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Energy Efficiency Trends in Canada, 1990 to 2004

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Chapter 4. Commercial/Institutional Sector

Definition: The commercial/institutional sector in Canada includes activities related to trade, finance, real estate, public administration, education and commercial services (including tourism). These activities have been grouped into 10 activity types based on NAICS. Although street lighting is included in total energy use for the sector, it is excluded from the factorization analysis because it is not associated with floor space activity.

Changes to the Commercial/Institutional End-Use Model (CEUM) and Floor Space Data

To continually improve our analysis, this year, the OEE has refined and improved the modelling framework (CEUM) and revised its floor space data. First, the OEE reviewed CEUM and implemented a redesign to improve how energy is allocated among different activity types and to various end-uses in the commercial/institutional sector. Second, some NAICS floor space data previously attributed to the industrial sector, and therefore excluded from the 2003 database, were re-assessed and allocated to certain commercial/institutional activity types (e.g. offices, transportation and warehousing). Given these changes, energy allocations in this year’s database are different from what was presented in previous reports.

Between 1990 and 2004, energy use in the commercial/institutional sector rose by 35 percent, from 867.0 PJ to 1171.2 PJ. As a result, energy-related GHG emissions (including those related to electricity and street lighting) grew by 42 percent, from 47.8 Mt to 67.9 Mt. As shown in Figure 4.1, since about 2000, observed energy efficiency improvements in the commercial/institutional sector have been modest. See the text box, "Possible Underestimation of the Energy Efficiency Effect," for additional explanation.

Figure 4.1 Energy Use, With and Without Energy Efficiency Improvements, 1990-2004 (index 1990 = 1.0)

Figure 4.2 shows the various factors influencing changes in energy use and related GHG emissions between 1990 and 2004:

a 24 percent increase in activity (floor space), a by-product of growth in the Canadian economy,¹ led to an increase of 218.6 PJ in energy use and 12.7 Mt in GHG emissions;
structural changes in the sector (the mix of activity types) increased energy use by 3.3 PJ, and GHG emissions by 0.2 Mt;
the winter in 2004 was colder than in 1990, but the summer was cooler. The net result was an 11.0 PJ increase in energy demand in the commercial/institutional sector for space conditioning. GHG-related emissions rose by 0.6 Mt;
an increase in the service level of auxiliary equipment, or the penetration rates of office equipment (e.g. computers, fax machines and photocopiers), led to a 75.5 PJ increase in energy use and a 4.4 Mt increase in GHG emissions; and
improvements in the energy efficiency of the commercial/institutional sector saved 3.0 PJ of energy and 0.2 Mt of GHG emissions. See the text box, "Possible Underestimation of the Energy Efficiency Effect," for additional explanation.

Figure 4.2 Impact of Activity, Structure, Weather, Service Level and Energy Efficiency on the Change in Energy Use, 1990-2004 (petajoules)

* "Service Level Effect" refers to the service level of auxiliary equipment in the commercial/institutional sector.
** "Other" refers to street lighting, which is included in the "Total Change in Energy Use", but excluded from the factorization analysis.

Possible Underestimation of the Energy Efficiency Effect

Between 1999 and 2004, energy use in the commercial/institutional sector increased by 20 percent whereas floor space data (activity driver), increased much more slowly, about 8 percent. This rapid growth in energy use since 1999, mostly due to heavy fuel oil (188 percent rise), light fuel oil and kerosene (95 percent rise), has led to sharp decreases in the energy efficiency effect since 1999. Statistics Canada (STC) has been unable to ascertain the reason (or reasons) for these spikes in petroleum use, particularly heavy fuel oil. Some of the change may be due to legitimate fuel switching away from natural gas, which sharply increased in price in 2000, to light fuel oil. However, there is some evidence that fuel marketers (included in the commercial/institutional sector) are buying petroleum products from refineries and then re-selling the fuel to other sectors (e.g. industrial, transportation). As a result, some heavy fuel oil, light fuel oil and kerosene may be erroneously attributed to the commercial/institutional sector. However, there is inadequate information to determine the extent of the problem. NRCan is currently working with STC to better understand the data trends and to improve the quality of the reported commercial/institutional data.

Figure 4.3 shows the effects of activity, structure, weather, service level and energy efficiency on energy use. The impact of structural changes was marginal and there were no clearly defined climate-based trends. Steady increases in activity and, to a lesser degree, service level contributed most to increases in energy use between 1990 and 2004. Energy efficiency has slowed down this rate of increase, but since 1999, this offset has been getting smaller. In the early part of the period, fuel switching away from oil towards natural gas helped to improve energy efficiency. After 1999, due to a relative decrease in electricity consumption combined with a sharp increase in natural gas prices, there appears to have been some fuel switching back towards light fuel oil, reversing some of these earlier efficiency gains. Large increases in heavy fuel oil use since 2001, including a large spike in 2003, further contributed to this decline in energy efficiency.

Figure 4.3 Changes in Energy Use Due to Activity, Structure, Weather, Service Level and Energy Efficiency, 1990-2004 (petajoules)

As illustrated in Figure 4.4, the commercial/institutional sector recorded a 42 percent, or 20.1 Mt, increase in GHG emissions, including those related to electricity, between 1990 and 2004. Most of the increase was due to higher energy consumption, though a rise in GHG intensity also played a role. Despite a decrease in the electricity share during the analysis period, a higher GHG intensity in electricity production as well as additional use of heavy fuel oil contributed to the increase in GHG intensity in the commercial/institutional sector.

Figure 4.4 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 electricity-related GHG emissions are excluded, GHG emissions were 47 percent, or 12.1 Mt, higher in 2004 than in 1990 (Figure 4.4). The increase in GHG intensity was due to a shift towards heavy fuel oil in the energy mix.

¹ There is often a delay of two to three years between the decision to build (determined by economic conditions at that time) and the physical completion of new floor space.

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