Energy Intensity

Putting energy intensity in context

Much of the harm to the environment that results from human economic activity stems from energy use. While some forms of energy generation and use have little impact on the environment (solar-generated electricity and heat from geothermal pumps, for example), much of the energy we consume has substantial environmental consequences. The combustion of fossil fuels produces greenhouse gases (GHGs) and other noxious fumes that contribute to climate change and respiratory illness. And while hydro dams used to generate electricity have low GHG emissions, they can change the landscape dramatically, often harming the local ecosystem.

Given the environmental impacts of the various forms of energy we use, the amount of energy we produce and consume matters. All else being equal, societies that use less energy—that is, have a lower energy intensity—have a lower impact on the environment than those that use greater amounts of energy.

Increasing energy efficiency and reducing energy intensity should be a policy goal for Canadian provinces, Canada as a whole, and its peer countries as a way to mitigate climate change and conserve energy. For a sustainable energy future, Canada must encourage economic activity and GDP growth that does not rely on increased energy consumption that has an environmental impact.

A common way to measure energy intensity is to look at the ratio of energy use to GDP. This is a better measure than per capita energy use because energy use is affected, to a large degree, by a region’s income.

To measure energy intensity, we use a region’s final energy demand per unit of GDP. Final energy demand is energy consumed by industries and individuals (i.e., energy consumed to accomplish work, rather than energy transformed into other forms of energy or consumed by the energy industry). This includes all primary and secondary energy consumed for end-use within a region, regardless of where it was produced. Primary energy is energy in its raw natural form (such as crude oil, coal, and hydro power), before it is transformed into other fuels (secondary energy) that are more widely consumed for end-use (such as gasoline and electricity).

Because this measure includes only end-use energy consumption, it captures environmental impacts from energy consumption but excludes environmental impacts of energy production and transformation. These data do not include energy consumed by energy-producing industries because that data is not available for all provinces. As a result, we have also excluded energy consumed by the mineral mining industry from this measure, because Statistics Canada aggregates these data with some of the energy consumed by the crude oil and natural gas extraction industries. This biases Canada’s energy use downward relative to other countries, particularly for provinces with large mineral mining industries. However, the mineral mining industry accounts for only 3 per cent of energy consumed nationally (according to the International Energy Agency), so the exclusion of energy consumed by the mineral mining industries is unlikely to affect the results substantially. Excluding energy consumed by energy-producing industries also biases the report card somewhat in favour of large energy-producing jurisdictions, since the contribution of these industries to GDP remains in the calculation.

It should also be noted that this measure does not distinguish between the (often very different) environmental impacts that result from the consumption of different types of energy.

How do the provinces rank relative to Canada’s international peers?

Energy intensity is high in most provinces. Canada has no “A” or “B” performers and only a single “C” performer: Newfoundland and Labrador. The province’s energy intensity of 0.100 tonnes of oil equivalent (TOE) per US$1,000 GDP is nearly 50 per cent greater than the top-ranked peer countries, the U.K. (0.055), Ireland (0.058), and Switzerland (0.056), but comparable to Austria (0.082) and Belgium (0.085).

The next best-ranked provinces are British Columbia and Ontario, which receive “D” grades for their energy intensities of 0.117 and 0.120 TOE per $1,000 GDP. Nova Scotia (0.123) also gets a “D.”

Overall, Canada (0.132) gets a “D” and is the second-worst country, ahead of only Finland (0.135). Six provinces get “D–” grades for having energy intensities greater than bottom-ranked Finland: Alberta (0.140), P.E.I. (0.141), Quebec (0.146), New Brunswick (0.151), Manitoba (0.153), and Saskatchewan (0.176).

How do the provinces perform relative to each other?

Newfoundland and Labrador has the lowest energy intensity among the provinces, at 0.10 TOE per US$1,000 GDP, and earns a “C” grade. British Columbia, Ontario, and Nova Scotia have much higher energy intensities and are get “D”s.

The remaining six provinces—Alberta, P.E.I., Quebec, New Brunswick, Manitoba, and Saskatchewan—get “D–” grades for having the highest energy intensities among all jurisdictions. Saskatchewan’s energy intensity is over twice as high as that of Newfoundland and Labrador.

How has energy intensity in the provinces changed over time?

Between 1995 and 2014, the energy intensity of all provinces decreased substantially. Nationally, Canada reduced its energy intensity by 29 per cent, from 0.19 TOE per $1,000 GDP in 1995 to 0.13 TOE in 2014. The biggest proportional decrease among the provinces was in Newfoundland and Labrador, where energy intensity fell from 0.20 TOE per $1,000 GDP in 1995 to 0.10 TOE per $1,000 in 2014, a 50 per cent decrease. This was a result of both decreasing energy use and considerable economic growth.

What about primary energy production?

While final energy demand allows for a comparison of the end-use demand for energy across jurisdictions, it does not account for primary energy consumed to generate secondary energy. Nor does it directly relate to environmental impacts that occur during the production of primary energy or when primary energy is transformed into secondary energy.

