Change of Fossil-Fuel-Related Carbon Productivity Index of the Main Manufacturing Sectors in Poland

Abstract

The article presents the global characteristics of the Polish manufacturing industry and the structure of its energy consumption and carbon dioxide emissions related to direct emission as a result of fuel combustion and indirect emission as a result of electricity consumption. The share of individual sectors in energy consumption and emission levels was determined, and the changes in this share over the last 20 years were determined. A method for determining the carbon productivity index for the emissions of individual industries with the use of global macroeconomic indicators was proposed. The index allows for the comparison of the productivity of individual industries, regardless of the nature of production. The change in carbon productivity in Polish industry over time was presented. On this basis, it was assessed which industries are particularly promising in terms of decarbonising the Polish industry.

1. Background

The economy’s carbon dioxide emissions include, in particular, energy and heating, manufacturing industry, agriculture, forestry, building operation, and transport [1]. For each of these sources, separate, consistent decarbonisation policies are introduced. Due to its characteristics, practically each country follows its own path to limiting the impact on climate change [2,3,4]. Additionally, in Poland, studies have been carried out for over 10 years to discuss [5] the optimal path to decarbonization and the path to climate neutrality of the Polish economy [6,7,8,9].

In recent years, in response to the intensification of the needs in the field of emission reduction, new solutions and methods on a local scale in relation to Polish circumstances are being proposed [10]. They concern the reduction of emissions in the energy sector [11,12,13,14], decarbonisation of industry [15,16], greening of cities [17,18,19], or reducing the impact on the quality of life of society [20,21,22].

Decarbonisation and the direction to climate neutrality of the European economy pose new challenges for enterprises that until now were end users of energy sources only. When technologies of distributed generation of electricity are more and more easily available in the financial, technological, and regulatory scope, industrial energy on a smaller scale will become more and more important. The larger and more complex an organization is, the more opportunities it has to actively participate in this process. Decarbonising the manufacturing industry and reducing the carbon footprint is one of the pillars of European industrial policy [23]. Depending on the nature of the energy consumption structure and emission sources, individual enterprises or industries will use a different range of decarbonization instruments [24].

To demonstrate how energy-intensive a company or industry is, indicators linking energy consumption and economic parameters are used [25,26,27,28,29,30]. There are two basic approaches: intensity and productivity. In the intensity approach, energy consumption is determined to the value of the goods produced. On the other hand, in the productivity approach, it is assessed how many goods can be produced using a given unit of energy. In this work, analyses were carried out and the results presented in the productivity approach.

When it comes to the decarbonising of industry, energy consumption is an intermediate parameter. The key indicator to be compared is carbon dioxide emissions resulting from the direct consumption of fuels and other forms of energy. Therefore, in the analysis of decarbonization methods of individual industries, the carbon productivity index is used. It allows to unify the analysis into one common indicator, which can be compared regardless of the forms of energy consumed and taking into account local energy mix. Such studies are performed for different states individually [31,32,33,34,35].

The manufacturing industry is an important element of the Polish national economy (see Section 2). In addition to the large internal market (over 38 million citizens), exports are also an important part of the economy. Factories located in Poland are essential elements of many European and global supply chains—this applies to both the raw materials industry and highly processed, innovative, and complex products. Considering that Poland is responsible for nearly 1% of global and 10% of EU carbon dioxide emissions, its future actions will have a concrete impact on the implementation of the provisions of the Paris Agreement.

Moreover, the Polish industry is struggling with a high carbon footprint as a result of the high share of coal in the production of electricity. The more an industry is dependent on electricity, the more important this issue is (see Section 2.2). This will affect the competitiveness of Polish companies. Its future position on world markets, apart from economic competitiveness and high quality, will also depend on the carbon footprint of the product. Thus far, no analysis has been carried out on how the productivity of the Polish industry (its economic parameters) is shaped in relationship to its carbon dioxide emissions.

Contribution

In this work, on the basis of the data on the Polish industry, the nature of fuel and energy consumption by Polish industry was presented and compiled. In addition, the final energy consumption by the Polish industry sectors and the corresponding carbon dioxide emissions were determined. In addition, for the first time, the corresponding carbon productivity index (CarPIn—see definition in Section 3.1) was characterized by reference to national data on economic output and gross value added. The partial-factor productivity approach was used. On the basis of historical data for some industries, a temporal analysis was carried out in the years 2005–2018.

