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7 CAC DOCUMENT N. 258 TOTAL ENERGY COST OF HOUSEHOLD CONSUMPTION IN NORWAY, 1973 by Rbert A. Herendeen* Center fr Advanced Cmputatin University f Illinis at Urbana- Champaign Urbana, IL *This wrk was carried ut while the authr was a Visiting Fellw at the Institute f Ecnmics, Technical University f Nrway, 7034 Trndheim-NTH, Nrway. Fellwship supprt was frm the Nrwegian Cuncil fr Scientific and Industrial Research, Osl. Research supprt was prvided by these surces: At the Technical University in Trndheim: Institute f Ecnmics, Organizatin fr Industrial and Technical Research, and the Cmmittee fr Envirnmental Studies. At the University f Osl: Cuncil fr Envirnmental Studies.

8 Digitized by the Internet Archive in 2012 with funding frm University f Illinis Urbana-Champaign

9 ABSTRACT I have cnverted the ecnmic data f the 1973 Nrwegian Survey f Cnsumer Expenditures int their crrespnding energy requirements. The relatinship between ttal husehld energy requirements and dispsable incme shares three cmmn features with that already btained fr the United States: 1. The graph f ttal energy vs. dispsable incme shws sme tendency t saturate, but the effect is much less marked than fr direct purchase f energy alne (residential energy and aut fuel). 2. Direct energy accunts fr apprximately 2/3 f ttal energy fr a pr family (dispsable incme in lwest decile) and apprximately 1/3 fr a rich family (highest decile). 3. There is strng evidence that urban life is less energy intensive (by abut 10%) than rural life. Cmparisn shws, hwever, that the average energy intensity f husehld cnsumptin is abut 40% lwer in Nrway than in the U.S., reflecting the verall greater efficiency f energy use.

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11 1. INTRODUCTION. In a previus paper husehld cnsumptin f all gds and services was energy-csted t btain the "energy cst f living" in the United States. This reprt presents a similar study fr Nrway. In bth cuntries, attentin t the energy cst f nn-energy gds is required by the relatively small fractin f the natinal energy budget which results frm direct energy cnsumptin in residences and private autmbiles (ne-third in the U.S., ne-furth in Nrway; see Figure 1.) The ptential usefulness f a Nrwegian-U. S. cmparisn is based n the realizatin that Nrway, while different, is nt t different t ffer relatively accessible ptins fr U.S. plicy. In terms f bvius cntributrs t energy cnsumptin, there are significant differences. Cars are taxed apprximately 100%, gasline is selling (September, 1977) fr $1.65 a galln, there is mre public transprt, incme and sales taxes in general are high, the climate is harsh, distances are shrt, cities are cncentrated, much f the fd is imprted, 2 and s n. While many f these issues have been studied (in Sweden fr example), they have nt been drawn tgether as they affect, and are affected by, the actual husehld cnsumptin pattern. The methdlgy parallels clsely that used fr the U.S. The basic cnsumptin data are frm the study "Survey f Cnsumer Expenditures, ," cnducted by the Central Bureau f Statistics in Osl. The detailed data are cnverted t their ttal energy requirements by the use f energy intensities calculated fr the Nrwegian ecnmy fr the 4 same year. The large amunt f cnsumptin data available allws sme investigatin f the rle f ttal expenditures, number f

12 PCE DIRECT (25.0) PCE INDIRECT (37.6) Fig. 1 Rle f persnal cnsumptin (PCE) in Nrwegian energy demand, The whle circle represents dmestic prductin plus net imprt f energy (accunting fr the energy cst f imprted and exprted gds) 1 The numbers are percentages. There are "new investments ' nly, because depreciatin has been allcated t the cnsuming industries. Sme f the investment is gvernment investment. The direct cmpnent includes energy "penalty" n energy, such as refinery lsses, and is shaded n diagram. Surce: Ref. 4.

13 husehld members, and lcal ppulatin density as determinants f ttal energy demand. This wrk is a static, crss-sectinal picture f persnal cnsumptin in Nrway in ne year, Within limits it can be used t say smething abut future energy cnsumptin, as discussed in the Cnclusins. 2. METHODOLOGY a. Energy intensities. The methd fr btaining energy intensites is based n an input-utput analysis f the Nrwegian ecnmy fr The ecnmic data are frm the mdel MODIS IV f the Central Bureau f Statistics; these are supplemented with independent data n energy use. The methd accunts fr all energy alng the chain f extractin f raw materials t final assembly. It is fund that the energy intensities (expressed in Jules/krne) f different cmmdities, measured at the pint f manufacture have a large spread (a factr f at least 70, speaking f nly nn-energy cmmdities). This is reduced by the time the cmmdities reach the persnal cnsumptin market by the admixture f shipping and merchandising activities. In terms f purchasers prices, hwever, a wide spread still exists, as shwn in Table 1, (fr example, bat travel is abut 17 times as energy intensive as alchlic beverages.) The fact that a cnsumer's dllar can be spent with significantly different energy impact is, f curse, the underlying justificatin fr this study. The "energy" shwn here represents the sum f cal, crude il, and hydrelectricity - s called "ttal primary energy." Hydrpwer is energy csted at 3,601 MJ/kWh, with n crrectins fr the mechanical efficiency f turbines. Hwever, tw exceptins must be nted: 3

