Energy Efficiency Trends in Canada, 1990 to 2004

Chapter 5. Industrial Sector

Definition: The Canadian industrial sector includes all manufacturing industries, all mining activities, forestry and construction.

Between 1990 and 2004, industrial energy use increased by 21 percent, from 2717.4 PJ to 3277.5 PJ. As a result, industrial energy-related GHGs (including those related to electricity) increased by 20 percent, from 141.7 Mt to 169.7 Mt. Without improvements in energy efficiency, energy use would have increased by 32 percent between 1990 and 2004, instead of the observed 21 percent (Figure 5.1).

Figure 5.1 Energy Use, With and Without Energy Efficiency Improvements, 1990– 2004 (index 1990 = 1.0)

This year, Informetrica Limited made substantial changes to the industrial GO data used in this report (see text box at the beginning of this chapter). Since GO is the activity driver for more than half of the 49 industries analyzed by the OEE, this has had a significant impact on the factorization analysis presented in Figure 5.2. Compared with previous reports, the activity and structure effects have been reduced because, based on better information, growth rates in the historical series for GO were revised down in many less energy intensive manufacturing industries. As a result, the energy efficiency effect is also smaller.

As Figure 5.2 indicates, the following influenced the change in energy use and related GHGs between 1990 and 2004:

• a 40 percent increase in industrial activity (i.e. a mix of GDP, GO and production units) resulted in a 1097.8 PJ increase in energy use and a corresponding 56.8 Mt increase in GHG emissions;
  
  
• structural changes in the industrial sector; specifically, a relative decrease in the activity share of energy intensive industries helped the sector to reduce its energy use and GHG emissions by 223.9 PJ and 11.6 Mt, respectively. Note that industries that consume more than 6 MJ per dollar of GDP (e.g. pulp and paper, petroleum refining and upstream mining) represented 42 percent of industrial GDP in 1990, but accounted for 34 percent in 2004; and
  
  
• improvements in the energy efficiency of the industrial sector avoided 313.9 PJ of energy use and 16.2 Mt of GHG emissions.

Figure 5.2 Impact of Activity, Structure and Energy Efficiency on the Change in Energy Use, 1990– 2004 (petajoules)

Between 1995 and 2004, increases in energy use due to robust activity growth were partially offset by a shift towards less energy intensive industries in the industrial structure and significant energy efficiency improvements (Figure 5.3). However, since 2001, this energy efficiency effect has been getting smaller. Between 2000 and 2004, increases in energy intensity in industries such as upstream mining, fertilizer and forestry have masked the progress made by other industries, helping to explain this decline in energy efficiency. Other contributing factors include lower levels of capacity utilization (ratio of actual output to potential output) since 2000 in the sector as a whole. Lower production levels mean fixed energy costs are spread over fewer units of output, decreasing overall efficiency levels.

Figure 5.3 Changes in Energy Use Due to Activity, Structure and Energy Efficiency, 1990-2004* (petajoules)

* For the 2001 reporting year, the Industrial Consumption of Energy Survey was converted to NAICS. Statistics Canada, at the request of the OEE, revisited the historical series and developed NAICS-based industrial data for 1990 and 1995 to 2000. However, NAICS-based data for some industries are not currently available for 1991 to 1994, hence the gap in the analysis for this period.

As Figure 5.4 shows, GHG emissions from the industrial sector, including GHGs related to electricity, were 20 percent, or 28.0 Mt, higher in 2004 than in 1990. This increase in GHGs was due to higher energy consumption. The change in GHG intensity was small because fuel switching towards less GHG intensive fuels in the industrial sector was offset by a higher GHG intensity in electricity production.

Figure 5.4 Impact of Energy Use and GHG Intensity on the Change in GHG Emissions, Including and Excluding Electricity-Related GHG Emissions, 1990– 2004 (megatonnes of CO₂ equivalent)

When GHG emissions related to electricity are excluded, GHG emissions increased by 13 percent, or 13.8 Mt, between 1990 and 2004 (Figure 5.4). The relative increase in the use of biomass and the decline in the use of heavy fuel oil, coke and coke oven gas led to a 6 percent decrease in GHG intensity between 1990 and 2004.