The analysis made it possible to distinguish four groups of industrial sectors depending on the dynamics of changes in the CarPIn indicators. It was assessed which sectors of the economy improved their indicators the most in the analysed period. The results of the analyses can be used in further research on the methods of decarbonising individual industries.

2. Characteristics of Polish Manufacturing Industry

2.1. General Characteristics

Industry, apart from agriculture and services, is one of the three traditionally distinguished sectors of the economy. In Poland, its largest part is manufacturing, which includes processing materials into products. Among the European Union, Poland is a relatively highly industrialized country. The. manufacturing sector shared in the value added generated in Poland with a rate of 18.67% in 2019 compared to the value of the entire EU-27, which is equal to 16.73% [36].

Energy consumption, which is the source of direct emissions of the Polish industry, accounts for approximately 70% of the global final energy consumption by the Polish industry (estimated at approximately 133 TWh/a of direct emissions sources and 57 TWh/a of indirect emissions sources) [37].

The biggest sectors of Polish industry are manufacturing of food products (16.9%), automotive (11.5%), metal (9.2%), rubber and plastic (7.2%), and coke and refined petroleum (6.4%), which totally are responsible for more than half of the national manufacturing output [38]. Output and gross value added of manufacturing sectors are presented in Figure 1 and Figure 2 (Euro exchange rate: EUR 1 EUR = PLN 4.30).

The manufacturing sector has a significant impact on the labour market in Poland. Compared to EU-27 countries, industrial workers constitute 20.71% of all employed, while in the entire EU, the amount is 14.55% [39].

2.2. Energy Consumption and Carbon Dioxide Emissions of Manufacturing Sectors in Poland

Direct emissions in Polish industrial enterprises are mainly related to:

• Emissions from fuel consumption in devices necessary for the technological processes (burners in combustion chambers and dryers, technological boilers producing hot water or technological steam, as well as boiler rooms producing hot heating oil, hot water for washing technological machines);
• Emissions from the production of household heat: heating of production, storage and office areas as well as for the needs of hot utility water, e.g., for washing in cloakrooms;
• Emissions from transport for the needs of the enterprise (company cars, internal industrial transport); usually emissions related to the supply of materials and transport of finished products are included in the supply chain emissions, and therefore, in direct reporting, they constitute a small fraction, i.e., usually at the level of 1–4%.

The primary sources of energy in the form of heat in Polish industry are [40]:

• Natural gas—approx. 37%,
• Solid fuels—approx. 24%,
• Renewable energy sources—approx. 16%,
• District heating—approx. 7%,
• Liquid fuels—approx. 8%,
• Non-renewable waste—approx. 7%.

This energy mix is definitely more conducive in terms of emissions than the energy mix available with electricity supplied from the National Power System (KSE—Krajowy System Elektroenergetyczny), which is responsible for the vast majority of indirect emissions. In 2020, more than 70% of the electricity generated into the National Power System came from hard coal or lignite [41].

Eventually, the National Centre for Emissions Management (KOBiZE—Krajowy Ośrodek Bilansowania i Zarządzania Emisjami) reported, in 2021, CO₂ emission factors per 1 MWh of electricity produced in fuel combustion sources, including electricity supplied to the grid from renewable energy sources, and taking into account losses and balance differences, i.e., at the end user [42], with a value of 698 kg CO₂/MWh, which gives a successive decline for ca. 13% from 2014 to 2020 (see Figure 3).

In the vast majority of industries, the main source of energy is electricity; it is often responsible for over 70% of energy consumption. However, there are a few sectors with a significant share of direct fossil energy consumption. This applies in particular to the chemical and food (and beverage) industries, the production of metals and metal products, as well as other mineral products and coke [38] (see Figure 4).

The share of individual industries in the final energy consumption by the processing industry is shown in the Figure 5 (outer ring). The inner ring of the graph shows the share of direct and indirect carbon dioxide emissions. The conversion of energy consumption into the value of emissions was made using the coefficients published by National Centre for Emissions Management [43].

The six most energy-intensive industries in the Polish manufacturing industry account for over 75% of final energy consumption and over 80% of direct and indirect carbon dioxide emissions. As a rule, they correspond to the industries indicated above, in which the final energy consumption is mainly caused by the direct consumption of fossil fuels. These are: chemical, metal, mineral products, food, coke, and paper production. These six industries are also responsible for the direct consumption of over 93% of hard coal in the Polish manufacturing industry.

