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The State of Energy Efficiency in Canada, Office of Energy Efficiency Report 2005

The State of Energy Efficiency in Canada

The Office of Energy Efficiency (OEE) has become Canada's foremost centre for collecting and analysing energy efficiency data, analysing trends in energy use and developing and delivering 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 greenhouse gas (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. Thus, to track changes in energy efficiency, the OEE uses a factorization methodology to develop the OEE Energy Efficiency Index, the only one of its kind in Canada.

The OEE Index³ depicts annual changes in energy efficiency in the Canadian economy. 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, namely activity, weather, structure and service level, the resulting estimate of energy efficiency includes some factors not related to efficiency. For example, the estimate of industry energy efficiency will include the effect of changes in sub-sector mixes of products or in the products themselves.

The OEE Index³ shows that, even with the many barriers to improvement in energy efficiency, strong and measurable progress has been made, due in part to the programs of the OEE. For 1990-2002, the OEE Index shows an increase in value, indicating that energy efficiency improved by 13 percent (see Figure 3). As a result of this improvement, Canadians saved approximately $11.6 billion in energy costs in 2002 alone.

Energy use increased between 1990 and 2002. Without improvements in energy efficiency, increases attributable to activity, weather, structure and service level would have led to an increase of 31 percent. However, as a result of a 13 percent improvement in energy efficiency, actual energy use increased by 18 percent (see Figure 4).

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. The following are a few highlights from the analysis:

• In the residential sector, the combined effects of a 23 percent increase in activity (which is represented by a mix of households and floor space), an increase in energy demand due to weather (a colder winter and a warmer summer in 2002 relative to 1990) and an increase in the average number of major appliances per household were partially offset by a 20 percent improvement in energy efficiency. This kept the increase in residential energy use over the period to about 9 percent over 1990 levels.
  
  
• A 7 percent improvement in energy efficiency in the commercial/institutional sector over 1990-2002 reduced GHG emissions by almost four megatonnes.
  
  
• Although there was a 44 percent increase in industrial activity, much of it occurred in less energy-intensive industries, such as electrical and electronic products. That, along with a 14 percent improvement in energy efficiency between 1990 and 2002, restrained the increase in energy use in the industrial sector to 17 percent, which reflects changes in activity, structure and efficiency.
  
  
• Passenger transportation energy use increased by 13 percent, and freight transportation energy use increased by 36 percent. Thus energy use increased an average of approximately 23 percent in the transportation sector. A 10 percent improvement in energy efficiency helped offset increases in energy use.

Energy Intensity/Energy Efficiency

Although aggregate energy intensity is often used as a proxy for energy efficiency, there is a distinction between these two terms. Aggregate energy intensity is either the ratio of energy use per unit of gross domestic product (GDP) or energy use per capita. However, this measure is misleading because, in addition to pure energy efficiency, energy intensity captures (among other things) the impacts of weather variations and changes in the structure of the economy.

To properly gauge changes in energy efficiency over time, differences in economic structure and weather need to be normalized or factored out of the intensity calculation. The OEE applies an internationally recognized factorization analysis technique to isolate the impact of energy efficiency on changes in Canadian energy use.

Figure 5 compares, for Canada, an index of annual variation in energy intensity with the OEE's index of changes in energy efficiency over 1990-2002. For comparison purposes, the indexes present improvements in energy intensity/energy efficiency as a downward trend (as opposed to an upward trend, as depicted in Figure 3).

³ For more information on the OEE Energy Efficiency Index, see Energy Efficiency Trends in Canada, 1990 to 2002 – June 2004. The document can be viewed on the OEE Web site at oee.nrcan.gc.ca/corporate/statistics/neud/dpa/data_e/Trends04/TofC.cfm (for the HTML version) and oee.nrcan.gc.ca/corporate/statistics/neud/dpa/data_e/Trends2004.pdf (for the PDF version).