Improving Energy Performance in Canada – Report to Parliament Under the Energy Efficiency Act For the Fiscal Year 2009-2010

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Introduction

Natural Resources Canada's Efficiency and Alternative Energy Programs

According to the International Energy Agency, if energy efficiency policies had not been introduced 30 years ago, today’s worldwide energy consumption would be 50 percent higher.¹

Gains in energy efficiency have substantial benefits for society, the economy and the environment. Energy efficiency can add to the global security of energy supplies by reducing the need for energy. It saves consumers and businesses money by decreasing their energy bills without disruptions to their daily routine, and it can increase access to energy services by reducing their effective cost. Energy efficiency also positively impacts economic competitiveness and employment.

In particular, greater energy efficiency is used as a strategy to reduce carbon dioxide and other greenhouse gases (GHGs) and thereby help reduce the effects of climate change.

Natural Resources Canada (NRCan) emphasizes the promotion of energy efficiency and the use of alternative energy (i.e. alternative transportation fuels and renewable energy) as ways to reduce GHG emissions and improve the Canadian economy.

A complete list of NRCan’s efficiency and alternative energy (EAE) initiatives in 2009–2010 is in Appendix 1.

These initiatives engage Canadian society and all major sectors of the economy in new and more advanced approaches to secondary energy use – i.e. to the consumption of energy in the residential, commercial/institutional, industrial and transportation sectors.

NRCan’s EAE initiatives are managed by the following:

• the Office of Energy Efficiency, which delivers market transformation initiatives to improve energy efficiency and the use of alternative transportation fuels
  
  
• CanmetENERGY and the CANMET Mineral Technology Branch, which deliver EAE research, development and demonstration (R,D&D) initiatives
  
  
• the Office of Energy Research and Development, which coordinates NRCan’s energy research and development (R&D) planning and fund allocations
  
  
• the Electricity Resources Branch, which delivers market transformation initiatives for renewable energy
  
  
• the Science Branch of the Canadian Forest Service, which undertakes R&D in the use of forest biomass for energy
  
  
• the Policy, Economics and Industry branch of the Canadian Forest Service, which delivers funding for approved green capital projects in pulp and paper mills

In its efforts to improve energy efficiency and increase the use of alternative energy, NRCan emphasizes partnership and co-operation with stakeholders, such as other levels of government, the private sector and nongovernmental organizations.

With this approach, the demand side of the energy market moves toward more energy-efficient capital stock, production processes and operating practices without reducing service or comfort levels. On the supply side, Canada participates in developing technology for tapping renewable energy resources and alternative transportation fuels and in increasing the energy efficiency of energy production.

Policy Instruments

NRCan’s key policy instruments are as follows:

• regulation
• financial incentives
• leadership
• information
• voluntary initiatives
• research, development and demonstration

Regulation

The Energy Efficiency Act gives the Government of Canada the authority to make and enforce regulations that prescribe standards and labelling requirements for energy-using products that are imported to Canada or shipped across provincial borders for lease or resale and prescribe standards for products that affect energy use.

Financial Incentives

NRCan uses financial incentives to encourage end-users of energy to adopt energy efficiency and renewable energy technologies and practices. NRCan also offers financial incentives for renewable power and heat, ethanol plants, energy efficiency and renewable energy production at pulp and paper mills, natural gas vehicles and refuelling infrastructure.

Leadership

Leadership means setting an example for other levels of government and for the private sector by increasing energy efficiency and the use of alternative energy in the Government of Canada’s operations.

Information

NRCan disseminates information to consumers, using methods ranging from broad distribution to individual consultations with clients. This increases awareness of the environmental impact of energy use and encourages consumers to become more energy efficient and make greater use of alternative energy sources.

Information activities include publications, exhibits, advertising, toll-free telephone lines, conferences, Web sites, workshops, training, building-design software and promotional products. One particular outreach program targets youth as the energy consumers of the future and distributes activity booklets to virtually all elementary schools across the country.

Voluntary Initiatives

Companies and institutions work with NRCan voluntarily to set and achieve energy efficiency objectives. NRCan’s voluntary EAE initiatives target the commercial/institutional and industrial sectors and organizations whose products are major factors in energy use. The initiatives involve industry-government agreements and, for groups of large industrial energy users, commitments to develop energy efficiency improvement targets and action plans. NRCan provides support to assist and stimulate action by companies and institutions on energy efficiency, including developing standards, educational material and training.

Research, Development and Demonstration

Ongoing improvement in energy efficiency is contingent on improvements and innovations in technology. NRCan’s EAE initiatives support the development and dissemination of more energy-efficient equipment, processes and technologies and alternative energy technologies. R,D&D also provides the scientific knowledge needed to develop the technologies, codes, standards and regulations required for the sustainable use of energy.

NRCan provides national leadership in energy science and technology (S&T) by undertaking research in its own laboratories and contracting research activities to other organizations. These initiatives are the only federal interdepartmental S&T investment funds that focus on the energy sector and its economic and environmental effects.

Figure INT-1 shows how these policy instruments work together to increase energy efficiency, that is, how they help to reduce the amount of energy required to complete a task or obtain a certain level of service. Energy performance regulations eliminate less efficient products from the market. Fiscal incentives, voluntary programs and information activities increase the number of people and organizations taking advantage of existing opportunities to use energy more efficiently. R&D increases the opportunities for achieving higher levels of efficiency in a particular type of energy use.