14 Table 1. Energy intensities fr 55 persnal cnsumptin categries. These are all in terms f purchaser's (cnsumer's) prices; units are MJ/kr (millin Jules per krne). Hydrelectricity is csted at 3,601 MJ/kWh, i.e., with a multiplier f unity. The errr is chsen subjectively. Categries 1-23, 28-32, 36, are taken directly frm the persnal cnsumptin calculatin f Ref. 4; these categries are identical t sectrs , 26-30, 33, in MODIS IV. Fr electricity, categry 24, a natinal average rate structure culd nt be derived because f insufficient data. Therefre, an average price (8.02 0re/kWh) was used fr all residential electricity (Ref. 13, Table 27). Fr petrleum, wd, and cal, utside surces were used 14 t cnvert energy intensities t purchaser's prices. In all cases the energy intensities in Ref. 4 were used t accunt fr the energy penalty n energy. Fr categries 33, 34 (cars, mtrcycles and bicycles) and (public transprtatin), Ref. 7 was used t disaggregate. In 1973, the exchange rate was 5.73 krner t the dllar. Thus, fr cmparisn with intensities in the U.S. fr that year, 1 MJ/kr = 5,430 Btu/$.

15 Table 1, cntinued PRODUCT ENERGY 1NTF.NSITY ERROR 1. Flur and Cereal 2. Baked Gds 3. Meat, Meat. Prd., Egg: 4. Fish and Fish Prducts 5. Canned Fish, Meat 6. Milk and Cream 7. Cheese Butter Oils and Margarine Fresh Vegetables 10, 11. Fresh Fruit 12. Berries, Preserved Fruit T3. Ptates 14. Cnfectins. Sugar, Cffee, Tea 16. Sft Drinks 17. Beer 18. Wine and Liqur 19. Tbacc 20 Wearing Apparel 21. Material, Yarn 22 Shes and Repairs 23 Ldging 24. Electricity 25. Residential Fuel Oil 26. Fuel Wd 27. Cal 28. Furniture, Rugs, etc 29. Appliances 30, Misc. Husehld Articles 31. Paid Husewrk 32. Health Care 33. Aut Purchase JE^ Mtrcycles, Bikes 35. Aut Gasline + Oil 36. Other Persnal Transprtatin 37. Train Transprtatin 38. Streetcar 39. Bat Transprtatin" ~40. Air Transprtatin 41. Bus 42. Taxi 4 3. Mving Expenses 44. Telephne, Telegraph 45. TV, Radi Sets 46 Sprts Equ i pment, Tys, etc. 47 Public Perfrmances 48. Bks and Newspapers 49T~Magazincs, Statiner y 50. Schl Fees 51. Csmetics "52. Sap, Tilet Article s 54. Restaurants, Htels 55. Financial Services Average f all respndents in the survey S IT _5_^4_2 19.1" _30 "

16 First, the energy cntent f fuel wd fr residential use is accunted fr. Secnd, fr nn-cmpeting imprted prducts (cars, citrus fruits, etc.), the energy cnventins apprpriate t the assumed cuntry f rigin are used. This means that the energy intensity f an autmbile includes sme natural gas, and that the electricity used t prduce the car was prbably energy-csted at abut 3 times the Nrwegian value t accunt fr the fact that it was prduced in a fssil-fuel electric plant. It is pssible t carry ut an analysis fr the individual energy types as well. This is nt stressed in this reprt, but the calculatins are available n request. N accunt has been taken f the thermdynamic quality f the energy as actually used (high- r lw temperature prcess heat, mtive pwer, light, feedstcks, etc.). While this is imprtant fr questins f future substitutins, cgeneratin, district heating ptential, etc., it is als very difficult t cllect. Mst cnsumer prducts are taxed; the basic Nrwegian value-added tax adds 20% t the cnsumer's price f mst cmmdities. One is initially inclined t assign this "expenditure" zer energy intensity, but this raises fundamental issues abut the whle apprach. Behind the discussin is the hpe f cmparing results frm Nrway and the U.S. Arguments fr using zer intensity fr sales taxes are these: 1. The assumptin is implicit in the U.S. wrk in Ref The gvernment's cnsumptin f gds and services is nly lsely tied t the means it uses t raise its funds. 3. If the intensity is nt zer, subsidies (which are cmmn in Nrway) will be difficult t handle.

