Market News

 September 26, 2007
A demand perspective on greenhouse gases in Canada

 A report released this week by Statistics Canada on Canadian greenhouse gas emissions between 1990 and 2002 shows that while external trade greatly benefits the Canadian economy, it also has caused greenhouse gas production to grow substantially.

A great deal of the increase in total greenhouse gas emissions in Canada between 1990 and 2002 can be attributed to emissions associated with the production of fossil fuels destined for export markets.

According to the Study, exports represented nearly half of the industrial emissions of greenhouse gases in Canada in 2002, the largest single share of emissions from a demand perspective. Typically, emissions are reported from a supply perspective, showing how much pollutant is produced and by whom.

While this supply perspective is important, it is also useful to look at emissions from a demand perspective. This shows how the consumption of goods and services for different purposes (household use, for example) drives the industrial production of greenhouse gas emissions.

The study found that between 1990 and 2002, total greenhouse gas emissions from industrial sources increased 18.4% to 573,843 kilotonnes. Exports accounted for the vast majority of this increase.

During this period, greenhouse gas emissions from the production of goods and services sent to international markets surged 49.9% to 264,358 kilotonnes.

After exports, the production of goods and services purchased by Canadian households was the second largest source of greenhouse gas emissions from a demand perspective. However, emissions associated with industrial production to meet this personal spending rose only 6.9% during this period to 209,787 kilotonnes.

The leading greenhouse gas emitters from goods destined for export markets are shown in Figure 1.

Compared to 1990, the year 2002 showed a 50% increase in greenhouse gas emissions from the production of goods and services sent to external markets. In contrast, there was only a 0.4% increase in greenhouse gases from emissions caused by the production of goods and services to satisfy the demands of the domestic market. Combined, these two sources of demand led to an overall 18% increase in industrial emissions.

The largest source of this growth was the export of mineral fuels, including coal, crude oil, and natural gas. From 1990 to 2002, as worldwide demand for fuels surged, greenhouse gas emissions from the production of exported fuels jumped 135%.Most of these increased GHG emissions can be tied to the remarkable boom in Alberta, which is due to the surge in demand for its valuable oil and gas.

Figure 2 shows the percentage change in greenhouse gas emissions for major emitting industries from 1990 to 2002. In addition to the export of mineral fuels, other utilities (thermal coal power) increased its greenhouse gas emissions by 177% and food products emissions grew by 120%.

As exports have increased in quantity and value, so too have imports. Imports also have associated emissions of greenhouse gases, but these emissions do not occur in Canada and are not typically included in Canada's emissions estimates. Between 1990 and 2002, emissions outside the country associated with Canadian demand for imported goods and services increased an estimated 15%.

The study also found that the use of fuel to power motor vehicles was by far the main source of greenhouse gas emissions associated directly with households.

These emissions are considered direct because they result from households' own use of fossil fuels. The other direct emissions from households are from the use of fuel oil and natural gas to heat homes. Greenhouse gas emissions associated with the direct consumption of fuels by households amounted to 111,276 kilotonnes in 2002.

The full Statistics Canada report, A Demand Perspective on Greenhouse Gas Emissions can be downloaded at the following link.