The relative importance of energy in each production activity may be characterized through its energy expenditure as a percent of the corresponding net output or value added, as shown in Table 1. Sectors with a high ratio of energy expenditures relative to value added include: refined petroleum products (79.27 percent), basic nonferrous metals (57.02 percent), basic iron and steel (53.86 percent), basic chemicals (42.93 percent), rubber products (40.56 percent), gas, electricity & steam (37.50 percent), and transportation and storage (35.32).

|**Table 2: CO2 coefficients for energy inputs, 2003**|
|---|
|**In millions of metric tons of CO2 emissions per billion rand of energy input**|
|Coal<br>34.25|
|Petroleum<br>0.84|
|Electricity & gas<br> 0.00|

_Notes:_ The small amount of emissions from gas is attributed to petroleum, given that the SAM combines electricity and gas into one sector. Households and producers are assumed to have the same CO2 coefficient for energy consumption.

_Source:_ Energy Information Administration (EIA) International Energy Annual, 2006, for emission data and SAF SAM 2003 for data on intermediate spending on coal and petroleum.

Table 2 shows the derived CO2 coefficients that are consistent with the CO2 emissions for each aggregate energy input (Figure 1) and the energy input expenditures in the 2003 SAM. The coefficients suggest how clean or dirty the production technology is for a particular energy source or input, the dirtiest being coal energy, the main energy input in South Africa.<sup>12</sup> In the SAM, electricity and gas are lumped together as a sector and input. Because the emissions arising from natural gas is very small, we combine its emissions into oil in our framework, so that electricity & gas sector mainly connotes electricity in terms of carbon content, thus isolating its key characteristic as energy in South Africa: electricity is relatively clean by itself, but it relies primarily on coal to generate the energy, emitting substantial amounts of CO2 indirectly.

12 Because of the lack of data, we do not adjust the energy expenditures by input and sector for relative prices and other factors in order to reflect more accurate energy quantities or equivalents. For a single country analysis, this is not as critical as in a multi-country comparison. Moreover, sectoral approaches to estimating energy quantities consistently understate the total level of CO2 emissions because of data issues. For example, for South Africa in 2004, IEA reports CO2 emissions of 421 million tons based on aggregate quantity of energy inputs and 343 million tons by the sectoral approach. For modeling purposes, the CGE database of the Global Trade Analysis (GTAP), version 6.0, from Purdue University, also provides emissions for South Africa by sector that total 299 million tons in 2001. Compared to the corresponding EIA number of 399 million metric tons based aggregate energy quantities, the GTAP numbers seem to be derived from EIA’s sectoral approach. In Table 2, the derived coefficients are applied uniformly except in two sectors - basic iron and petroleum, where adjustments were made to make them closer to the CO2 coefficients from sectoral approaches. For basic iron, the CO2 coefficient for coal is 12.65 and for petroleum it is 0.42. For petroleum, which is mainly imported, the CO2 coefficient for coal and petroleum is zero.

8