Use of Fuels in the Productivity of Ecuadorian Companies: Assessment of Their Impact on Climate Change

Abstract

This article aims to analyze the relationship between fuel consumption (gasoline, diesel, and Liquid Petroleum Gas (LPG) and total production in Ecuadorian companies that use some fuel in their processes, in addition to quantifying the CO₂ emissions generated by these fuels in 2019. For this purpose, a correlational study of these variables (Pearson’s correlation coefficient) has been made, using statistical data from the ENESEM 2019 Structural Enterprise Survey, prepared by the National Institute of Statistics and Census (INEC). The results show that the relationship between the consumption of Extra gasoline and Ecopais with total production is not significant, while it is in the case of consumption of Super gasoline, Diesel, and LPG. As for CO₂ emissions, it is observed that the largest generator is diesel, with almost 4.5 megatons per year, second to gasoline, with a little less than 2 megatons, and finally is LPG, with less than 0.5 megatons. In conclusion, LPG fuel, whose association with total production is the most significant, is the least polluting and in total these business sectors generate almost 7 megatons of CO₂ per year of the total 40 megatons generated by the country.

1. Introduction

The global Agenda, known as “Agenda 2030”, sets out 17 Sustainable Development Goals (SDGs), which are the continuation of the Millennium Development Goals (MDGs), set by the United Nations in 2000 and which were already in force for 15 years [1]. In the 2030 agenda, climate change is considered a cross-cutting issue that affects the achievement of many other SDGs, making it one of the main challenges facing humanity today. Although there is a Sustainable Development Goal (SDG 13) entitled Climate Action, which simply points to the process of formulating policies on climate change, this goal is related to the vast majority of the other Goals, as all of them consider environmental protection in some way or another [2].

This climate action focuses on the reduction of Greenhouse Gases (GHG), which are “those gaseous components of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation”. (United Nations, 1992) The United Nations Framework Convention on Climate Change recognizes six: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and hexafluoride of sulfur (SF₆). Their abundance retains heat in the atmosphere, progressively increasing the planet’s temperature [3].

The Paris Agreement aims to strengthen the global response to the threat of climate change. In addition, to “enhance the ability of countries to address the impacts of climate change and to ensure that financial flows are consistent with low greenhouse gas (GHG) emissions”, the Paris Agreement aims to “enhance the capacity of countries to address the impacts of climate change and to ensure that financial flows are consistent with low greenhouse gas (GHG) emissions [3]”. According to the report of the United Nations Intergovernmental Panel on Climate Change (IPCC), global warming is directly attributed to human activities, to greenhouse gas emissions as a result of dependence on fossil fuels such as carbon dioxide and methane, This has generated an increase of 1.2 degrees Celsius in the planet’s temperature, with fossil fuels being considered the most polluting sources of energy (diesel and gasoline), as they are major generators of greenhouse gas (GHG) emissions.

Therefore, as a commitment in the context of “The United Nations Convention on Climate Change”, the document entitled Nationally Determined Contribution (NDC), published in 2019, “which incorporates more than 150 institutions from the public sector, private sector, academia, civil society and other cooperation agencies with more than 1000 participants”, was prepared [4].

The massive use of fossil fuels constitutes the bulk of the exosmotic energy used by humans (and the obtaining of endosomatic energy -that of food-) [5]. For this reason, since the end of the 20th century, there has been growing concern about the environmental impacts of the massive burning of fossil fuels and, above all, their effects on climate change. “The activities that generate greenhouse gases are diverse, but today the most important factor is undoubtedly the emission of CO₂ associated with energy production” [5].

For this reason, since the end of the 20th century, there has been growing concern about the environmental impacts of the massive burning of fossil fuels and, above all, their effects on climate change. “The activities that generate greenhouse gases are diverse, but today the most important factor is undoubtedly the emission of CO₂ associated with energy production” [6]. Regardless of the size of the company, or the activity to which it is dedicated, it must measure the impact produced by its production and production processes, such as energy consumption, fuel consumption, mobility, waste, suppliers, etc. to reduce the carbon footprint.