Measuring Progress

The primary goal of NRCan’s EAE initiatives is to change energy consumption patterns and thereby generate environmental and economic benefits. Part of assessing program progress and performance involves considering both program delivery and program effectiveness. NRCan monitors and tracks the following three aspects of program delivery:

• program outputs
• program outcomes
• market outcomes

Program outputs are the items produced regularly, such as information and marketing materials, demonstration projects, financial incentives and regulations. Program outputs are designed to lead to program outcomes – namely, changes in the behaviour of groups targeted by a program. These groups may be either energy users or producers of energy-using equipment or structures. For example, program outcomes occur when consumers purchase more energy-efficient appliances than they would have if there were no program. Other important factors that influence consumer behaviour include product price, household income, personal taste and government and non-government programs.

Because program outcomes can directly affect the amount and type of energy consumed in the market, they contribute, in part, to observable market outcomes. Market outcomes ultimately reflect the impacts of NRCan programs on changes in energy efficiency, energy intensity, GHG emissions and the use of alternative energy. In this sense, achievement of a targeted market outcome, or observable progress toward a market outcome, may serve as an indicator of program effectiveness. Measuring progress toward an immediate market outcome can be difficult for R,D&D programs, which typically take many years to produce results that can be properly assessed.

An example of a program outcome leading to a market outcome is a householder’s purchase of a more energy-efficient appliance, resulting in reduced use of electricity. Depending on what source of electricity is involved and how the utility changes its electricity-generating methods to meet the change in demand resulting from reduced electricity use, this could also lead to a decline in GHG emissions.

Data Collection and Analysis

In 1991, NRCan launched the National Energy Use Database (NEUD) initiative to help the Department improve its knowledge of energy consumption and energy efficiency at the end-use level in Canada and to support its analytical expertise. The NEUD initiative plays a number of crucial roles directly related to NRCan program activities. However, its most important role is to secure the development of a reliable, Canada-wide information base on energy consumption at the end-use level for all energy-consuming sectors.

The NEUD initiative consists of several broad components that typically involve conducting large- and small-scale surveys of energy use in the transportation, industrial, commercial/institutional and residential sectors. The surveys gather information about the stocks and characteristics of energy-using equipment and buildings, observing Canadians’ behaviour with respect to energy use and monitoring the adoption of new technologies in the marketplace.

In 2009–2010, analysis of the residential sector was undertaken for reference year 2007. This analysis forms the basis of reports explaining how and where energy is used in this sector (Survey of Household Energy Use [SHEU]). Data on the transportation sector continue to be collected on a quarterly basis, while industrial and commercial data continue to be collected annually.

The NEUD initiative also produces a comprehensive energy use database with accompanying publications to explain Canada’s overall energy use and energy efficiency trends. All NEUD initiative reports are available to the public, free of charge, both in hard copy and online at oee.nrcan.gc.ca/statistics.

The NEUD initiative also contributes to the development of energy end-use data and analysis centres (DACs) across Canada. The DACs are mandated to improve the accessibility and comparability of existing data about trends in energy consumption and their impact on environmental quality, develop expert knowledge and advise on NEUD’s data collection activities. Three DACs have been established:

• transportation at Université Laval in Québec, Quebec (Centre for Data and Analysis in Transportation [CDAT])
  
  
• industrial at Simon Fraser University in Burnaby, British Columbia (Canadian Industrial Energy End-Use Data and Analysis Centre [CIEEDAC])
  
  
• buildings at the University of Alberta in Edmonton, Alberta (Canadian Building Energy End-Use Data and Analysis Centre [CBEEDAC])

GHG Emissions and Climate Change

Climate change is a global challenge arising from the continuing buildup in levels of anthropogenic (human-produced) GHGs in the atmosphere in addition to naturally occurring emissions. GHGs are composed of several gases, and the main source of anthropogenic emissions is the combustion of fossil fuels. Substantially reducing GHG emissions is a challenge, particularly given Canada’s highly industrialized and resource-based economy. Solutions require a multifaceted, coordinated domestic response and a high level of co-operation among all nations.

In This Report

This seventeenth annual Report to Parliament focuses principally on EAE initiatives that address secondary energy use. Trends in energy use and GHG emissions in Canada for the residential, commercial, industrial, transportation and renewable energy sectors are discussed in Chapter 1.

Chapter 2 discusses equipment regulations under the Energy Efficiency Act and equipment-labelling activities. Chapter 3 describes the suite of ecoENERGY and related programs and lists key 2009–2010 achievements. Chapter 4 explains energy S&T programs and achievements related to energy efficiency and the continued integration of renewable sources. Chapter 5 outlines NRCan’s involvement with renewable energy sources and use. The sixth and final chapter describes domestic and international co-operation in EAE.

Appendix 1 contains information about NRCan’s EAE expenditures. Appendix 2 contains detailed information about the figure data presented in this report. Calculations of the estimated GHG savings in this report are based on Environment Canada’s standardized emissions factors as described in its publication Canada’s Greenhouse Gas Inventory. The emissions factor for electricity was based on the provincially weighted average of marginal fuel sources across the country.

¹ International Energy Agency, Mind the Gap: Quantifying Principal-Agent Problems in Energy Efficiency, 2007.

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