Energy Use in the Industrial Sector

Photo of a house

Key highlights

Over the 1990 to 2016 period,
  • Canadian industry saved $4.9 billion in energy costs due to a 16% energy efficiency improvement in 2016.
  • Industrial energy use increased 26%. It would have increased 42% without energy efficiency improvements.
  • In 2016, Canadian industry saved 426 PJ of energy and reduced 21.2 Mt of GHG emissions.
  • Energy intensity (MJ/$2007 – GDP) decreased 14.9%.

  Overview - Energy use and GHG emissions

The industrial sector used the most energy of any sector in Canada, but had fewer GHG emissions than the transportation sector.

The industrial sector spent $39.5 billion on energy in 2016 for all their manufacturing, resource extraction, forestry and construction activities.

Text version

Distribution of industrial energy use by fuel type, 2016

Percentage
Electricity 21.6
Natural gas 39.5
Oil 8.0
Still gas and petroleum coke 13.5
Wood waste and pulping liquor 10.9
Other 6.5

Text version

Distribution of energy use and activity by industry, 2016 (percentage)

Industry GDP Energy use
Construction 27.3 3.0
Forestry 1.3 0.8
Mining (including oil sands extraction) 31.0 35.0
Manufacturing 40.4 61.1

  Industrial energy use

From 1990 to 2016, industrial energy use increased 26%, from 2,710 PJ to 3,414 PJ. The associated end-use GHG emissions increased 20%, from 141.4 Mt to 169.8 Mt.

Natural gas use grew while major declines were reported in heavy fuel oil2 (HFO) and coke and coke oven gas. The shift toward less emission-intensive fuels over the period resulted in lower growth in GHG emissions.

Text version

Industrial energy use by fuel type, 1990 and 2016 (petajoules)

1990 2016
Electricity 658.4 738.4
Natural gas 837.2 1348.1
Oil 328.7 272.0
Still gas and petroleum coke 309.9 460.6
Wood waste and pulping liquor 341.0 373.3
Other 234.6 221.4

  Energy use in resource extraction

This subsector comprises industries engaged in oil and gas extraction, coal mining, metal ore mining, non-metallic mineral mining, quarrying and support activities for mining and oil and gas extraction.

Since 1990, the subsector’s energy consumption and its associated end-use emissions have more than tripled. Over the 1990–2016 period, this subsector's GDP increased 60%, compared to a 48% increase for the entire sector.

Activity in the oil sands was the main driver in energy demand from the resource extraction industries. Since the late 1990s, production from non-conventional resources (oil sands) increased. The production of bitumen and synthetic crude oil increased from 55,000 cubic metres per day (m3/day) in 1990 to 384,000 m3/day by 2016.

Text version

Industrial energy use by selected industries, 1990 and 2016 (petajoules)

1990 2016
Upstream mining (including oil and gas extraction) 210.7 1048.9
Pulp and paper 728.0 552.0
Petroleum refining 323.0 271.0
Chemicals 223.0 278.0
Iron and steel 219.0 221.0
Other industries 1005.0 1043.0

  Manufacturing energy use

The Manufacturing sector consumed 2,086 PJ of energy in 2016, one quarter of the energy used by final consumers in Canada, representing a decline of 8.8% since 1990. Although there are 21 subsectors with NAICS 3-digit codes, four of these subsectors accounted for 75% of all energy consumption in the manufacturing sector.

Text version

Share of energy use in the Manufacturing sector, 2016

Percentage
Pulp and paper 26.5
Smelting and refining 12.0
Chemicals 13.3
Petroleum refining 13.0
Wood products 2.9
Iron and steel 10.6
Cement 2.7
Other Manufacturing subsectors 19.0
* Metal and non-metal mines, food industries, textiles, clothings, wood products, rubber, plastic, cement, primary production of alumina and aluminium, fabricated metal products, machinery, computer and electronic products, electrical equipment and components, motor vehicle manufacturing, furniture, construction, forestry.

Paper Manufacturing

The Paper Manufacturing subsector is engaged in the manufacturing of pulp, paper and paper products and is the main user of biomass as a source of energy.

Energy use for Paper Manufacturing production peaked in 2004 and declined consistently since then. In 2016, the subsector consumed 552 PJ of energy, a decrease of 24% from 728 PJ in 1990. Pulp, paperboard, paper and newsprint mills all decreased their energy use significantly from 1990 to 2016, with the largest decline experienced in newsprint (-68%). GHG emissions decreased 60% since 1990 for the subsector as a whole.

This subsector is a major player in combined heat and power (CHP), which can result in a substantial increase in energy efficiency as compared to separate electricity generation and heating.

