ELECTRICITY EFFICIENCY

A Report on the State of Energy Efficiency in Canada

To the end of the 2000-2001 fiscal year, the OEE managed 17 energy efficiency and alternative fuels programs aimed at the residential, commercial/institutional, industrial and transportation sectors.1 In 2001-2002, another 12 initiatives will be implemented, expanding the OEE's responsibilities. Guided by the OEE's vision statement of 'Leading Canadians to Energy Efficiency at Home, at Work and on the Road', these programs target all energy consumers and emphasize partnerships and economic investments. They aim to overcome the market barriers of inadequate information and knowledge, institutional deterrents in energy end-use markets and financial and economic constraints on energy users.

The OEE is also responsible for collecting and analyzing data on energy end-use and developing new measures to increase the impact and reach of NRCan's support for energy efficiency improvement. Other responsibilities of the OEE include the following:

• modifying its existing programs to increase its effectiveness or efficiency;
• reporting annually on the state of energy efficiency in Canada and communicating up-to-date energy efficiency information through its publications and Web site at http://oee.nrcan.gc.ca; and
• managing Canada's Energy Efficiency Awards.

The OEE is assisted by the National Advisory Council on Energy Efficiency, comprising energy efficiency experts and leaders from all sectors of the economy.

The OEE has become Canada's foremost centre for collecting and analyzing energy efficiency data, analyzing trends in energy use and developing key programs that promote energy efficiency in the major energy using sectors of the economy. One of its goals is to improve Canada's ability to track the influence of its energy efficiency programs on market trends and identify opportunities to further improve energy efficiency.

At the core of the OEE's analytical capacity is its annual assessment of trends in energy use and related GHG emissions in Canada since 1990. The results are published in the technical report Energy Efficiency Trends in Canada. Changes in energy efficiency cannot be measured directly at the sectoral or economy-wide level. To track changes in energy efficiency, the OEE developed the OEE Energy Efficiency Index, the only one of its kind in Canada.

The OEE Index depicts annual changes in energy efficiency in the Canadian economy. Moreover, it identifies these changes more accurately than the indicator previously used - the ratio of gross domestic product to energy use, commonly referred to as 'energy intensity.' This is because energy intensity is influenced by changes in economic structure, the weather and energy efficiency. Nevertheless, it is important to note that the OEE Index is only an estimate of changes in energy efficiency in the economy. Even after accounting for the other principal factors that influence energy intensity, the resulting estimate of energy efficiency includes some factors not related to efficiency. For example, the estimate of industrial energy efficiency will reflect changes in sub-sector mixes of products or in the products themselves.

The OEE Index shows that even with the many barriers to improved energy efficiency in Canada, strong, measurable progress has been made, due in part to the programs of the OEE. For 1990-1999, the OEE Index shows an increase in value, indicating that energy efficiency improved by 8 percent (Figure 1). As a result of this improvement, Canadians are saving about $5.7 billion per year in energy costs. Moreover, energy use increased by only 12.2 percent instead of 20.2 percent between 1990 and 1999. In addition, energy-related GHG emissions are more than 32 megatonnes lower than they would have otherwise been (Figure 2).

Each of the four principal end-use sectors in the Canadian economy (residential, commercial/institutional, industrial and transportation) contributed to this improvement in energy efficiency. Following are a few highlights from the analysis:

• A 13.0-percent improvement in residential energy efficiency, combined with the warm winter of 1999, helped offset the increased demand for houses and appliances. This limited the increase in residential energy use over the review period to only 1.3 percent above 1990 levels.
• The 1.6-percent improvement in energy efficiency in the commercial/ institutional sector over the 1990-1999 period contributed to reducing GHG emissions by 0.7 megatonnes.
• Although industrial GHG emissions increased overall, they were 12.4 megatonnes lower in 1999 than they would have otherwise been because of a significant 9.1-percent improvement in energy efficiency between 1990 and 1999.
• Growth in international trade and deregulation has led to increased truck freight activity and energy use. Nevertheless, the freight transportation sector achieved a 12.0-percent improvement in energy efficiency over the review period.
• The passenger transportation sector experienced an energy efficiency improvement of only 3.9 percent between 1990 and 1999. The growth in emissions was largely due to Canadians' increasing preference for minivans and sport utility vehicles.