Gasoline, diesel, and LPG are used in human activities. These fuels are expressed in units of measurement according to the time it takes for each fuel to detonate, i.e., the anti-knock capacity of the fuel in the engine and, to a certain extent, the quality of the fuel. These units of measurement can be octane in the case of gasoline and LPG and cetane in the case of diesel.

In Ecuador, the octane rating of extra gasoline is between 85 and 87 octanes, while super registers between 90 and 92 octanes. By mixing gasoline with different octane ratings, an average octane rating of 88 octane is obtained [7]. According to experts, there is no major difference between extra and Ecopaís. Both have 85% octane, but Ecopaís has 5% ethanol and Ecopaís does not, and the latter is more polluting [8]. Gas is also measured in octanes, and has an octane rating of 110 octanes, both LPG and NGV [9]. Likewise, diesel is expressed in cetanes, being of better quality the higher the octa-nage or cetane rating of the fuel [10].

Hence, the energy sector is the largest contributor to the carbon footprint through GHG emissions from power generation. In fact, around 78–80% of the annual CO₂ emitted on the planet originates from the burning of fossil fuels (IPCC, 2014). In this way, and due to the sustained trend of increasing energy consumption, countries face a titanic task to control and reduce gas emissions that contribute to climate change [11]. One liter of gasoline emits 2.37 kg of CO_2, and one liter of diesel emits 2.65 kg of CO₂ [12]. While 1 L LGP emits 1.7 kg of CO₂ [13].

The objective of this work is to examine the use of fuels by each of the business sectors, their relationship with productivity, and their impact on GHG generation. For this purpose, the National Standard Industrial Classification ISIC 4 Revision is considered [14]. ISIC: which classifies entities according to the main economic activity they perform. It is based on inputs of goods, services and factors of production. The process and technology of production. The characteristics of the products. The categories of each level of the classification are mutually exclusive [14].

2. Materials and Methods

The research is of the documentary type “Documentary research is a process based on the search, recovery, analysis, critique, and interpretation of secondary data; that is, data obtained and recorded by other researchers in documentary sources: printed, audiovisual or electronic” [15], p. 27. In this case, an inquiry is made of INEC statistics, published according to the Structural Business Survey ENESEM of 2019, which is the most recently published.

It has a quantitative approach “This approach is based on the measurement of the characteristics of phenomena, (…). The obtained data can be interpreted are quantifiable; therefore, it can be measured” [16], p. 75. The study will measure the variables of gasoline, diesel, and LPG consumption and their association with the total production of each business sector according to the CIUU classification, as well as the measurement of CO₂ emissions generated by the amount of fuel used.

The study takes into account data provided by INEC of Ecuador in the Business Structural Survey “The ENESEM generates statistical information on the structure and evolution of economic activities categorized according to sections of the International Standard Industrial Classification (ISIC) for large and medium-sized companies in Ecuador” [17].

Table 1. CIIU Classification.

Activity

Agriculture, livestock, forestry, and fishing. Mining and quarrying. Manufacturing industries Electricity, gas, steam, and air conditioning supply. Water distribution; sewerage, waste management, and sanitation activities. Construction Wholesale and retail trade; repair of motor vehicles and motorcycles. Motor vehicles and motorcycles. Transportation and storage. Accommodation and food service activities. Information and communication. Financial and insurance activities. Real estate activities. Professional, scientific and technical activities. Administrative and support service activities. Public administration and defense; compulsory social security schemes. Education Human health care and social work activities. Arts, entertainment, and recreation Other service activities Activities of households as employers; undifferentiated activities of households as producers of goods and services for own use Activities of extraterritorial organizations and bodies.

shows the sectors according to this classification, which are 21 sectors in total, noting that the ENESEM considers a total of 17 sectors, excluding those identified in the following: A-Agriculture, livestock, forestry and fishing, O-Public administration and defense, T-Activities of households as employers, non-differentiated activities of households as producers of goods and services for own use, and U-Activities of extraterritorial organizations and bodies.