2.3. Industrial Energy Performance and Carbon Footprint Measures

To determine productivity in various areas, individual enterprises define key performance indicators (KPIs), which allow to control the performance of their organization and assess the level of achievement of goals and the effectiveness of previous steps. KPIs are also a tool of managerial control: they allow to quickly make decisions, plan and prioritize actions, and react to emerging problems. They also support continuous improvement processes and the effective use of the resources held by the organization.

There are a number of standards that guide how to define KPIs in the field of energy management and climate change policy in an organization. For energy efficiency, they are essentially the energy performance indexes [44,45], and for carbon dioxide emissions, it is the carbon footprint [46,47].

The determination of these indicators by enterprises helps them to continuously improve and plan activities aimed at energy saving and reducing the impact on the climate.

Unfortunately, the results related to the energy performance index and carbon footprint are disclosed by organizations partially. The published indicators can be global, indicating the total energy consumption or the global emissions by the organization. Individual organizations can also publish intensive indicators, which are related to their production or other microeconomic indicators. In this case, one can try to compare individual companies or production plants within a given industry. However, the success of such an analysis depends on the completeness and comparability of the data disclosed by individual organizations.

3. Carbon Productivity Indexes

3.1. Definition of Carbon Productivity Indexes to Compare Industries within the Economy

The indicators presented in Section 2.3 do not apply to the comparison of the influence of individual industrial sectors on the global emission intensity of the economy. It is also impossible to compare how individual industries respond to climate action. Therefore, it is necessary to define a common factor that is measurable, comparable, reliably determined, and represents the value generated by a given sector.

The global list of emissions, which is presented in Figure 5, may reflect changes in emissions in particular industries over the years. However, such a comparison will not take into account the change in production efficiency.

For these reasons, indicators based on energy consumption and comparable macroeconomic indicators (output and gross value added) were applied:

$$CarPI{n}_{output, i}=\frac{{\$}_{output,i}}{{\sum }_{k=1}^n{\dot{Q}}_{k,i}{e}_k}\left(\frac{\mathrm{mln}\mathrm{EUR}}{{\mathrm{Mg}\mathrm{CO}}_2}\right)$$

(1)

$$CarPI{n}_{gross value added, i}=\frac{{\$}_{gross value added, i}}{{\sum }_{k=1}^n{\dot{Q}}_{k,i}{e}_k}\left(\frac{\mathrm{mln}\mathrm{EUR}}{{\mathrm{Mg}\mathrm{CO}}_2}\right)$$

(2)

where:

$CarPI{n}_{output, i}$	- Carbon productivity index (output) of i industry;
${\$}_{output,i}$	- Output of i industry (output of industry is a production measure that characterizes the result of an industrial production process carried out by an industrial enterprise over a given period of time) (bln EUR) [33];
$i$	- Selected industry sector;
$k$	- Selected source of consumed energy;
${\dot{Q}}_{k,i}$	- Annual energy consumption of k energy source by i industry sector (GJ) [32];
$e_k$	- k energy source emissivity $\left(\frac{MgC{O}_2}{GJ}\right)$ [37,38];
$CarPI{n}_{gross value added, i}$	- Carbon productivity index (gross value added) of i industry;
${\$}_{gross value added, i}$	- Gross value added of i industry (gross value added measures the newly created value from the production activities of domestic institutional units. Gross value added is the difference between output and intermediate consumption) (billion EUR) [33].

3.2. Comparison of Carbon Productivity Indexes of manufacturing industries within the Polish economy in 2018

Both carbon productivity Indexes, namely output and gross value added, were calculated for Polish manufacturing industries for 2018 data.

Figure 6 shows the values of carbon productivity indexes by individual sectors of the Polish processing industry. The orange colour (and left axis) indicates the indicators for the sales value (the indicator is important for customers of particular industries), and the yellow colour (and right axis) indicates the indicators related to the added value (important from the point of view of targeting the economy decarbonization goals).

It can be seen that heavy and energy-intensive industries obtain rather low values. This is due to the fact that energy accounts for a high percentage of the industry’s costs as well as high direct emissions in the sectors’ emission structure.

On the other hand, a number of light industry sectors can be distinguished, for which the indicators for the value of sales are 10 to 20 MEUR/MgCO₂. These include the automotive industry, electrical, furniture, and pharmaceutical production. The highest indicators are obtained by the clothing and general service industries.

