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Canada’s Energy Transition: Historical and Future Changes to Energy Systems – Update – An Energy Market Assessment

A transport train travels towards the camera through a snowy forest on a winter day.

4. Energy and Emissions in Canada

Energy Production in Canada

Canada is one of the largest energy producers in the world. Canada’s large landmass, paired with diverse geography and geology, allows for numerous types of energy production. Canada is currently ranked the sixth-largest crude oil producer and the fifth-largest natural gas producer in the world. Canada is also the second-largest hydroelectricity producer in the world and is ranked seventh with respect to installed wind power capacity.

Canada is also a large net exporter of energy; exporting production that is surplus to the current and future needs of Canadians. In 2017, Canada’s net energy exports were valued at $71.4 billion.

Energy Use in Canada

Canada is one of the largest consumers of energy globally when measured as a ratio to economic activity. Figure 6 illustrates that Canada’s energy intensity is second among OECD nations at 7.70 MJ per $2011 GDP. The global average for energy intensity is 5.36 MJ per $2011 GDP, while the OECD average is 4.66 MJ per $2011 GDP.

Figure 6: Energy Intensity for OECD Economies and Select NICs, 2015

Source: World Bank

Description:

This column chart illustrates the energy intensity (as measured by MJ per $2011 GDP) for OECD nations and select newly industrialized countries (NICs). Iceland ranks the highest for energy intensity at 18.18 MJ per unit of GDP, while Canada ranks second for OECD nations at 7.70 MJ per unit of GDP. The world average is 5.36 MJ per unit of GDP. When NICs are included in the comparison, Canada is bookended by Russia at 8.19 MJ per unit of GDP and China at 7.43 MJ per unit of GDP.

In addition to a cold climate and dispersed population, Canada has a relatively large industrial base, a growing energy producing sector, a low cost of energy, and a very high standard of living. These factors all contribute to Canada’s high energy intensity.

GHG Emissions in Canada

COAL PHASE-OUTS IN CANADA

Ontario was the first jurisdiction in North America with a significant reliance on coal for electricity generation to phase out its use. Between 2003 and 2014, coal went from providing 25% of Ontario’s electricity supply mix to 0%. The closure of 19 units totaling 8 800 megawatts (MW) was replaced with the return of two nuclear units at Bruce Power, new natural gas-fired generation facilities, and over 5 500 MW of new non-hydro renewables.

Alberta has committed to end emissions from coal-fired generation facilities by 2030 under its Climate Leadership Plan. The plan also involves coal-to-gas conversions and a 30% target for generation from renewable sources by 2030. In fall 2016, the Government of Canada announced an accelerated phase out of traditional coal-power.

In 2017, 47% of Alberta’s electricity was from coal-fired generation.

ECCC has estimated Canada’s 2017 GHG emissions at 716 MT of CO2e. Canada’s GHG emissions peaked in 2007 at 745 MT of CO2e. This decline in emissions can be attributed largely to two factors: the phase-out of coal-fired electricity in Ontario and the economic slowdown that resulted from the 2008 financial crisis and recession.

As shown in Figure 7, the largest contributor to GHG emissions in Canada is the oil and gas sector (195 MT of CO2e in 2017), followed by the transportation sector (174 MT of CO2e). Emissions from the oil and gas sector are largely from the consumption of natural gas used in the oil sands for bitumen production and upgrading, and for natural gas production and processing.

Figure 7: GHG Emissions by Sector in Canada, 1990 – 2017

Source: ECCC – National Inventory Report 1990-2017

Description:

This stacked column chart illustrates the largest components of the source for GHG emissions in Canada.
Note: The “Others” category includes: agriculture, waste, coal production, and light manufacturing

Emissions from the transportation sector are from the consumption of gasoline and diesel—the two fuels that power over 95% of Canada’s auto fleet. Diesel fuel also provides the energy for the majority of Canada’s freight transportation, including trucking and rail.

The Kaya Identity, Energy Intensity, and Emission Intensity

The link between emissions and energy consumption can be examined through the Kaya identity.Footnote 25 The Kaya identity states that the level of GHG emissions are connected through four factors: population, economic activity (real GDP per capita), energy intensity (energy use per GDP), and GHG intensity (GHG emissions per energy use). Using 1990 as a base year, Figure 8 illustrates the link between these factors. Between 1990 and 2017, real Canadian GDP per capita increased 39% while energy intensity decreased by 29% and GHG emissions per unit of energy decreased 9%. Emission intensity (GHG emissions per GDP) decreased by 35%. Though not a Kaya identity component, emission intensity is an important metric nevertheless.

Figure 8: Index of Economy, Energy, and Emissions Factors in Canada, 1981 – 2017

Source: Statistics Canada (Tables 25-10-0004-01, 25-10-0029-01, 36-10-0222-01, 17-01-0005-01), ECCC – National Inventory Report 1990-2017, NEB calculations

Description:

The line chart illustrates various Kaya factors for Canada between 1981 and 2017. The numbers are displayed as an index using 1990 as a base year.

Note: GHG emissions figures for Canada are only available starting in 1990.

A structural shift in the Canadian economy, and improvements in energy efficiency, are responsible for this decline in Canada’s energy and emission intensity.Footnote 26 The structural shift was the result of significant economic growth from Canada’s commercial and institutional sector. While Canada also experienced significant economic growth from more energy-intensive industries, particularly the oil sands, the growth in contribution to GDP was considerably more from the less energy-intensive commercial and institutional sector relative to the industrial sector. Footnote 27 Energy efficiencyFootnote 28 effects were largest in the residential and passenger transportation sectors.

Figure 9: GHG Emissions by Country: Intensity and Per Capita, 2015

Source: CAIT Climate Data Explorer

Description:

These two column charts illustrate GHG emissions intensity and GHG emissions per capita for OECD nations and select NICs in 2015. Canada ranks third for OECD nations, and fifth when including NICs for emissions intensity. For every million dollars of GDP, Canada emits 488 tonnes of CO2e. China has the highest emissions intensity at 684 tonnes of CO2e per million dollars of GDP, while Switzerland has the lowest at 103 tonnes of CO2e per million dollars of GDP. The global average is 447 tonnes of CO2e per million dollars of GDP.

When comparing emissions per capita, Canada ranks second highest at 21.0 tonnes of CO2e per person. Australia ranks the highest at 25.1 tonnes of CO2e per capita, and India ranks the lowest at 2.4 tonnes of CO2e per capita. The global average is 6.3 tonnes of CO2e per capita.

Though Canada’s energy and emission intensities have declined over the years, Canada remains one of the most emission intensive nations in the world. This is evident when emissions are compared against GDP or population, as illustrated in Figure 9. However, as Canada continues to use fuel and electricity more efficiently, and as lower-intensity industries grow, the trend of declining energy and emission intensities is expected to continue.

 

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