Likewise, the study calculates business productivity, i.e., the relationship between the use of resources in general (in this case, the factors used will be the fuel units) and the product obtained (in this case, the total production of each business sector), which is tabulated. For a better understanding of the behavior of the variables, combined graphs are presented to visualize the two variables (consumption and productivity) simultaneously. These tables and graphs are processed in Microsoft Excel.

$$\mathrm{Productivity}=\frac{\mathrm{Production}\mathrm{obtained}}{\mathrm{Factors}\mathrm{used}}$$

The scope of the study is correlational, “the purpose of this type of study is to determine the relationship or degree of association between two or more concepts, categories or variables in a particular context” [18], p. 93.

Pearson’s correlation coefficient indicates how closely two variables are associated with each other, with values between −1 and 1. The closer it is to −1, the more closely it refers to a perfect negative correlation. The closer it is to 1, the more it refers to a perfect positive correlation. On the other hand, values close to O (zero) imply that there is no association between the variables studied [19].

This implies that the Pearson correlation coefficient allows us to know if there is any relationship between two variables. It also reveals, in what sense does that correlation occur, and finally, how strong is that correlation; if it is high or if it is low.

The formula for the coefficient is:

$$\mathrm{r}=\frac{\mathrm{n}\left(\sum \mathrm{xy}\right)-\left(\sum \mathrm{x}\right)\left(\sum \mathrm{y}\right)}{\surd [{\mathrm{n}\sum \mathrm{x}}^2-(\sum \mathrm{x}{)}^2][{\mathrm{n}\sum \mathrm{y}}^2-(\sum \mathrm{y}{)}^2]}$$

where

• r = Pearson Coefficient
• n = number of the pairs of the stock
• ∑xy = sum of products of the paired stocks
• ∑x = sum of the x scores
• ∑y = sum of the y scores
• ∑x² = sum of the squared x scores
• ∑y² = sum of the squared y scores

In this study, the variables to be correlated would be the consumption of each of the fuels (Super gasoline, Extra gasoline, Eco-País gasoline, diesel, and LPG) with the total production of each business sector.

For this purpose, the hypotheses are tested. Although the contrast is made for the relationship for each type of fuel, in general, the hypotheses are presented below:

• Hypothesis 0 (H0): There is no relationship between fuel consumption and total company production.
• Hypothesis 1 (H1): There is a relationship between fuel consumption and the companies’ total production.

The 95% confidence level is used, so the significance level of 0.05. That is to say that if p < 0.05, the null hypothesis Ho is rejected, so the correlation between the variables is significant. Otherwise, if p > 0.05, the null hypothesis is accepted, and we can affirm that the correlation is significant. This coefficient is processed with the Statistical Package for Social Sciences (SPSS).

3. Results

Initially, the information obtained from the ENESEM is presented, considering each of the business sectors, the amount of fuel consumed, and total production (see

Table 2. Quantity of fuels and total production of companies in Ecuador.

Description	No. of Companies	Super Gasoline (Gallons)	Extra Gasoline (Gallons)	Gasoline Ecopais (Gallons)	Diesel (Gallons)	Liquefied Petroleum Gas (LPG) (Kilograms)	Total Production ($)
National Total	14,430	20,562,813	159,443,506	36,846,092	445,081,098	149,501,808	91,206,649,683
Mining and quarrying	193	366,016	1,207,673	20,529	117,501,306	11,398,016	11,258,436,486.40
Manufacturing industries	1927	3,238,974	26,216,352	1,074,321	112,871,957	113,386,737	32,403,954,633.64
Electricity, gas, steam, and air conditioning supply	39	164,306	1,738,937	15,167	29,753,262	-	3,940,282,129.00
Water distribution; sewerage, waste management, and sanitation activities	89	549,597	108,527,128	82,966	32,034,836	519,673	1,232,272,581.08
Construction	789	1,419,771	3,196,835	301,007	41,608,949	17,999	3,793,344,190.57
Wholesale and retail trade; repair of automotive vehicles and motorcycles	7486	10,558,487	11,207,790	1,287,107	31,855,493	5,972,016	14,663,108,137.12
Transportation and storage	906	911,879	1,283,093	33,031,042	54,463,114	275,555	5,268,300,219.10
Accommodation and food service activities	344	473,422	129,514	206,097	1,770,984	14,660,407	1,742,412,612.25
Information and communication	249	429,892	460,755	82,975	913,158	4053	4,780,503,064.52
Financial and insurance activities	56	109,663	53,472	34,118	10,359	-	2,389,789,840.48
Real estate activities	240	55,844	295,994	183,616	813,865	811,226	883,609,652.24
Professional, scientific and technical activities	723	367,398	888,491	103,306	2,193,843	224,057	2,079,969,501.72
Administrative and support service activities	551	1,021,479	1,852,865	366,263	15,311,566	451,912	2,154,560,505.98
Teaching	362	541,563	1,910,185	28,252	410,818	35,998	1,886,461,589.61
Human health care and social welfare activities	354	113,916	256,237	28,941	1,716,796	1,427,940	2,210,131,806.67
Arts, entertainment, and recreation	61	135,953	64,818	388	1,197,098	136,402	303,808,561.80
Other service activities	61	104,652	153,368	-	653,694	179,815	215,704,170.97