17 4. Incme taxes are already implicitly assigned zer energy intensity in this study; nly incme after taxes, i.e. dispsable incme is dealt with. Sales taxes are als taxes, and deserve like treatment. On the ther hand, there are these arguments fr using nn-zer intensity fr sales taxes: 1. There is^ a difference between the incme and sales tax in that the sales tax is nt unifrm ver all prducts. If it were, zer energy intensity wuld be justified. But because it varies there is an implicit chice here, which shuld be accunted fr. 2. Using zer leads t surprising cnclusins such as this: Alchlic beverages arc the least energy-intensive f the cnsumptin categries because they are taxed at ver 80% f the cnsumer's price. This statement seems misleading. 3. Subsidies can be handled easily. A subsidy has zer energy intensity in any case. The effect f the subsidy is t increase the cnsumer's dispsable incme. This increase is presumably spent and is energy-csted prperly. Similarly the sales tax increases the "dispsable incme" f the gvernment and ught t be energy csted. The argument really reflects the underlying desire t indicate a chice available t the cnsumer, a chice f different energy requirements frm his spending f a given amunt f mney. Maximum chice wuld ccur fr n taxes, zer chice fr 100% taxatin. (Chice is meant in a narrw sense. Accrding t this definitin, fr example, a citizen f

18 Ls Angeles, with its limited public transprtatin, wuld be as free nt t wn a car as a citizen f Osl, with its relatively gd public transprtatin). The ntin f cnsumer chice is mre ppular in America than in Scandanavia, where cllective scial actin is cnsidered mre viable. Actually, cmparable prtins f the natinal energy budget in bth Nrway and the U.S. can be allcated t gvernment cnsumptin (arund 20-25%). This is nt^ included in the energy cst f persnal cnsumptin as defined abve (if the energy intensity f taxes is zer), and admittedly it seems best, at a distance, t allcate it n equal share t each citizen (r perhaps t each vter, r taxpayer). The dilemma therefre seems t be that this allcatin appears different as viewed by the individual cnsumer lking ut at the rest f sciety, and the citizen lking in at his sciety. The reslutin f the questin is thus a matter f pinin. In this paper sales taxes will be assigned zer energy intensity. Since sales taxes in the U.S. average abut 5 percent, versus 20 percent in Nrway, cmparisn f persnal cnsumptin between the tw cuntries. will be rendered still mre difficult. If ne wuld try t assign a -ttal energy cst f living" t each citizen, ne might define it as /citizen's energy cst f \ (persnal cnsumptin ) + (enej^j^st^^ \ ppulatin In this reprt nly the first term is cnsidered. b. Cnsumptin data The basic surce is the raw data tape 3 fr. the cnsumptin survey. This cvers 3363 husehlds in Nrway 8

19 (ppulatin =4.0 millin), each fr a tw-week perid. The data n the tape are quite disaggregated and it is necessary t aggregate int 55 cnsumptin categries, as shwn in Table 2. Mst f these categries are taken frm the persnal cnsumptin "sectrs" f MODIS IV. Here a cmment is needed n the parallelism with the U.S. cnsumer data, and the different terminlgy used. In Nrway's ecnmic mdel MODIS IV there is infrmatin t disaggregate a private cnsumptin "sectr" int its cmpnent "cmmdities." Fr example, MODIS sectr 33926, which is entitled "furniture, rugs, textiles, etc." is disaggregated int x% furniture, y% rugs, and s n. In the United States mdel the crrespnding peratin is the breaking dwn f persnal cn sumptin "activities" int cmpnent "sectrs." Hwever, fr the purpse f energy analysis, several f the MODIS IV sectrs need additinal disaggregatin. Fr example, MODIS IV sectr 33934, "use f public transprtatin," is t brad since it aggregates trains (lw energy intensity) with planes (high energy intensity). With the f< 7 help f details frm MODIS IV and the Nrwegian Natinal Accunts (frm which MODIS IV is cnstructed), this sectr has been disaggregated int 7 types f public transprtatin. The prblem f matching the cnsumptin categries in the cnsumptin survey with the MODIS IV persnal cnsumptin sectrs is easily handled, as they are bth related t the Natinal Accunts by a well -dcumented scheme. This is a welcme cntrast t the U.S. wrk, in which the cnsumptin data (frm the Bureau f Labr Statistics) match prly with the Input-Output mdel (Bureau f Ecnmic Analysis). The Nrwegian Cnsumer survey is related t the Natinal Accunts by Ref. 8 and the Natinal Accunts t MODIS IV by Ref. 9.

20 Table 2. Crrespndence Between 55-Level and 10-Level Cnsumptin Categries. 10- LEVEL SECTOR 55-LEVEL SECTOR 1. Fd 1-2. Alchl, Sft Drinks, Tbacc Husing 23, Aut Fuel and Oil Aut Purchase and Maintenance 33, 34, Clthing 20-22, Residential Heat and Light Public Transprtatin Recreatin 44-50, 54, Medical and Persnal Care 32, 51, 52 10

21 Tw prblems remain. The first is very serius. The data d nt include changes in real assets: real estate, investments. (Sme attempt t accunt fr husing purchase is reflected in the calculatin f an "equivalent rent" which is included in purchases, but this is inadequate.) This reflects the cnventins used in the Nrwegian Cnsumer Price Index, and is rather frustrating frm the standpint f the energy analyst. It differs frm the American practice. There is n dubt that a significant expense is thus "lst." Cmparisn f the Nrwegian and American cnsumptin data seems t indicate that Nrwegians spend surprisingly little n husing, especially given the relatively high husing csts in Nrway. A search fr data t reflect husing expenditures with incme, husehld size, etc., has prved fruitless. The secnd prblem is that the use f wd fr residential heating is very prly cvered in the cnsumptin survey. This is n accident: large cnsumers f wd ften either cut it themselves r btain it frm clse acquaintances in undcumented (untaxable!) transactins. Unfficial estimates indicate that farm use f wd is 2^ times that listed in the Natinal Accunts. This surce f errr will particularly affect urban-rural cmparisns. c. Chice f "independent" variables. In principle ne culd calculate ttal energy requirements f a husehld and perfrm statistical analyses (regressins) with respect t many variables such as ttal expenditure, number f members, reginal ppulatin density, age f members, structural details (married - single, etc.). Instead the first 3 variables have been chsen and analysis carried ut with respect t them. The 11

