Improving Energy Performance in Canada – Report to Parliament Under the Energy Efficiency Act For the Fiscal Year 2005-2006

Introduction

Natural Resources Canada's Efficiency and Alternative Energy Program

Since the early 1990s, Natural Resources Canada (NRCan) has emphasized the promotion of energy efficiency and the use of alternative energy (i.e. alternative transportation fuels and renewable energy) as a means to reduce greenhouse gas (GHG) emissions and improve the Canadian economy.

A complete list of NRCan's efficiency and alternative energy (EAE) initiatives in 2005-2006 is provided in Appendix 1. These initiatives engage Canadian society and all major sectors of the economy in new and more advanced approaches to secondary energy use – i.e. to the consumption of energy in the residential, commercial/institutional, industrial and transportation sectors.

NRCan's EAE initiatives are managed by

• the Office of Energy Efficiency, which delivers market transformation initiatives to improve energy efficiency and the use of alternative transportation fuels;
• the CANMET¹ Energy Technology Centre and the Mineral Technology Branch, which deliver EAE research, development and demonstration (R,D&D) initiatives;
• the Electricity Resources Branch, which delivers market transformation initiatives for renewable energy; and
• the Science Branch of the Canadian Forest Service, which undertakes research and development (R&D) in the use of forest biomass for energy.

In its efforts to improve energy efficiency and increase the use of alternative energy, NRCan emphasizes partnership and cooperation with stakeholders such as other levels of government, the private sector and non-governmental organizations. With this approach, the demand side of the energy market moves toward more energy-efficient capital stock, production processes and operating practices without reducing service or comfort levels. On the supply side, Canada participates in developing technology for tapping renewable energy resources and alternative transportation fuels as well as for increasing the energy efficiency of energy production.

Policy Instruments

NRCan's key policy instruments are as follows:

• regulation
• financial incentives
• leadership
• information
• voluntary initiatives
• research, development and demonstration

Figure 1 shows how these policy tools work together to increase energy efficiency, i.e. how they help to reduce the amount of energy needed to obtain a certain level of service. Energy performance regulations eliminate less efficient products from the market. Fiscal incentives, voluntary programs and information increase the take-up of existing opportunities to use energy more efficiently. R&D increases the opportunities for achieving greater levels of efficiency in a particular type of energy use.

Moving the Market.

Regulation
The Energy Efficiency Act gives the Government of Canada the authority to make and enforce regulations, primarily for the purpose of establishing performance and labelling requirements for energy-using products, doors and windows that are imported or shipped across provincial borders.

Financial Incentives
NRCan uses financial incentives to encourage final users of energy to employ energy efficiency and renewable energy technologies and practices. NRCan also offers financial incentives for wind energy, ethanol plants, natural gas vehicles and refuelling infrastructure.

Leadership
Leadership means setting an example for other levels of government and for the private sector by increasing energy efficiency and the use of alternative energy in the Government of Canada's operations.

Information
NRCan disseminates information to consumers, using methods that range from broad distribution to individual consultations with clients, to increase awareness of the environmental impact of energy use and to encourage consumers to become more energy efficient and make greater use of alternative energy sources. Activities include publications, exhibits, advertising, toll-free lines, conferences, Web sites, workshops, training, building design software and promotional products.

Voluntary Initiatives
Companies and institutions work with NRCan on a voluntary basis to establish and achieve energy efficiency objectives. NRCan's voluntary EAE initiatives target large consumers of energy in the commercial/institutional and industrial sectors and organizations whose products are important determinants of energy use. The initiatives involve industry-government agreements and, for groups of large industrial energy users, energy efficiency target setting. NRCan provides a variety of support services to assist and stimulate action by companies and institutions on energy efficiency, including developing standards and training.

Research, Development and Demonstration
NRCan's EAE initiatives support the development and dissemination of more energy-efficient equipment, processes and technologies, and alternative energy technologies. R&D also provides the scientific knowledge needed to develop the technologies, codes, standards and regulations required for the sustainable use of energy.

NRCan provides national leadership in energy science and technology (S&T) by undertaking in-house research in its own laboratories, contracting out research activities to other organizations and carrying out the federal funding initiatives listed in Chapter 9, which are the only federal interdepartmental S&T investment funds with a focus on the energy sector and its economic and environmental effects.