).

As shown in Figure 1, the bulk of Ecuador’s companies belong to the wholesale and retail trade sector, which account for 50% of the total, followed by the manufacturing sector, which accounts for just over 13% of the total number of companies.

Productivity is found by dividing total production by the consumption of each of the fuels. Therefore, it is expressed in dollars per gallon of fuel consumed (See

Table 3. Quantity of productivity of companies in relation to fuel consumption.

Description	Super Gasoline (Gallons)	Extra Gasoline (Gallons)	Gasoline Ecopais (Gallons)	Diesel (Gallons)	Gas (LPG) (Kilograms)
Mining and quarrying	30,759	9322	548,416	96	988
Manufacturing industries	10,004	1236	30,162	287	286
Electricity, gas, steam, and air conditioning supply	23,981	2266	259,793	132	3,940,282,129
Water distribution; sewerage, waste management, and sanitation activities	2242	11	14,853	38	2371
Construction	2672	1187	12,602	91	210,753
Wholesale and retail trade; repair of automotive vehicles and motorcycles	1389	1308	11,392	460	2455
Transportation and storage	5777	4106	159	97	19,119
Accommodation and food service activities	3680	13,453	8454	984	119
Information and communication	11,120	10,375	57,614	5235	1,179,497
Financial and insurance activities	21,792	44,692	70,045	230,697	2,389,789,840
Real estate activities	15,823	2985	4812	1086	1089
Professional, scientific and technical activities	5661	2341	20,134	948	9283
Administrative and support service activities	2109	1163	5883	141	4768
Education	3483	988	66,773	4592	52,405
Human health care and social welfare activities	19,401	8625	76,367	1287	1548
Arts, entertainment, and recreation	2235	4687	783,012	254	2227
Other service activities	2061	1406	215,704,171	330	1200

).

Figure 2 shows that the sector with the highest consumption of super gasoline is the Wholesale and retail trade; repair of motor vehicles and motorcycles, with a little more than 10 million gallons per year, with a productivity of less than 1500 dollars per gallon, The next largest sector in terms of super gasoline consumption is the manufacturing industry, with more than 3 million per year, however, its productivity is approximately US$10,000 per gallon. There are also four sectors with low consumption and high productivity such as mining and quarrying, electricity, gas, steam and air conditioning supply, financial and insurance activities, and human health care and social work activities.

It can be seen in Figure 3 that the sector with the highest consumption of extra gasoline is water distribution and sewerage waste management and sanitation activities, with more than 100 million gallons per year, but with an almost zero productivity of 11 dollars per gallon, in second place is the manufacturing industry sector, with a consumption of more than 20 million gallons, also with very low productivity of just over $1000 per gallon, there are also sectors with high productivity such as Financial and insurance activities and Accommodation and food service activities.

As shown in Figure 4, the largest consumer of gasoline Ecopais, is the Transportation and warehousing sector, with a little over 30 million gallons, and with very low productivity of less than $150 per gallon, followed by the Wholesale and retail trade sector; repair of motor vehicles and motorcycles. However, the consumption of Ecopais gasoline is negligible with almost 1.3 million gallons, while the most productive sectors are the arts, entertainment and recreation, mining and supply of electricity, gas, steam, and air conditioning. The other service activities sector does not use this type of fuel.

