By November 24, 2017 Read More →

More GDP with less energy: Canada’s declining ‘energy intensity’

Energy efficiency has been improving for the past decade, but Canada has been slow to keep up

The International Energy Agency reports that energy intensity, the energy used to generate a unit of gross domestic product, fell by 1.8 per cent in 2016. According to recent data from the National Energy Board, Canada is also becoming much more energy efficient.

The world would have used 12 per cent more energy in 2016 without the improvements achieved since 2000, which is equivalent to adding another European Union to the global energy market, according to the IEA, which notes that 68 per cent of energy consumption occurs in countries which do not have energy efficiency policies.

“Energy efficiency is the one energy resource that all countries possess in abundance,” Dr Fatih Birol, the IEA executive director said in a press release. “I welcome the improvement in global energy efficiency, particularly at a time of lower energy prices. This is a sign that many governments push the energy efficiency policies, and it works.”

Energy efficiency is gaining ground in Canada, with most provinces having an agency devoted to helping Canadians adopt best practices and technology. Alberta is behind the curve, with the Energy Efficiency Agency only opening its doors this past May.

The NEB’s most recent long-term outlook, Canada’s Energy Future 2017: Energy Supply and Demand Projections to 2040 (EF2017), projects total energy use -including fossil-fuels, renewables and nuclear – to increase slightly in the baseline Reference Case. Despite increasing energy demand, the energy intensity of gross domestic product (GDP) declines.

In the past, annual changes in energy consumption and GDP have been more closely linked. Years with high GDP growth also tend to have high energy demand growth. However, Canada’s energy intensity of GDP has been decreasing.

This means GDP has been growing faster than energy consumption. This is due to improvements in efficiency and changes in industrial make up. This includes growth in less energy-intensive industries.

Projections in EF2017 suggest a widening gap between GDP and energy use in the future. This gap is shaped by a number of significant factors: lower demand growth, federal and provincial climate policy initiatives, and the uptake of new technology.

EF2017 includes a Reference Case, a Higher Carbon Price Case, and a Technology Case that includes both an increasing price on emissions and a higher uptake of select emission-reducing technologies.

The total energy demand projections range from a 6.4% increase in the Reference Case to a 2.7% decrease in the Technology Case by 2040. And despite differences in energy use between the Higher Carbon Price, Technology and Reference cases, GDP varies by less than 1% between the three cases through 2040.

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