Text version

Paper Manufacturing energy use by selected industry, 1990 and 2016 (petajoules)

1990 2016
Pulp mills 300.2 286.2
Paperboard mills 62.6 33.6
Paper mills (except newsprint) 99.8 75.3
Newsprint mills 247.6 79.7
Other 17.9 77.6

Primary Metal Manufacturing

Energy use for Primary Metal production increased significantly, driven primarily by growth of the alumina and aluminum and smelting and refining industries (e.g. aluminum, nickel, copper, zinc, lead and magnesium).

This subsector saw its energy consumption increase by 17% to 471 PJ in 2016. From 1990 to 2016, energy demand in the production of alumina and aluminum grew 87%, emitting just 26% more GHG emissions. Since 1990, GDP in the production of alumina and aluminum has more than tripled, from $1.2 billion ($2007) in 1990 to $4.2 billion ($2007) in 2016.

Text version

Smelting and refining energy use by selected industry, 1990 and 2016 (petajoules)

1990 2016
Alumina and aluminum 109.8 205.7
Other non-ferrous 73.5 44.6
Smelting and refining 183.3 250.3

Chemical Manufacturing

Chemical Manufacturing experienced robust growth in its energy needs, while Petroleum Refining reported a decline in energy use in 2016 compared to 1990.

Energy use in Chemical Manufacturing rose 25% from 223 PJ in 1990 to 278 PJ in 2016, driven in part by increasing energy demand in industrial gas manufacturing. Natural gas (68% share) and electricity (28% share) accounted for the majority of the energy needs for the Chemical Manufacturing subsector. GHG emissions from this subsector increased 12%.

In contrast, energy use in Petroleum Refining declined 16%, even though the production level of the petroleum refining industry was 5% higher in 2016 than in 1990. GHG emissions declined 11% from 1990 to 2016, reflective of energy efficiency improvements.

Wood Product Manufacturing

The Wood Product Manufacturing subsector3 comprises establishments primarily engaged in manufacturing products from wood, including activities such as:
  • sawing logs into lumber and similar products, or preserving these products
  • making products that improve the natural characteristics of wood; for example, by making veneers, plywood, reconstituted wood panel products or engineered wood assemblies
  • making a diverse range of wood products such as millwork

This subsector represented only 3% of the Manufacturing sector’s energy use with 58.5 PJ in 2016. GHG emissions decreased 22.7% between 1990 and 2016, reflecting a shift in lower and non-GHG emissions energy sources.

  Isolating the effect of energy efficiency in industry

Without energy efficiency gains, energy use would have increased 42% instead of 26%.

Text version

Impact of activity, structure and energy efficiency on the change in industrial energy use, 1990–2016

Petajoules
Total change in energy use 703.9
Activity effect 2,185.4
Structure effect -1,055.8
Energy efficiency effect -425.8

Text version

Industrial energy use, with and without energy efficiency improvements, 1990–2015

Energy use without energy efficiency improvements Energy use with energy efficiency improvements
1990 2710.0 2710.0
1995 3058.0 3017.3
1996 3104.4 3019.6
1997 3231.7 3086.4
1998 3290.1 2998.6
1999 3465.8 3046.4
2000 3595.2 3166.9
2001 3513.1 3023.3
2002 3664.8 3139.6
2003 3655.6 3203.0
2004 3745.7 3367.5
2005 3735.5 3292.1
2006 3626.4 3292.4
2007 3745.0 3420.7
2008 3576.5 3278.2
2009 3256.5 3113.6
2010 3435.9 3215.5
2011 3488.1 3302.8
2012 3526.2 3342.2
2013 3626.3 3370.4
2014 3772.8 3386.9
2015 3798.1 3441.2
2016 3839.6 3413.8

Various factors influenced change in energy use:

  • Activity effect – A significant increase in oil sands mining and conventional oil and gas production increased energy use in the industrial sector by 2,185 PJ and GHG emissions by 109 Mt.
  • Structure effect – A shift from energy-intensive heavy manufacturing to financial and service-related activities continued, resulting in a reduction of 1,056 PJ of energy use and 53 Mt of GHG emissions in 2016.
  • Service level effect – There is no service level effect for the industrial sector.
  • Weather effect – There is no weather effect for the industrial sector.
  • Energy efficiency effect – In 2016, Canadian industry saved $4.9 billion in energy costs because of a 16% energy efficiency improvement. Industry saved 426 PJ of energy and reduced GHG emissions by 21.2 Mt.
Text version