Figure 5 shows that the main consumers of diesel are the Mining and quarrying sector and the Manufacturing sector, with more than 100 million gallons each, but with very low productivity that does not reach 300 dollars per gallon. While financial and insurance activities have high productivity since their consumption is negligible.

Figure 6 shows that the sector with the highest LPG consumption is the manufacturing industry; however, its productivity does not reach $300 per gallon. While the sector with the highest productivity is Information and communication with approximately 1,200,200 dollars per gallon. The sectors of electricity, gas, steam and air conditioning supply and financial and insurance activities do not register any consumption of this fuel.

After this univariate analysis, a correlational analysis of the consumption of each type of fuel and the total production of each sector is performed.

First Contrast of hypotheses

Hypothesis 0 (H0):

There is no relationship between super gasoline consumption and firms’ total production.

Hypothesis 1 (H1):

There is a relationship between the consumption of super gasoline and the total production of the companies.

Table 4. Correlation coefficient between super gasoline consumption and total production.

Correlations
		SUPER	PRODUCTION
SUPER	Pearson correlation	1	0.536
	Sig. (bilateral)		0.026
	N	17	17
PRODUCTION	Pearson correlation	0.536 *	1
	Sig. (bilateral)	0.026
	N	17	17

* Correlation is significant at the 0.05 level (bilateral).

shows that p < 0.05 with a value of 0.026, which implies the rejection of the null hypothesis, revealing that there is a significant association between the consumption of super gasoline and total production.

Second Contrast of hypotheses

Hypothesis 0 (H0):

There is no relationship between the consumption of extra gasoline and the total production of the firms.

Hypothesis 1 (H1):

There is a relationship between the consumption of extra gasoline and the total production of the companies.

Table 5. Correlation coefficient between extra gasoline consumption and total production.

Correlations
		EXTRA	PRODUCTION
EXTRA	Pearson correlation	1	0.103
	Sig. (bilateral)		0.695
	N	17	17
PRODUCTION	Pearson correlation	0.103	1
	Sig. (bilateral)	0.695
	N	17	17

shows that p > 0.05 with a value of 0.695, which implies accepting the null hypothesis, revealing that there is no significant association between the consumption of extra gasoline and total production.

Third Contrast of hypotheses

Hypothesis 0 (H0):

There is no relationship between the consumption of Ecopais gasoline and the total production of the companies.

Hypothesis 1 (H1):

There is a relationship between the consumption of Ecopais gasoline and the total production of the companies.

Table 6. Correlation coefficient between Ecopais gasoline consumption and total production.

Correlations
		ECOPAIS	PRODUCTION
ECOPAIS	Pearson correlation	1	0.033
	Sig. (bilateral)		0.899
	N	17	17
PRODUCTION	Pearson correlation	0.033	1
	Sig. (bilateral)	0.899
	N	17	17

shows that p > 0.05 with a value of 0.899, which implies acceptance of the null hypothesis, revealing that there is no significant association between Ecopais gasoline consumption and total production.

Fourth Contrast of hypotheses

Hypothesis 0 (H0):

There is no relationship between diesel consumption and the total production of companies.

Hypothesis 1 (H1)：

There is a relationship between diesel consumption and the total production of the companies.

As shown in

Table 7. Correlation coefficient between diesel consumption and total production.

Correlations
		DIESEL	PRODUCTION
DIESEL	Pearson correlation	1	0.773
	Sig. (bilateral)		0.000
	N	17	17
PRODUCTION	Pearson correlation	0.773 *	1
	Sig. (bilateral)	0.000
	N	17	17

* The correlation is significant at the 0.05 level (bilateral).

, p < 0.05 with a value of 0.000, which implies rejecting the null hypothesis, revealing that there is a significant association between diesel consumption and total production.

Fifth Contrast of hypotheses

Hypothesis 0 (H0):

There is no relationship between LPG consumption and the total production of the companies.

Hypothesis 1 (H1):

There is a relationship between LPG consumption and companies’ total production.

Table 8. Correlation coefficient between LPG consumption and total production.

Correlaciones
		GLP	PRODUCTION
GLP	Pearson correlation	1	0.899
	Sig. (bilateral)		0.000
	N	17	17
PRODUCTION	Pearson correlation	0.899	1
	Sig. (bilateral)	0.000
	N	17	17

Correlation is significant at the 0.01 level (bilateral).

shows that p < 0.05 with a value of 0.000, which implies the rejection of the null hypothesis, revealing that there is a significant association between LPG consumption and total production.