Several factors affect how much energy the Canadian economy uses. These include the level of economic activity in a sector (e.g., production by industry, floor space in the residential or commercial sector); structure (the mix of activities that consume energy in a sector); the weather; and how efficiently each sector uses energy. By promoting improved energy efficiency, the OEE's programs are helping Canada reduce its GHG emissions.

Between 1990 and 1999, the amount of energy that Canadians used to heat and cool their homes and workplaces and to operate their appliances, vehicles and facilities increased by about 12.2 percent. GHG emissions associated with this energy use (including electricity) increased by about 11 percent. Overall, energy consumption for these purposes -- known as 'secondary energy use' -- accounted for about 64 percent of all GHG emissions in Canada in 1999.

Impact of Other Factors Affecting Energy Use
The increase in Canada's energy use between 1990 and 1999 was primarily due to growth in economic activity in each end-use sector. For example, activity in the industrial sector increased by 27.6 percent during this period. In the residential sector, the number of households and the total floor space of households increased by 18.3 percent. Likewise, the amount of commercial floor space in Canada grew by 15.9 percent over the 1990-1999 period. In the transportation sector, there was a 13.3-percent increase in passenger-kilometres and a 32.7-percent increase in freight tonne-kilometres.

Changes in structure -- the mix of activities that consume energy -- also contributed to increased energy use between 1990 and 1999. Among the notable trends were shifts in consumer preference toward light-duty trucks (e.g., minivans and sport utility vehicles) and the increase in the amount of freight shipped by trucks.

The industrial sector accounted for 39 percent of total secondary energy use in Canada in 1999 (Figure 4) and 33.3 percent of secondary energy-related GHG emissions (Figure 5). The second largest energy-using sector -- transportation -- accounted for 28.7 percent of energy use in 1999. However, it also accounted for 35.7 percent of GHG emissions, more than any other sector. This is because the energy used in transportation, primarily gasoline and diesel fuel, produces more GHG emissions than other energy sources when combusted. Similarly, the agriculture sector produces more GHG emissions than would be suggested by its share of energy use.

Energy Efficiency in the Commercial/Institutional Sector: Composition and Trends
The commercial/institutional sector of the economy accounted for 12.5 percent of Canada's secondary energy use and 12.0 percent of the related GHG emissions in 1999.

Improved energy efficiency, combined with weather conditions, helped offset the effect of increased commercial activity between 1990 and 1999. This limited the growth in the sector's energy use to 13.4 percent. The energy efficiency of commercial/institutional buildings, heating and cooling equipment, lighting technology, electric motors and control systems improved. Without these advances, energy use in the sector would have been another 1.6 percent higher in 1999.

GHG emissions from the commercial/institutional sector increased by 13.7 percent during the 1990-1999 period. Fewer GHG emissions would have been released if there had not been a shift toward the use of more GHG-intensive fuels to generate electricity during that period.

Promoting Energy Efficiency
Space heating accounts for about 50 percent of the energy used in this sector and offers significant opportunities for gains in energy efficiency. Auxiliary motors, auxiliary equipment and lighting together account for about 35 percent of commercial/institutional energy use. Energy efficiency improvements are also possible in these areas.

As is the case in the residential sector, it is generally more economical to make energy efficiency improvements during the construction of a commercial/institutional building than after. However, given the slow turnover of the building stock in this sector and the opportunities for energy-efficient retrofits, the energy performance of existing buildings must also be improved.

The OEE's approach to the commercial/ institutional sector is to

• use regulations and information programs to gradually exclude the least-efficient equipment from the market and to influence consumers to select, and manufacturers to produce, energy-efficient products that outperform the minimum standards;
• accelerate changes in building design, construction and operation by: marketing the benefits of more energy-efficient construction; in-creasing the awareness and knowledge of building owners, designers and builders; supporting energy codes and - providing incentives for designing more energy-efficient buildings; and
• encourage investments in energy efficient building retrofits to lower costs and reduce GHG emissions by forming partnerships with key associations, emphasizing corporate energy management planning and providing incentives for implementing energy-efficient retrofits.

These funds support feasibility studies and encourage investments in projects that improve environmental performance or energy efficiency in municipal buildings and facilities, energy services and renewable energy, water and wastewater services, waste management and public transportation. The Director General of the OEE sits on the Green Municipal Funds' Council, and OEE staff are involved in assessing projects. Information on the funds can be obtained through the FCM's Web site at www.fcm.ca.