Factors influencing energy consumption, 1990-2016

Total change in energy use Activity effect Structure effect Energy efficiency effect
1990 0.0 0.0 0.0 0.0
1995 307.4 249.7 98.3 -40.6
1996 309.7 298.4 96.0 -84.8
1997 376.5 471.4 50.3 -145.2
1998 288.7 580.4 -0.2 -291.5
1999 336.5 719.4 36.4 -419.4
2000 457.0 911.1 -25.9 -428.3
2001 313.4 942.6 -139.5 -489.8
2002 429.6 1076.8 -122.0 -525.2
2003 493.0 1137.6 -192.0 -452.6
2004 657.6 1328.1 -292.4 -378.1
2005 582.2 1366.8 -341.2 -443.4
2006 582.5 1480.3 -563.9 -334.0
2007 710.7 1530.7 -495.6 -324.4
2008 568.2 1467.3 -600.8 -298.3
2009 403.7 1349.9 -803.4 -142.9
2010 505.5 1549.3 -823.47 -220.4
2011 592.9 1646.4 -868.3 -185.3
2012 632.2 1840.6 -1024.3 -184.1
2013 660.4 1953.6 -1037.0 -255.9
2014 676.9 2132.6 -1069.8 -385.9
2015 731.2 2169.6 -1081.5 -356.9
2016 703.9 2185.4 -1055.8 -425.8

Manufacturing energy savings were 670.7 PJ in 2016, reflecting a strong energy efficiency performance in manufacturing related activities.

Energy use in the resource extraction sector more than tripled from 1990 to 2016. Resource extraction industries posted much higher energy intensity per unit of economic activity, especially in the upstream mining sector (including oil and gas extraction), reflecting the opportunity for more energy efficiency.

Excluding resource extraction, Canadian industries improved energy efficiency by 27%, which represents 646.8 PJ of savings.

Text version

Industrial energy use, with and without energy efficiency improvements (without resource extraction industries), 1990-2016

Energy use without energy efficiency improvements Energy use with energy efficiency improvements
1990 2362.4 2362.4
1995 2638.6 2571.4
1996 2681.6 2550.3
1997 2778.6 2615.2
1998 2812.9 2547.5
1999 2998.8 2548.2
2000 3100.7 2656.7
2001 3008.1 2505.3
2002 3131.2 2604.8
2003 3100.5 2569.3
2004 3128.3 2748.7
2005 3122.6 2634.0
2006 2978.6 2589.7
2007 3073.8 2566.7
2008 2909.6 2417.0
2009 2582.0 2186.4
2010 2731.0 2215.6
2011 2741.5 2263.5
2012 2731.5 2251.3
2013 2773.2 2273.9
2014 2840.9 2281.3
2015 2840.6 2287.4
2016 2864.3 2217.4

The impact of activity, structure and energy efficiency on the change in industrial energy use excluding the resource extraction industries were:

  • Activity effect – Industrial activity increased energy use by 1,711 PJ and GHG emissions by 78.4 Mt.
  • Structure effect – The structural changes in the industrial sector, specifically, a relative decrease in the activity share of energy-intensive industries (i.e. pulp and paper), helped the sector to reduce its energy use and GHG emissions by 1,209 PJ and 55.4 Mt, respectively.
  • Energy efficiency effect – Improvements in the energy efficiency reduced energy use by 647 PJ and avoided 29.6 Mt of GHG emissions.
Text version

Factors influencing industrial energy consumption (without resource extraction), 1990-2016

Total change in energy use Activity effect Structure effect Energy efficiency effect
1990 0.0 0.0 0.0 0.0
1995 209.1 215.3 61.0 -67.2
1996 187.9 256.6 62.6 -131.3
1997 252.9 402.9 13.4 -163.3
1998 185.1 495.3 -44.7 -265.4
1999 185.8 612.5 24.0 -450.7
2000 294.3 773.2 -34.8 -444.0
2001 143.0 799.5 -153.7 -502.8
2002 242.4 910.7 -141.9 -526.5
2003 207.0 960.4 -222.2 -531.1
2004 386.3 1114.3 -348.4 -379.6
2005 271.6 1145.5 -385.3 -488.6
2006 227.4 1235.5 -619.3 -388.9
2007 204.4 1274.3 -562.9 -507.0
2008 54.7 1227.1 -679.9 -492.5
2009 -176.0 1142.7 -923.1 -395.6
2010 -146.8 1281.4 -912.7 -515.5
2011 -98.8 1348.1 -969.0 -478.0
2012 -111.1 1480.0 -1110.9 -480.2
2013 -88.5 1556.1 -1145.3 -499.3
2014 -81.1 1676.6 -1198.1 -559.6
2015 -75.0 1701.4 -1223.1 -553.2
2016 -144.9 1711.3 -1209.4 -646.8
  1. Wood waste and pulping liquor are primarily used in the pulp and paper industry because they are recycled materials produced only by this industry.
  2. One reason for the decline in HFO was that the pulp and paper industry, the largest user of HFO, adopted alternate forms of fuels, such as pulping liquor. Fuel switching was facilitated by the use of interruptible contracts with energy suppliers, allowing the industry to react to changes in relative prices of fuels.
  3. Wood Product Manufacturing does not include industries engaged in logging and chipping logs in the field, which is covered in Forestry and Logging.