4. Discussion

Of the fossil fuels analyzed, LPG is the one that pollutes the least due to its composition, which responds to a lower octane rating.

In 2019 in Ecuador there was a total of 40 Megatons of CO₂ generated [20], see

Table 9. Calculation of Megatons of CO₂ generated.

Fuel	Conversion		Total Units Consumed in Original Unit of Measure	Total Units Consumed in Liters	Kg of CO2 Per Liter	Kg of CO2 Generated	Megatons of CO2 Generated
	Original Unit of Measurement	Liters
Gasoline (Gallons)	1	3785	216,852,411	820,873,117	2.37	1,945,469,286	1.95
Diesel (Gallons)	1	3785	445,081,098	1,684,809,988	2.65	4,464,746,469	4.46
GLP (kilograms)	1	1850	149,501,808	276,578,345	0.70	470,183,186	0.47
Total							6.88

.

Precisely in 2019, in accordance with the Paris Agreement, the Nationally Determined Contribution (NDC) is formulated, in which each country establishes the lines of action to contribute to the mitigation of climate change in different sectors. The Nationally Determined Contribution (NDC) is formulated for the Energy, Agriculture, Industrial Processes, and Waste sectors, based on an estimated GHG emission reduction potential of 20.9% in relation to the baseline scenario for 2025, subject to the support of international cooperation to implement the lines of action established in this conditional scenario [21].

Consequently, Corporate Social Responsibility is of vital importance, which “focuses on three aspects: care for the environment, the working conditions of its workers, and support for humanitarian causes”. [22]. In this sense, the International Organization for Standardization ISO 26000, “provides guidance to those who recognize that respect for society and the environment is a critical success factor” For companies and organizations. And the urgent intervention is in the care of the environment, with emphasis on the fight against climate change.

5. Conclusions

Consideration of Greenhouse Gases is important, since a large part of their generation is a consequence of human activity, especially the use of fossil fuels that produce Carbon Dioxide (CO₂), and that are gradually affecting the climate of the planet, increasing the temperature to levels that can become irreversible.

The results obtained with respect to the analysis of the variables of gas, diesel, and LPG consumption and total production of the 17 business sectors registered in the Structural Business Survey (ENESEM) correspond to the year 2019 and consider the companies classified as medium and large.

With respect to fuel consumption by each of the business sectors, it can be concluded that: In super gasoline, the sectors with the highest consumption are wholesale and retail trade, repair of motor vehicles and motorcycles, and the manufacturing industry. In extra gasoline, the sectors with the highest consumption are water distribution, sewage, waste management, and sanitation activities, as well as the manufacturing industry. In Ecopais gasoline, the sector with the highest consumption is transportation. Ecopais gasoline consumption and productivity and storage sector. In diesel, the sector with the highest consumption is the Mining and quarrying sector and the manufacturing industry sector. In LPG, the sector with the highest consumption is the manufacturing industry. It is noticeable that, in general, the manufacturing industries sector has shown higher productivity, when compared to sectors that also have a high consumption of fossil fuels.

Regarding the association between fuel consumption and total production, it can be noted that: with respect to gasoline, the correlation coefficients are positive, being significant for that of super gasoline, while those of extra gasoline and Ecopais are not significant, which implies that high consumption of the latter two types of gasoline is not associated with high production in the business sectors. The correlation index for diesel consumption is also positive and significant, which implies that if there is an association, the higher the diesel consumption, the higher the total production. In the case of LPG, the index is also positive and significant, revealing that there is an association, i.e., the higher the LPG consumption, the higher the production.

Regarding CO₂ emissions, it is observed that in 2019, the largest generator is diesel, with a little more than 4 megatons per year, followed by gasoline with a little less than 2 megatons per year, and finally LPG with less than 0.5 megatons per year. Consequently, LPG fuel, whose association with production is most significant, is the least polluting. The total CO₂ emissions of the analyzed sectors generate approximately 7 megatons of the total 40 megatons generated in the country in 2019.