For the industries with low values of CarPIn, the general way to decarbonize would be investments in reducing direct emissions, and for the industries with higher CarPIn, the improvement of electricity energy mix in the power grid and investments in their own renewable energy sources or power purchase agreement contracts based on low-emission technologies would be beneficial.

4. Analysis of Polish Manufacturing Industry Response to Climate Action Activities by Carbon Productivity Index

Carbon productivity indexes for manufacturing industry overall and for individual industries were specified. A temporal analysis in 2005–2018 was applied. Input and gross value added were indexed to 2018 prices by the sold industrial output price index published by Statistics Poland.

The overall industry CarPIn values were raised within 13 years by ca. 55%. Figure 7 presents the change in CarPIn’s over the period analysed.

In the analysed period, CarPIn improved in almost all industries. The indexes fell only in two branches: coke and refined petroleum products and printing and reproduction of recorded media. For both areas, the decline is due to global trends in commodity prices and changes into electronic publishing.

CarPIn (output) and CarPIn (gross value added) temporal analysis results are presented in

Table 1. Carbon Productivity Indexes in Poland (manufacturing sectors) (million (2018) EUR/k Mg CO₂) in 2005–2018 (own study).

Year	2005	2005	2010	2010	2015	2015	2018	2018
Industry Sector	CarPIn Output	CarPIn Gross Value Added	CarPIn Output	CarPIn Gross Value Added	CarPIn Output	CarPIn Gross Value Added	CarPIn Output	CarPIn Gross Value Added
Manufacturing Overall	2.995	0.767	4.060	1.055	4.328	1.203	4.740	1.220
Manufacture of basic metals	0.663	0.123	1.119	0.151	1.088	0.226	1.337	0.225
Manufacture of chemicals and chemical products	0.782	0.179	0.909	0.215	0.974	0.269	1.039	0.236
Manufacture of other non-metallic mineral products	1.051	0.367	1.325	0.451	1.503	0.537	1.654	0.535
Manufacture of coke and refined petroleum products	4.484	0.696	5.151	0.736	3.611	0.519	4.330	0.581
Manufacture of paper and paper products	1.179	0.307	1.723	0.450	2.027	0.565	2.551	0.683
Manufacture of products of wood, cork, straw, and wicker	3.161	0.893	3.608	1.139	5.089	1.493	4.289	1.238
Manufacture of food products	4.718	1.007	5.980	1.394	6.299	1.389	6.409	1.267
Manufacture of beverages	5.550	1.612	6.742	2.058	6.735	1.998	6.365	1.819
Manufacture of rubber and plastic products	5.886	1.624	6.944	2.024	6.521	1.954	7.060	1.971
Manufacture of textiles	3.135	0.915	5.683	2.002	8.280	2.651	6.923	2.021
Manufacture of other transport equipment	5.262	1.435	9.561	2.996	14.910	4.533	11.169	3.055
Manufacture of electrical equipment	8.267	2.306	13.583	3.269	12.625	3.171	15.055	3.447
Manufacture of motor vehicles, trailers, and semitrailers	13.749	2.436	17.969	3.068	16.579	3.472	19.040	3.631
Manufacture of machinery and equipment n.e.c.	8.132	2.597	8.917	3.191	10.963	3.523	11.922	3.700
Manufacture of furniture	10.304	2.743	17.079	5.774	13.134	4.162	14.774	4.394
Printing and reproduction of recorded media	25.215	9.540	16.496	6.295	13.257	5.170	13.318	5.109
Manufacture of metal products	9.712	3.091	13.408	4.597	13.441	4.972	15.805	5.348
Manufacture of pharmaceutical products	8.875	3.144	12.507	4.736	14.202	5.023	12.249	5.671
Manufacture of leather and related products	9.431	3.101	11.883	4.100	19.490	6.100	18.785	5.840
Manufacture of computer, electronic, and optical products	14.970	3.718	35.155	5.922	25.637	4.761	33.934	7.061
Manufacture of tobacco products	11.597	3.855	9.349	5.280	12.840	8.099	12.928	7.279
Other manufacturing	20.529	6.692	29.530	11.143	21.399	8.719	25.425	9.676
Manufacture of wearing apparel	17.681	7.061	17.726	7.938	23.669	10.694	28.692	12.982
Repair and installation of machinery and equipment	ND	ND	31.521	10.837	47.389	20.655	52.108	23.940

.