When we compare primary energy production relative to GDP across jurisdictions, we see a much wider range of values. Alberta is the bottom-ranked jurisdiction, with production intensity that dwarfs that of the top-performing jurisdiction, Japan. Alberta’s primary energy production intensity of 1.13 TOE per $1,000 GDP is over 150 times that of Japan (< 0.01 TOE per $1,000 GDP).

Newfoundland and Labrador, the top-ranked province on energy intensity, fares much worse on this measure, with the third highest energy production intensity after Alberta and Norway. This discrepancy reflects the fact that much of the energy produced by Newfoundland and Labrador (largely crude oil) is not consumed locally.

This measure shows just how much Canada’s economy relies on energy production. The only countries with economies more dependent on energy production than Canada as a whole are Australia and Norway. However, Saskatchewan and Newfoundland and Labrador have higher energy production intensities than Australia, and Alberta has the highest energy production intensity among all jurisdictions.

Why do Canada and most of its provinces have such high energy intensities?

Canada’s industrial structure, vast geography, and cold climate make it a highly energy-intensive country. Unlike most other developed countries, Canada’s economy relies heavily on primary industries, such as resource extraction and agriculture. Primary industries typically consume more energy than services-producing industries per dollar of GDP they generate. Canada’s reliance on primary industry thus drives up energy intensity relative to countries whose economies are more centered on services-producing industries.

Canada’s geography and climate also affect its energy intensity. The large area over which Canada is spread results in high transmission losses for electricity and high transportation demand for people and goods. The cold climate means that more energy is required for heating than in warmer countries.

Canada’s energy intensity also reflects the country’s role as a significant energy exporter.

The regional differences among Canada’s provinces are largely the result of their differing economies. Saskatchewan and Alberta, which have very high energy intensities, generate a much larger portion of their GDP from goods-producing industries than most provinces (45–50 per cent vs. the Canadian average of 30 per cent). For Saskatchewan and Alberta to reduce their energy intensities, they would have to diversify their economies and reduce reliance on primary industries. Large-scale changes of this nature are unlikely to occur in the near future.

With respect to energy production intensity, Canada’s economy and, more specifically, the economies of B.C., Saskatchewan, Newfoundland and Labrador, and Alberta rely heavily on producing and exporting energy. As a result, their production intensities are higher than most other jurisdictions, for which energy production represents a smaller portion of overall economic activity.

How carbon-intensive is Canada’s energy consumption?

The environmental impacts associated with energy consumption vary substantially across different energy sources. One of the most notable impacts is the production of greenhouse gases (GHGs) because of their impact on global warming. GHGs emitted per unit of energy consumed vary widely.

To calculate GHG intensity, we looked at GHG emissions resulting from end-use energy consumption and from electricity generation. We excluded up-stream GHG emissions generated during the processing, extraction, and refining of fossil fuels, because these fuels are traded heavily, and so including up-stream emissions from these industries would heavily penalize large energy exporters, such as Alberta, Saskatchewan, and Norway. While a similar issue remains with electricity that is imported or exported, the volume of electricity traded relative to its consumption within OECD countries is much smaller than it is for coal, natural gas, and petroleum products. Additionally, because the carbon intensity of electricity generation varies so heavily across jurisdictions, excluding these emissions omits a large portion of the emissions resulting from energy use in jurisdictions that rely heavily on fossil fuels to generate electricity.

While most of Canada’s provinces have high energy consumption intensities, several provinces emit a relatively small amount of GHGs for the energy they consume. Quebec, for instance, has a lower GHG intensity of energy use than all jurisdictions other than Sweden and Norway and emits just 1.55 tonnes of CO₂ equivalent emissions (CO₂e) per TOE consumed. British Columbia and Manitoba also do well (5th and 6th, respectively), with GHG intensities of energy uses of 1.94 and 1.95 tonnes CO₂e per TOE consumed, respectively.

At the opposite end of the spectrum, Nova Scotia has the highest GHG intensity of energy among all the jurisdictions, at 4.47 tonnes CO₂e per TOE consumed, just above that of Australia (4.32 tonnes CO₂e per TOE) , the worst-ranked peer country .

Clearly, energy consumption is of particular concern in Nova Scotia and Saskatchewan. Both provinces have a high energy intensity (scoring “D” and “D–” grades, respectively) and also produce more emissions for every unit of energy they consume than almost all jurisdictions. Both Nova Scotia and Saskatchewan rely heavily on coal to generate electricity (see low-emitting electricity production). This results in increased emissions relative to other jurisdictions, as coal is the most GHG-intensive form of primary energy commonly used to generate electricity. In Nova Scotia, emissions from public electricity and heat production account for 27 per cent of total GHG emissions; in Saskatchewan, they account for 44 per cent of the total. Reducing the reliance on coal in these provinces would thus go a long way to reducing their GHG emissions and GHG-intensity of energy use.