final purposes and energy losses upon conversion processes). The supply table of the net energy flow accounts shows the different energy products extracted within a country, supplied from the rest of the world (imports). The use table shows the different energy products actually consumed for final purposes (final use of energy plus energy losses due to conversions) and supplied to the rest of the world (exports) along with inventory changes. In contrast to the gross energy accounts, there is no double counting. The main accounting identity underlying the net flow accounts for energy is the following:
Imports + Direct extraction = Exports + Final use of energy + Energy losses due to conversions - Inventory changes
However, this accounting identity is only valid for the sum of all energy products in the economy and not for individual energy products.
Net supply use tables have not been produced as part of this publication. However net energy estimates were used to compile the energy intensity time series estimates.
Activity vs Ownership (ANZSIC) industry bases
The Australian and New Zealand Standard Industrial Classification (ANZSIC) is the industry classification system used by the ABS. It provides a standard framework under which units carrying out similar productive activities can be grouped together, with resultant groups being referred to as industries. The term industry is used in its widest context, covering the full range of economic activities undertaken to produce both goods and services. Each individual industry class is defined in terms of a specified range of activities.
It is common for a business unit to engage in a range of activities wider than those designated as belonging to a particular class, and when this occurs the unit is classified based on its predominant activity, that is the activity with the highest value-added. Activities undertaken which belong to classes other than that to which the unit is classified are described as its secondary activities. The secondary activities of the unit play no part in assigning the industry to which the unit is classified.
An important characteristic of this energy account (and the National Accounts) is that energy production and energy use are attributed to appropriate institutional units, as per the ANZSIC. ABARES' energy balances assign fuel consumption on a different basis. Specifically, energy use related to transport activity is allocated to the transport industry. By contrast, the National Accounts attribute transport-related fuel consumption to the industry to which the predominant activity of the unit (and therefore the unit itself) belongs. This may not be the transport industry, especially in the case of road transport fuel use. For example, under the ANZSIC, the fuel consumed by a truck owned by a construction company would be assigned to the construction industry, not to Road transport, because the predominant activity of that business entity is construction.
This approach has necessitated a methodology to re-allocate fuels from the transport industry to the industry to which the predominant activity of the unit belongs. Refer to Methodological Issues which describes the re-allocation methodology in further detail.
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