22 reasns are first, that expenditures are cnsidered imprtant, and secnd, that the graphical display f data used here is cnsidered useful in itself. The data will thus be srted accrding t this scheme: a. ttal expenditures (11 classes); b number f members - 1, 2, 3, 4, 5, >6 (6 classes); c. reginal ppulatin density - sparsley ppulated, 3 sizes f city (4 classes). Srting int t small grups will, f curse, increase expected errrs, as discussed in the Appendix. 3. RESULTS In sme cases the 55 cnsumptin categries have been aggregated int 10 (as given in Table 2). All cnversins t energy were dne at the 55-level, befre aggregatin, s that accuracy is maintained. a. All -Nrway average. In Figure 2 energy requirements are pltted vs. expenditures, averaged ver husehld size and lcatin (the data are given in Table 3). Such averaging intrduces bias regarding husehld size as Table 3 indicates; the husehlds with less expenditures are smaller. Nnetheless, ne can cmment n the shape f the curve. There is apparent leveling ff ("saturatin") f direct energy use (residential energy and aut fuel tgether) with expenditures, even thrugh the effect is less prnunced fr aut fuel alne. The latter is nt surprising since in 1973 there were nly 0.59 private cars per husehld; i.e., far frm saturatin. (In the U.S. there are apprximately 1.4 cars per husehld.) Ttal energy requirements shw sme tendency tward saturatin, 12

23 EXPENDITURES ( I0 3 Krner, 1973) Fig. 2 Energy vs. expenditures fr all Nrwegian average. Direct energy is aut fuel and il plus residential heating and lighting energy. Here, as in all results in this study, direct energy includes the energy "penalty" n energy frm refinery lsses, transmissin lsses, etc. Backup data are given in Table 3. 13

24 Table 3. Energy vs. Expenditures Fr All Husehlds I Number Members Number Respndents Expenditures (kr.) Ttal Energy Direct Energy 10 5 MJ % Errr 10 5 MJ' % Errr , , , , , , , , , , ,

25 but cnsiderably less than direct energy. Average energy intensity fr all expenditures thus decreases with expenditures: fr expenditures = krner, intensity = 9.38 MJ/kr; fr krner, 7.17 MJ/kr; fr kr, 5.36 MJ/kr. The details f the expenditure patterns which prduce this are given in Figures 3 a, b, c, and Table 4. in Table 4 it is seen that the rich spend a greater percentage f their dispsable incme n husing, aut purchase and fuel, clthing, public transprtatin, recreatin, and medical care: this list cntains bth high and lw energy intensity cmmdities. Ntice als frm Table 4 that there is a strng implicatin that public transprtatin expenditures by the rich are mre energy intensive than thse f the pr because f the type f transprtatin purchased. In fact this is s: the pr husehld spends 11% f its public transprtatin expenditures n bat and air transprt (the tw mst energy intensive mdes), while the middle incme husehld spends 17%, and the rich husehld 30%. Figures 3 a, b, c, present Table 4 graphically. Frm them ne sees that the pr husehld accunts fr 66.1% f its ttal energy requirements thrugh its purchases f residential and aut fuel. Fr the middle incme husehld this fractin is 44.6%, and fr the rich husehld it has drpped t 31.3%. These figures are very similar t thse fr the U.S. in ref. 1. Fr bth cuntries ne can say that fr the pr (apprximately lwest decile f dispsable incme), average (fifth and sixth decile), and rich (highest decile), direct energy purchases accunt fr tw-thirds, ne-half, and ne-third f the ttal husehld energy budget.

26 PUBLIC TRANSP. (2.3) RECREATION (2.4) AUTO PURCHASE 8 MAINTENANCE (O.O) MEDICAL a PERSONAL CARE (I.I).CLOTHING (1.6) HOUSING (4.2) ALCOHOL a TOBACCO (0.9) AUTO FUEL (2.2) EXPENDITURES = 7026 Kr. ENERGY = 0.83 x I0 5 MJ ENERGY INTENSITY = 11.9 MJ/Kr. Fig. 3a Deta ils f energy requirements fr pr husehld, 16

27 RECREATION (8.0) PUBLIC TRANSP. (4.2) AUTO PURCHASE 8 MAINTENANCE (4.1) MEDICAL 8 PERSONAL CARE (2.1) CLOTHING (5.7) ALCOHOL 8 TOBACCO () EXPENDITURES = Kr. ENERGY = 2.82 x I0 5 MJ ENERGY INTENSITY = 6.84 MJ/Kr. Fig. 3b. Details f energy requirements fr mi dde- incme husehld, 17