CarPIn (output) improved continuously across six industries. The values are shown in green colour in Table 1. It is worth noting that four of these industries are among the six most energy-intensive industries in 2018. This means that the most energy-intensive industries are steadily improving their CarPIn and reducing carbon dioxide emissions in relation to the value of sales.

There were also a number of industries in which, despite the fact that the improvement in indexes was not stable, the CarPIn growth in the analysed period reached values higher than the manufacturing overall. Apart from the spectacular improvement of indexes in the production of paper, attention should also be paid to the improvement of indexes in the manufacture of basic metals and textile manufacturing. The values for this group are shown in yellow colour in Table 1.

Other industries also improved CarPIn indexes in the analysed period. However, the improvement was slower than the industry average. In this group, industries such as manufacture of products of wood, cork, straw and wicker; and manufacture of beverages or manufacture of motor vehicles, trailers, and semitrailers, which have an important role in the Polish industry, and their CarPIn indicators improved by about 20 to 30%. The values for this group are shown in orange colour in Table 1.

5. Conclusions

The paper presents the carbon productivity index analysis assessing the emission of industrial sectors in Poland as well as manufacturing industry overall. Calculated indexes are designed to compare the impact of individual industries on climate change as well as assess and compare their climate action related to emissions from fossil fuel combustion.

Moreover, a temporal analysis was carried out for the years 2005–2018 of selected industrial sectors in Poland. The study showed that in the analysed period, both CarPIn indexes improved in the manufacturing overall by approximately 55%.

For most sectors, indexes improved over the years under review. It results primarily from the improvement of energy efficiency of the Polish industry. Over the years, a number of projects aimed at improving energy efficiency have been implemented in industry. National institutions, such as the National Fund for Environmental Protection and Water Management, implement grant programs related to energy saving. In addition, since 2011, a system of energy efficiency certificates (white certificates) has been in force in Poland, which implements the provisions of Article 7 of the Energy Efficiency Directive. As part of this program, the Energy Regulatory Office has already issued confirmations for the implementation of energy efficiency projects in about 8000 cases. Moreover, the condition of Polish industry in the period under review also gradually improved. Hence, the investments carried out by the industry made the processes more efficient and less energy-intensive.

Not without significance is also the constant decrease in the carbon index of the Polish energy mix related to the consumption of electricity from the National Power System. In 2020, the official rate fell below 700 kg CO₂/MWh for the first time, but it is still almost twice as high as the average in the European Union. This has a negative impact on the environmental performance of Polish enterprises. In the coming years, the decline in this indicator should be much faster in Poland in order to effectively support the decarbonization of industry. This should be achieved by eliminating carbon-intensive sources with renewable energy sources and industrial combined heat and power systems.

Solar energy (from photovoltaic installations) is also a perspective solution for energy production by non-professionals—in many cases, it allows energy to be used locally by industry. However, for larger industrial enterprises, where the consumption of electricity is disproportionate to the possibilities resulting from the local energy production on roofs, the solutions of photovoltaic farms in the form of own investments or entrusted in the form of PPA and cPPA contracts will be beneficial.

Commercial power industry should turn into low-emission technologies: offshore and onshore wind energy, nuclear energy, hydrogen energy, and municipal waste processing technologies. These are systemic investments and should be carried out advantageously by professional investors.

In the transition period, the greatest quantitative effects in the decarbonisation of the Polish industry will come from the liquidation of solid fuel combustion sources. In many cases, this will involve the conversion of the fuel feed into natural gas.

A significant limitation in the above scope is the level of gas supply in many areas of Poland. Many industrial enterprises that consume significant amounts of heat do not have access to the gas network, which prevents them from implementing a long-term strategy of supplying plants with fuels and forces them to postpone investment decisions for subsequent years. Therefore, it is important to further develop the domestic gas pipeline system. The gas transmission system should be prepared for future supplies of hydrogen through it. This will allow for an evolutionary energy transformation in the field of heat production in industry.

The proposed calculation method can also be applied to national economies in other countries. In particular, the comparability of the CarPIn index can be achieved for the economies of the European Union countries due to the general level of harmonization of national statistics carried out by EUROSTAT.

The calculated CarPIn index can also be used for other analytical purposes. First of all, it allows to assess the progress in decarbonisation of industries, taking into account not only global emissions but also their productivity. It can be used to compare models of decarbonisation of various industries and, after appropriate adjustments in terms of local conditions on fuel markets, also in different countries. In addition, the analysis of index values may help to decide on the direction of development of individual industries within the entire economy.