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Canada’s energy perspectives and policies for sustainable development
Applied Energy 86 (2009) 407–415
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Canada’s energy perspectives and policies for sustainable development Karen Hofman, Xianguo Li * Department of Mechanical and Mechatronics Engineering, University of Waterloo, 200 University Avenue West, Waterloo, ON, Canada N2L 3G1
a r t i c l e
i n f o
Article history: Received 14 September 2007 Received in revised form 14 October 2007 Accepted 16 October 2007 Available online 20 September 2008 Keywords: Canadian Government Energy policy Environmental impact Renewable energy Sustainable development
a b s t r a c t A regression analysis is performed to make projections for the Canadian energy production and consumption. These have been increasing and are projected to increase even further in the near future. The primary energy production and consumption are projected to increase by 52% and 34%, respectively, by 2025 over 2004 if business as usual. The amount of fossil energy resources is finite and the extraction, transportation and combustion of fossil fuels cause environmental pollution and climate change. On the other hand, energy plays an important role in the economic and social development of Canada. Canada can develop further from an energy balance point of view, but this alone cannot be sustainable, because of the negative consequences of the major energy use on the environment. Application of energy localization and diversification is a promising solution, but in order to reach that, better energy efficiency and more use of renewable energy are necessary. Instead of non-compulsory policies Canada’s policy approach should have more compulsory policies. Only then Canada can be made to develop further in a sustainable manner. Ó 2008 Elsevier Ltd. All rights reserved.
1. Introduction Canada is an energy-intensive country: the energy sector is an important part of Canada’s economy in terms of investment, trade, income generation and employment [1]. The Canadian energy demand and production is increasing further every year. Canadian primary energy production increased from 11,495 PJ to 16,594 PJ between 1990 and 2004, an increase of 44%. In the same period the Canadian primary energy consumption increased from 9229 PJ to 11,617 PJ, which is an increase of almost 26% [2]. Not only the Canadian energy consumption has been increasing every year, but also the worldwide energy consumption has been increasing rapidly, because energy is an essential input to all forms of economic and social activities and plays an important role in the economic and social development of a country. The major energy demand of fossil fuels has major consequences. One of the main issues is that the amount of fossil resources is finite and that it is not sure how long these fossil fuels are available for future generations. Another main environmental problem caused by the major energy consumption is the emission of toxic chemical pollutants, greenhouse gases like CO2 and other air pollutants. These cause climate change and environmental pollution of air, land and water, which has a negative impact on the health of humans and all other life forms on earth. Sustainable development (developing sustainable or achieving sustainability) means the satisfaction of present needs without * Corresponding author. Tel.: +1 519 888 4567x36843; fax: +1 519 885 5862. E-mail address: [email protected] (X. Li). 0306-2619/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.apenergy.2007.10.010
compromising the ability of future generations to meet their own needs [3,4]. Sustainability can be seen as the final goal: a balance of social and economic activities and the environment. Sustainable development is a mean of reaching total sustainability. A sustainable energy sector has a balance of energy production and consumption and has no, or minimal, negative impact on the environment (within the environmental tolerance limits), but also gives the opportunity for a country to employ its social–economic activities. Given this definition and the current trends in the energy sector as described above, it can be concluded that the manner Canada is developing at the moment is definitely not sustainable. Essential steps towards a sustainable energy future must be made in order to make Canada develop in a sustainable manner, because little has changed so far in the Canadian energy behaviour and technology. In order to really break the current trends radical changes are needed, small steps are not sufficient to reach the goal. To make these changes, with improvement in the quality of life and with having room for further development and further population and economical growth, the Canadian Government has to step forward and take the lead. According to Dincer and Dost [5] developing a good energy policy is not possible without enough knowledge of past and present energy consumption and likely future demands. In 1997 Dincer et al. [6] analyzed the current situation of Canada’s energy resources and provided future projections, but a decade after their projections it can be concluded that the total Canadian energy production and energy demand has grown even further as they predicted. Other trend analyses are performed by Tutmez [7] and
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Dincer and Dost [5]. Tutmez performed a trend analysis for the projection of energy related carbon dioxide emissions and forecasted the 2025 world’s carbon dioxide emissions from fossil fuels between 30,000 and 32,000 million metric ton. Dincer and Dost [5] analysed the close relationship between the GDP, the population of Canada and Canada’s energy supply and consumption over the years. Li [8] concludes that the best approach to the issue of energy, environment and sustainable development is the diversification and localization of energy systems, which is also the best approach to the security of energy. The dominance of a single energy source and system, no matter how ‘‘perfect” it might be at a time, would be unsustainable in the long run. Canada has good possibilities to apply energy diversification and localization, but currently Canada is still exporting and importing major amounts of energy and is still very dependent on fossil fuels. An effective energy policy is necessary in order to successfully