28 MEDICAL 8 PERSON/1 CARE (2.6) CLOTHING (7.5) ALCOHOL 8 TOBACCO (1.6) EXPENDITURES = Kr. ENERGY = 5.80 x I0 5 MJ ENERGY INTENSITY = 5.36 MJ/Kr. Fig. 3c. Details f energy requirements fr rich husehld, 18

29 Table 4. Details (10-Level) f Cnsumptin by Pr, Middle Incme and Rich Husehlds. Expenditures (krner) 7,025 41, ,109 Energy (10 5 MJ) S % '0 % % % Fd Alchl, Sft Drinks, Tbacc Husing Aut Fuel + Oil Aut Purchase + maintenance Clthing Residential Energy Public Transp Recreatin Medical, Persnal Care TOTAL Number f Members Number f Husehlds

30 Figure 2 has averaged ver all variables besides expenditures - fr example, size, reginal ppulatin density, age structure, lcatin, etc. Islatin f the first tw will nw be discussed. b. The rle f husehld size. In Figure 4 energy vs. incme is pltted fr husehld size f 1, 2, 4, and >6. The data are nisy (fr clarity the errrs are nt indicated n Figure 4), but ne can infer a trend: that there is a small increase in ttal energy intensity with number f members. Strictly speaking, it seems safer t infer that the >6 member husehld has a "high" energy intensity and the 1 member husehld a "lw" intensity, than t claim a significant difference between the 2 and 4 member husehlds. Fr the lwer expenditure classes (belw abut 50 thusand krner), a gd prtin f these differences is attributable t differences in direct enerby cnsumptin, but fr the higher classes the difference is in the indirect energy requirements. The reasn fr this is buried in the details f the cnsumptin f nn-energy prducts, which will nt be analyzed here, but ne cntributing factr is suggested by Table 5, which shws the energy intensities f the 10 aggregated cnsumptin categries fr the average respnding husehld. There it is seen that the aggregated categry "fd" is (except fr public transprtatin) the mst energy intensive f the nn-energy categries. A larger husehld buys mre f it than a smaller, and even fr the rich, it is a large prtin f expenditures (.7% f expenditures, frm Table 4). c. The rle f reginal ppulatin density. This is shwn in Figure 5. In rder t separate size and density effects nly husehlds f the same size are cmpared. (Average, r with exactly 4 members.) 20

31 -J I- u r O CNJ en r CO h- g> 9 c r- k. * t CO *"* Ul CD CO UJ CD 2 2 UJ Ul 2 5 CO UJ cc t 3 z UJ 0. X * UJ r O CM CO in ^ r (PW goi) A9U3N3 CNJ 21

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33 : AVERAGE SIZE 1 SPARSE 2 DENSE, < 10,000 3 DENSE, 10,000-49,999 4 DENSE, > 50,000 O.OMr EXPENDITURES ( I0 3 Krner, 1973) Fig. 5 Energy vs. reginal ppulatin density fr husehlds f average size and with exactly 4 members. In each case the 4 pints representing the different densities shuld be cmpared with the density-averaged-energy-expenditure curve fr the same size husehld, which is als shwn. Nte brken axes. Data are frm Table 6. 23

34 In rder fr the classes t have enugh members t prvide statistically useful results, it is necessary t average ver expenditures, and therefre each density class is represented by just ne pint n a graph f energy vs. expenditures. Hwever, it is still pssible t determine where this pint lies in relatin t the density-averaged energy-expenditure curve frm Figure 4, which is dne in Figure 5. (Backup data are in Table 6.) In each case (average size and 4 members) the cmparisn is with the density-averaged husehld f the same size. If a pint lies abve the curve, it represents abve-average energy intensity. If belw, belw-average energy intensity. Here there is a strng trend: city dwellers make purchases which are apprximately 10% less energy intensive than thse f rural peple (Table 6). This difference wuld be even greater if fuel wd were fully accunted fr. This trend agrees with the U.S. results, where urban life was fund t be abut 17% less energy intensive than suburban life. Perhaps the greater difference in the U.S. is due t the relatively higher use f the car fr cmmuting (r the greater incidence f cmmuting in the U.S.). But, in any case, there is agreemen and it is attributable t the same causes, as shwn in Table 7. Urban residents spend smaller fractins f their dispsable incme n aut fuel (abut 30% less) and residential energy (27% less), and the reductin in energy requirements is nt cancelled by the increased use f public transprt. This is cnsistent with the image f the urbanite as an apartment dweller wh uses public transprtatin t get t wrk, vs the rural r suburban persn with a larger, mre energy-demanding residence, and mre use fr the autmbile. 24