Measuring Progress

The primary goal of NRCan's EAE initiatives is to change energy consumption patterns to obtain environmental and economic benefits. Part of assessing program progress and performance involves considering both program delivery and program effectiveness.

NRCan monitors and tracks the following three aspects of program delivery:

• program outputs
• program outcomes
• market outcomes

Program outputs are the items produced regularly, such as information and marketing materials, demonstration projects, financial incentives and regulations. Program outputs are designed to lead to program outcomes – namely, changes in the behaviour of groups targeted by a program. These groups may be either energy users or producers of energy-using equipment or structures. For example, program outcomes occur when consumers purchase more energy-efficient appliances than they would have if there were no program. Other important factors that influence consumer behaviour include product price, household income, personal taste and other government and non-government programs.

Since program outcomes can directly affect the amount and type of energy consumed in the market, they contribute, in part, to observable market outcomes. Market outcomes ultimately reflect the impacts of NRCan programs on changes in energy efficiency, energy intensity, GHG emissions and the use of alternative energy. In this sense, achievement of a targeted market outcome, or observable progress towards a market outcome, serves as an indicator of program effectiveness. An example of a program outcome leading to a market outcome is a householder's purchase of a more energy-efficient appliance, resulting in reduced use of electricity. Depending on the source of electricity and how the utility changes its electricity-generating methods to meet the change in demand resulting from reduced electricity use, this could also lead to a decline in GHG emissions.

Data Collection and Analysis

In 1991, NRCan launched the National Energy Use Database (NEUD) initiative to help the department improve its knowledge of energy consumption and energy efficiency at the end-use level in Canada and to support NRCan's analytical expertise. The NEUD initiative plays a number of crucial roles directly related to NRCan program activities; however, its most important role is to secure the development of a reliable, Canada-wide information base on energy consumption at the end-use level for all energy-consuming sectors.

The NEUD initiative consists of several broad components that typically involve conducting large- and small-scale surveys of the stocks and characteristics of energy-using equipment and buildings (both commercial/institutional buildings and residential dwellings), observing Canadians' behaviour with respect to energy use, monitoring the adoption of new technologies in the marketplace, and participating in the development of energy end-use data and analysis centres (DACs) across Canada.

The main objective of the DACs is to create a base of expertise for the analysis of energy consumption at the end-use level in Canada. The DACs are mandated to improve the accessibility and comparability of existing data on the evolution of energy consumption and its impact on environmental quality. Three DACs currently exist: the transportation centre at Université Laval in Québec City, Quebec; the industrial centre at Simon Fraser University in Burnaby, British Columbia; and the buildings centre at the University of Alberta in Edmonton, Alberta.

The centres have made significant contributions to NEUD's mandate of improving knowledge of energy consumption and energy efficiency at the end-use level in Canada. For example, the transportation centre at Université Laval and the industrial centre at Simon Fraser University used a discrete choice model in 2005-2006 to analyse consumers' preferences for personal vehicles when they are faced with new technologies and alternative fuels. The results will be used to forecast the adoption of new technologies and alternative fuels, and the potential reductions in energy use and GHG emissions.

GHG Emissions and Climate Change

Climate change is a global challenge arising from the continuing buildup in levels of anthropogenic (humanproduced) GHGs in the atmosphere in addition to naturally occurring emissions. GHGs are composed of a number of gases, and the main source of anthropogenic emissions is the combustion of fossil fuels. Substantially reducing GHG emissions is a challenge, particularly given Canada's highly industrialized and resource-based economy. Solutions require a multifaceted, coordinated domestic response and a high level of cooperation among all nations.

In This Report

This thirteenth annual Report to Parliament focuses principally on EAE initiatives that address secondary energy use. Trends in energy use and GHG emissions in Canada are discussed in Chapter 1. Chapter 2 discusses the equipment regulations under the Energy Efficiency Act and equipment labelling activities. Chapters 3 to 6 review individual EAE initiatives to improve energy use in housing, buildings, industry and transportation, highlighting their achievements and progress indicators. Chapter 7 deals with renewable energy sources and use. Chapter 8 describes the Government of Canada's actions to improve its own use of energy. Chapter 9 describes general programs not specific to EAE initiatives discussed in Chapters 3 to 7. The final chapter describes domestic and international cooperation in EAE. Appendix 1 contains information on NRCan's EAE expenditures. Appendix 2 contains detailed information on the data presented in this report.

¹ CANMET is the Canada Centre for Mineral and Energy Technology.