Selected Progress Indicators
Through the Commercial Building Incentive Program, 59 projects aimed at improving the energy efficiency of new commercial, institutional and multi-unit residential buildings began in fiscal year 2000-2001. The projects had an estimated value of more than $2.5 million. Buildings are designed to achieve energy performance that is, on average, 35 percent better than that required by the Model National Energy Code for Buildings (the actual range is from 26 to 65 percent).

The Energy Innovators Initiative (EII) helps commercial businesses and public institutions explore energy efficiency options and strategies. Member organizations can save money and help the environment through the reduction of GHG emissions related to energy consumption. The EII offers access to tools, services and financial assistance -- delivered through.

Energy Innovators Officers who work with members as they pursue energy management planning and retrofits. Since 1992, the EII has recruited over 600 organizations, representing approximately $2.5 billion, or 26.9 percent, of the energy bills in these sub-sectors.

The EII Pilot Retrofit Incentive encouraged commercial and institutional organizations to initiate or expand the scope of energy efficiency projects. In its first three years, the program approved 52 projects representing over 8 million square metres of space.

These projects will reduce energy costs by $21 million and energy consumption by 1.5 million gigajoules annually (or 20 percent on average), based on a total investment of $210 million (of which $9.2 million came from the incentive). In 2001, the incentive was enhanced and renamed 'Energy Retrofit Assistance.' Funding is available for retrofit plans and projects, up to $250,000.

Energy Efficiency in the Industrial Sector: Composition and Trends
For the purposes of this report, the industrial sector of the economy includes forestry, construction, mining and manufacturing. In 1999, this sector accounted for 39.0 percent of secondary energy use in Canada and 33.3 percent of related GHG emissions.

Industrial energy use increased by 11.4 percent between 1990 and 1999 as a result of growth in economic activity. However, more energy would have been used if energy efficiency had not improved by 9.1 percent. The sector achieved this efficiency by rationalizing operations, installing more efficient equipment and other efforts.

GHG emissions from the industrial sector increased by 6.6 percent between 1990 and 1999. Like the commercial/ institutional sector, fewer GHG emissions would have been released if there had not been a shift toward the use of more GHG-intensive fuels to generate electricity during this period.

Promoting Energy Efficiency
In the industrial sector, energy is used primarily to produce heat, to generate steam, or as a source of drive power. Energy efficiency improvements are most easily achieved in equipment and processes that are common to many industries, such as motors and auxiliary systems.

Continued switching from fossil fuels to GHG-neutral energy sources (such as wood and pulp waste) represents another opportunity to reduce emissions from this sector.

The OEE's approach in the industrial sector is to

• implement more stringent minimum efficiency standards for electric motors and for fluorescent and incandescent lamps; and
• encourage and simplify voluntary action, both industry-wide and at the company level, to improve energy efficiency.

• Amendments to the Energy Effic-iency Regulations have raised the efficiency standard for industrial motors by about 5 percent and are expected to result in aggregate annual energy savings of 16.3 petajoules in 2010 (Figure 7).
  Associated with these savings is a reduction in GHG emissions by more than 2 megatonnes. More than half of the projected energy savings are expected to come from the industrial sector.
• By June 2001, 301 industrial companies had been recruited by the OEE's Industrial Energy Innovators Initiative. More than 200 Industrial Energy Innovators have prepared and submitted action plans describing their efficiency projects.
• The Canadian Industry Program for Energy Conservation (CIPEC) has a network of more than 40 trade associations representing more than 4000 companies from Canada's mining and manufacturing sectors. CIPEC reports on approximately 90 percent of total secondary industrial energy demand through its 23 task forces. The aggregate CIPEC target is a 1-percent overall improvement in industrial energy intensity per year through to 2005.

In general, they call for energy efficiency improvements of about 1 percent per year. The exceptions are breweries (3 percent), textiles (2 percent), cement (0.7 percent) and aluminum (0.3 percent).

Overall, CIPEC exceeded the targets it set for itself: from 1990 to 1999, industrial energy intensity improved, on average, by about 1.9 percent per year, while emissions for 1999 are confirmed at approximately 2 percent below the 1990 base case level (Figure 8).

From 'The State of Energy Efficiency in Canada: Office of Energy Efficiency Report 2001'. For more information visit http://energy-publications.nrcan.gc.ca. ET