35 ! Energy Expenditures relative Respndents <» ( < 1«< 1 < average intensity t O + r-l + 1 O r-t 1 t + + r i 1 i en > >. u CCD cw O cu >-( b4 Number CD r-h r- t t LO cn 00 CM cn i cn. 1 t> a> W) cd $H a> > Number Members 00 I t I t (M LO CM O 4-> H a> c H * c u w GO *>. U C UJ <-* (kr.) CM t t t CM 00 CM t t l t CM CM i t cn t t CM i t cn \ t CM t t LO LO vo t cn t LO t r-i CM CO t LO vo CM t LO 00 OO r- vo r- lo t CM t CM LO «* t -3- « LO ft (/) a> ft (-( CD X. 4~> O +-> 0) > H 4-> CO ^H a> u * H > <D LO 0) nl a cn cn cn cn cn cn in H U, X +j H l/> 0) Q N H l/j d> M rt >-. 0) CD 10 M CO r-t r-h V if) c. Q CM Cn O V) r. C) t in c CD Q i... U CD G.. <d u CO 1 r 4 V CD a CM cn i <D Q IO LO A 0) t/) c: CD a H Q> 10 O c c 0) +-> c H tf) x u Vn!-> O -H C 'O 4) C CU O CU H 2S

36 8.1?fi! 8.2 i Table 7. Details (10-Lcvel) f Cnsumptin vs. Reginal Ppulatin Density Reginal Ppulatin Density Sparse Dense, <10,000 Dense 10,000-49,999 Dense > 50,000 Expenditures (kr.) 43,821 47,885 50,204 57,746 Energy (10 MJ) ,246 3, , % 0, %, % % % 1. Fd Alchl, Sft Drinks, Tbacc 3. Husing \ Aut Fuel + Oil Aut Purchase + Maintenance Clthing Residential Energy Public Transp Recreatin , 3 ' " Medical, Persnal Care TOTAL Number members Number husehlds Energy Intensity (MJ/kr)

37 d. Cmparisn with the United States. Unfrtunately an energy analysis has nt yet been cmpleted n the U.S. Bureau f Labr Statistics Cnsumer Survey f Fr cmparisn, the mst suitable U.S. results are Herendeen and Tanaka's based n The basic prblem is t cnvert 1961 dllars t 1973 krner. There are at least tw pssible paths: 1. Cnvert 1961 dllars t 1973 dllars using the U.S. cnsumer price index, and 1973 dllars t 1973 krner using the exchange rate fr Cnvert 1961 dllars t 1961 krner with the 1961 exchange rate, and 1961 krner t 1973 using the Nrwegian cnsumer price index. Path 1 gives 1 kr. (1973) = $0,118 (1961), while path 2 gives 1 kr. (1973) = $0,076 (1961). This is a large difference. The average f the tw is $0,097 (1961) and this is runded t 1 kr. (1973) = $0.10 (1961). This bviusly imprecise cnversin allws the cmparisn f the all-u.s. and all-nrway energy vs expenditure curves shwn in Figure 6. A secnd prblem in this cmparisn, by nw well-knwn amng energy analysts, is the treatment f electricity. In the U.S. abut 5/6 f the electricity (in 1961) was fssil-fuel prduced. In Nrway in 1973, 99.8% was hydr. In the U.S. study ttal energy therefre includes a multiplier f apprximately 3 fr mst f the electricity. In Nrway the multiplier is 1. There is n unique way t cnvert ne t the ther t cmpute ttal energy (which is ne indicatin f the futility f trying t add tgether different kinds f energy). Tw pssibilities are t multiply the Nrwegian electricity by 3, r t divide the U.S. fssil electricity by 3. These give widely different results because a much greater prtin f Nrway's energy budget is electricity. 27

38 1 1 CO 0> <r CM \ \ O K) CM UJ -I UJ \ ^ CO r r CM 0) t/> 1 H X> cd H H <D C C O O H OJ,* T3 <D t </> r>«rt \ O 1 i-h CD V) +> \ \ CO \ v O) \ \ \ \ c \ \ >* \ \ IO \ \ S \ v UJ \ \ UI < CO 3 \ \ \ \ r ui UJ u -I UJ ^^ 3 t/> in h d <x> u O i ( r i i CO O <r CO D 1 t- 9 i-h c e * 3 a> r > a> e x O M CM ** e cd CO 00 UJ e H er 2 4-> 3 U cx K 6 z (1) O +J 2 u +-> UJ < CL X t/) UJ GO H i-h 3 sd -> en H i-h - c 6 «-» O X p*?h a> CO cm +j CD > t/> 03 t/> t/> X +J > * 00^ c M 3 -H a> </> cd c a> -M UJ CO c OJ vo 3 X bus CD fn M J= U. p > J_ CVJ CD IO CM 0) ( PIN g 0l) A9U3N3 c r

39 Frm Figure 6 ne sees that multiplying Nrway's electricity by 3 makes Nrway rughly as energy intensive as the U.S., while instead multiplying the U.S. fssil electricity by 1 leaves Nrway abut 50% less energy intensive. It is felt that the latter ptin is mre sensible, since it des nt penalize Nrway fr its widespread use f electric space heating. In this case the cmparisn shws each cuntry n a rather similar trajectry, but with different slpe, and with the U.S. farther alng ("richer"). The greater slpe fr the U.S. implies that Nrway is able t btain the same amunt f cnsumer prduct fr significantly less energy; i.e., is mre "energy efficient." This result is nthing new, certainly. A very detailed cmparisn f Sweden and 2 the U.S. has shwn why this is true fr that cuntry, and similar factrs - particularly small cars and gd insulatin - are present in Nrway. In cnclusin, the reader is reminded f the tw prblems in this cmparisn. First, the Nrwegian cnsumer survey gave incmplete cverage t increases in assets, and sednd, the amunt and type f state-supplied services are different in Nrway. Neither f these has been crrected fr here. 4. CONCLUSIONS With the framewrk and limitatins f this analysis f husehld cnsumptin in Nrway in 1973, these cnclusins result: a. Mre than half f the energy requirements due t persnal cnsumptin expenditures are indirect, i.e., frm the purchase f nn-energy prducts. When this is accunted fr, there is much less tendency twards saturatin ("leveling-ff") f the graph f energy requirements vs. expenditures fr 29

