Supply versus use designs of environmental extensions in input-output analysis: Conceptual and empirical implications for the case of energy.

Abstract

Input–output analysis is one of the central methodological pillars of industrial ecology. However, the literature that discusses different structures of environmental extensions (EEs), that is, the scope of physical flows and their attribution to sectors in the monetary input–output table (MIOT), remains fragmented. This article investigates the conceptual and empirical implications of applying two different but frequently used designs of EEs, using the case of energy accounting, where one represents energy supply while the other energy use in the economy. We derive both extensions from an official energy supply–use dataset and apply them to the same single‐region input–output (SRIO) model of Austria, thereby isolating the effect that stems from the decision for the extension design. We also crosscheck the SRIO results with energy footprints from the global multi‐regional input–output (GMRIO) dataset EXIOBASE. Our results show that the ranking of footprints of final demand categories (e.g., household and export) is sensitive to the extension design and that product‐level results can vary by several orders of magnitude. The GMRIO‐based comparison further reveals that for a few countries the supply‐extension result can be twice the size of the use‐extension footprint (e.g., Australia and Norway). We propose a graph approach to provide a generalized framework to disclosing the design of EEs. We discuss the conceptual differences between the two extension designs by applying analogies to hybrid life‐cycle assessment and conclude that our findings are relevant for monitoring of energy efficiency and emission reduction targets and corporate footprint accounting.