Domestic versus foreign energy use: an analysis for four European countries

In order to adequately assess energy policies and set clear objectives, a key preliminary step is to know the energy use patterns of the different countries. This paper estimates the evolution of the total energy use over the period 1995-2015 in four European Union (EU) countries, the Czech Republic, Hungary, Italy, and Spain, representative of two different energy patterns, the "Southern" one and the "Eastern" one. For doing so, we employ a Multi-Regional Input Output (MRIO) model. In difference with previous studies, in addition to differentiate between domestic and foreign use we distinguish whether this energy is produced domestically or abroad. The results obtained show a certain convergence in energy intensity across the four countries examined because of the radical transformations experienced by the Czech Republic and Hungary. Nonetheless, energy intensities are still substantially higher in Eastern than in Southern countries which confirms that the first group of countries have still a long road to go, especially regarding the incentives that their industries have to use energy efficiently. Taking our decomposition of total energy use, the reductions in total energy use were mainly caused by a high decrease in the importance of the domestic use of energy produced domestically. At the same time, a growing importance of the role played by the energy produced abroad was observed. These trends confirm the great importance of global value chains and the steady internalization of energy use. This methodology could be further applied to other countries.