40 a husehld, than is expected n the basis f energy prducts alne. There is, hwever, sme saturatin. The fractin f the ttal energy requirement, that is direct energy purchases (residential and autmbile), varies frm 66% fr the lwest expenditure grup (expenditures abut 7,000 krner per year) t 31% fr the highest expenditure grup (averaging 108,000 krner per year). These cnclusins are very similar t thse fr the United States based n Ref. 1. b. There is weak evidence fr increasing husehld energy intensity (MJ per krner spent) with increasing number f members; the difference invlved is arund 10% at mst. c. There is much strnger evidence that the urban husehld spends its mney in a manner that is abut 10% less energy intensive than that f the rural husehld. Again, a similar cnclusin applies t the U.S. d. Cmparisn f the energy-expenditure graphs fr the U.S. and Nrway (fr tw very different years, 1961 and 1973) shws the graphs t be very similar in shape but with different slpes. Nrway uses less energy per unit f persnal cnsumptin. It is suggested that the cnclusins have the fllwing implicatins: a. If relative prices f energy and nn-energy gds stay cnstant, the crss-sectinal data frm this single year can, with sme cnfidence, be used t "predict" the energy requirements f husehlds as they increase their incmes. b. Under rather stringent assumptins f price elasticity and the way in which industry will pass thrugh increased csts, ne can use the data in this reprt t evaluate the relative hardship felt by different husehld expenditure classes due t energy price increases. Certainly

41 . prduces a better estimate than attentin nly t direct energy cnsumptin. This wuld apply t the use f energy taxes, which are mre cmmn (and larger) in Nrway than the U.S. c. The result f the urban-rural cmparisn, which agrees with a similar study in the U.S. disagrees with the cmmnly-held view that cities are mre resurce- intensive per capital than rural areas. A mre cmplete energy-accunting scheme and a careful definitin f "resurces" are needed. In clsing it is advisable t respnd briefly t criticism already received. These cver bth methdlgical questins and mre fundamental philsphical nes: 1. Criticism: By stressing husehld cnsumptin ne places t much emphasis n cnsumer chice and especially n the rle f individuals. Respnse: As stated befre, perhaps this slant is mre apprpriate t the U.S. But in any case results must be presented in term f individuals r husehlds since this is the basis fr either cnsumptin behavir r plitical chice. 2. Criticism: The predictins mentined here are much better dne with detailed data n elasticities f energy demand in many different uses Respnse: This is crrect, but there are n data detailed enugh t be used fr a wide spectrum f cnsumer prducts. This was dne in the Frd Fundatin Reprt, A Time t Chse, but there were 9 sectrs in the mdel, nly 4 f which were nn-energy cmmdities. 3. Criticism: There is s much urban infrastructure, bth bvius and mre subtle, that the urban-rural cmparisn here is t limited. City dwellers ught t be allcated an especially large prtin f the gvernment ' s energy budget 31

42 Respnse: This is pssible but the study which the cmment implies needs t be careful, as simple appraches apparently give a surprising result. In Nrway this is further cmplicated by the rather large infrastructure t maintain transprtatin and cmmunicatin links t islated cmmunities, especially in the winter. The urban - rural issue is a ppular ne, but the results nw simply are nt gd enugh yet. 4. Criticism: The whle apprach is market-based, r at least based n measurable mnetary transactins. In Nrway in particular there are many peple living utside the market, (and utside the cities), prducing much f their fd, bartering (t avid being taxed) fr a large prtin f their services. Accrding t the analysis here they use relatively little energy, which is true, but it is incrrect t imply they are pr in terms f their cnsumptin f gds and services. Respnse: This is prbably right. In Trndheim, Nrway, ne can lk ver the rf tiles f the city (under which market-based peple live), acrss 16 kilmeters f fjrd t the farms f Fsen. It is plausible that such peple live partially utside the market, r if nt them, mre likely the very islated peple n the Nrwegian West Cast. Such examples are much rarer in the U.S., but they are wrth studying. 32

43 5. APPENDIX. Uncertainty analysis. The technique is identical t that used in Ref. 1. Energy is btained frm a sum f prducts f energy intensity times expenditures E = 55 I e. Y., where e. = enenergy intensity x x i=l and Y. = expenditure. Assuming indepencence f uncertainties, we have J ~~ r /l (Ae.) Y. + Z. (AY.) (... AE y i i l l (A-l) L I e. Y. i i where Ae. = uncertainty in e., etc. l l Fr the Nrwegian data there are n gd figures fr uncertainty in e. They are estimated thus: Intensities are classified int 3 categries (best, middle, wrst) based n hw their direct energy was evaluated (which is knwn frm Ref. 4) and the authr's subjective judgment. In general the least uncertain are thse fr actual purchase f energy such as hme heat and light, while the mst uncertain are fr services such as restaurants, htels and mving expenses. In the end values fr these uncertainties are guessed: 5%, &, and 30%, respectively, as listed in Table 1. It is likely that these are rather cnservative (i.e., t large). 12 Supprting this view is recent wrk which, n the basis f Mnte Carl simulatin, shws that many f the data errrs in the input-utput technique strngly tend t cancel in the cmputing f energy intensities. Cuntervailing this view is the bservatin that the 55 cnsumptin categries are still very brad and a given expenditure within ne f them 33

44 , may be atypical. (Fr example, ne husehld may buy caviar, and anther sardines; bth fit int cnsumptin categry 5, "canned fish and meat." ) Uncertainty in expenditures is assumed t be prprtinal t 1/i/fT, where N is the number f husehlds in the grup. Standard deviatins fr mst f the cnsumptin categries are given fr the entire ppulatin f 3363 respndent husehlds in Ref. 3, Table 3. Calling these p. AY. l Y. l = /3363 P i J N Equatin A-l is used t calculate the percentage uncertainties in energy given in this reprt. T be exact the assumptins als require an uncertainty in the ttal expenditure, but these are nt included r shwn n the graphs. 6. ACKNOWLEDGEMENTS The authr gratefully acknwledges the help f many rganizatins in Nrway, as fllws: Nrwegian Cuncil fr Scientific and Industrial Research (fellwship supprt). At the Nrwegian Institute f Technlgy: Institute f Ecnmics (hspitality and research supprt), Organizatin fr Technical and Industrial Research - SINTEF (research supprt), and Cmmittee fr Envirnmental Studies (research supprt). Cuncil n Envirnmental Studies at the University f Osl (research supprt and hspitality). Nrwegian Central Bureau f Statistics in Osl (data and interpretive assistance.) He especially thanks these individuals: Bj^rn Rsen and

45 and Nils Raestad (student assistants); Knut Bryn (Cmmittee n Envirnmental Studies in Trndheim) ; Paul Hfseth (Cuncil n Envirnmental Studies in Osl); Olav Bjerkhlt, Svein Lngva, Jan-Erik Blaalid, and Petter Lngva (Central Bureau f Statistics), Tusen takk t Lars J0rgen Vik, Trndheim, wh frced the authr t try t speak Nrwegian. 35

46 REFERENCES 1. R. Herendeen and J. Tanaka, "Energy Cst f Living," Energy 1, 165 (1976). 2. L. Schipper and A. J. Lichtenberg, "Efficient Energy Use and Weil-Being: The Swedish Example," Science 194_, 1001 (1976). 3. " FrbrukerundersgSke 1 se 1973, "(Survey f Cnsumer Expenditures, 1973.) Publicatin A 705, Central Bureau f Statistics, Osl, (All tables and mst f the text are in bth Nrwegian and English.) Use was als made f the raw data tape, cntaining all infrmatin n the 3363 husehlds, which is available frm the Central Bureau f Statistics. 4. R. Herendeen, "Energy Cst f Gds and Services in Nrway, 1973." Reprt, Institute f Scial Ecnmics, Technical University f Nrway, Trndheim, September, Survey f Current Business, "Persnal Cnsumptin Expenditures in the 1963 Input-Output Study," January, I. Heningsen, letter t Harald Opheim, 3 September, 1976, frm Central Bureau f Statistics (reference number IHe/SOw, with 2 attachments). T crrec t errrs tw mdificatins f the data tape were later perfrmed by Heningsen, resulting in Tape N. 3 which was used in this study. 7. Natinal Accunts. The surce fr 1973 was the 1973 Hvedbk, a cmputer printut n file at the Central Bureau f Statistics, Osl. 8. "Nasjnal Regnskaps Kntplan " (Structure f the Natinal Accunts). An internal dcument f the Central Bureau f Statistics (whlly in Nrwegian) Bjerkhlt, N. Furunes and S. Lngva, "Mdis IV, Dkumentasjnsntat nr. 4, variabelspesifikasjner g lister," 10 74/42 (Nrwegian) Central Bureau f Statistics, September J. Shiskin, "Updating the Cnsumer Price Index - an Overview." Mnthly Labr Review, July, Energy Plicy Prject, A Time t Chse, Cambridge, Ballinger Publishing Cmpany, Clark W. Bullard, Dnna L. Amad, Dan L. Putnam, and Anthny V. Sebald, "Stchastic Analysis f Uncertainty in a U.S. Input-Output Mdel," Dcument N. 208, Center fr Advanced Cmputatin, University f Illini Urbana, IL , September

47 13. "Elektrisitetsstatistikk 1973," Dcument A710, Central Bureau f Statistics, Osl, All the tables and mst f the text are in bth Nrwegian and English. 14. B. Rsen, "Energianalyser," (Student prject in energy analysis), Cmmittee fr Envirnmental Studies, University f Trndheim, Spring, 1976 (in Nrwegian). 37

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