apply the diversification and localization of energy systems. According to Tampier [9] green power marketing is not an effective green power policy, because the impact of voluntary green power programs is very limited. Rivers and Jaccard [10] have the same opinion about the low effectiveness of marketing, but according to them even subsidies are not effective policies. Without a major change towards more compulsory policies, it will be unlikely that Canada will shift towards more usage of renewable energy and better energy efficiency. Karimi [11] agrees: ‘‘As long as the current energy source is doing the job (at a very low price), there will be a resistance to change by Canadian inhabitants and companies, especially when it takes time, money and effort”. He also states that complete reliance on voluntary programs will not be effective and that voluntary programs must be complemented by regulations. There are many studies about energy statistics and the effectiveness of energy policy, as indicated early. However, not much is directed towards how Canada is able to develop further in a sustainable manner from an energy point of view. The policy of the Canadian Government is of major importance for a sustainable development of Canada. Therefore the goal of this study is to find out how Canada can develop further in a sustainable manner from an energy point of view and what the role of the Canadian Government must be to reach these goals. As stated by Dincer and Dost [5] developing a good energy policy is not possible without enough knowledge of past and present energy consumption and likely future demands. Therefore some statistics about the current situation will be analysed. Historic data will be used to perform a regression analysis. The outcome of that analysis is an equation, which will be used to make predictions of the future developments in the energy sector. Using this prediction the room for further development will be analysed. This will be done from two points of view: from an energy balance point of view (balance between energy production and consumption) and from an environmental impact point of view. This knowledge about the future situation provides more knowledge about what the government will have to do, in order to take care of further sustainable growth. Although energy policy must be considered as a global issue, because the result of energy policy is dependant on global effort, this paper will focus on Canadian energy policy only and analyses only Canadian historic data. Linear regression analysis is used as the method for performing a trend analysis, because this method is suitable to predict the mean future data.
2. Canadian energy statistic analysis The energy data is analysed by performing a trend analysis, which is an analysis that tries to predict the future movements
based on past data [7]. First some historic data is analysed and presented in a graph. Then a linear regression analysis is made to represent these data into an equation of the form
y ¼ a0 þ a1 x The goodness of fit of the regression analysis (R2) is the percentage of variance in the dependent variable projected by the equation. The significance level (F) of the regression analysis must be below 0.05 in order to be able to assume that the projected equation is statistically significant and thus useful. If the significance level is below 0.05, then the equation can be used to estimate future projections. 2.1. Historic projections compared with actual data In 1997 Dincer et al. [6] analyzed the then situation of Canada’s energy resources and provided future projections. A decade after their projections it can be concluded that the Canadian energy production and energy demand has grown beyond what they predicted, with the production and consumption of coal as the only exception. For example Dincer et al. [6] predicted the 2004 oil production and consumption at 4284 PJ and 2689 PJ, respectively, while the actual 2004 oil production and consumption were 5869 PJ and 4763 PJ, which means an underestimation of 37% and 77%, respectively. Figs. 1–3 show the regression lines, for total primary energy consumption and total energy production for coal, natural gas and oil, as projected by Dincer et al. [6] and the actual historic data based on the Energy Statistics Handbook 2006 [2]. 2.2. Regression analysis and future projections Based on historic data from the Ministry of Natural Resources Canada [12] and the Energy Statistics Handbook 1996 and 2006 [2,13] new predictions can be made, using a regression analysis. However, comparing previous projections with actual historic data showed that these expectations can again be too low. The predictions will be made for energy production per fuel type and primary energy demand per fuel type. The economic and demographic development of a country are closely linked to the increased use of energy, hence it is important monitoring developments in this area as well. 2.2.1. Predictions for energy production per fuel type Canada has secure, reliable and diverse sources of energy available, namely oil, gas, coal, uranium and hydro. This availability makes Canada the fifth largest energy producing country in the world, behind the United States, Russia, China and Saudi-Arabia (www.iea.org). Canada does not only produce enough energy for its own major energy demand, but also export significant amounts of energy, mainly to the United States. From 1989 to 1998, the value of energy products averaged about 10% of total exports [4]. Given the historic data of the energy production per fuel type Fig. 4 can be made, presenting the historic fuel consumption and the trend lines, which are made using a regression analysis. The energy production (all in PJ) can be modelled with the following regression functions:
Crude oil ¼ 28:28 103 þ 143:9 year
ð1Þ 3
Natural Gas Liquids ðNGLÞ ¼ 39:21 10 þ 19:92 year ð2Þ Natural Gas ¼ 432:0 103 þ 219:4 year 3
ð3Þ
Coal ¼ 49:47 10 23:96 year
ð4Þ
Total energy production ¼ 751:4 103 þ 383:6 year
ð5Þ
The regression equation that describes the production of nuclear and hydro is not significant, because the F-value is 0.09, which is higher than the 0.05 significance level. Therefore the relation
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Projected production
Oil Production and Consumption (PJ)
6000
Projected consumption
5500
Actual production Actual consumption
5000 4500 4000 3500 3000 2500 2000 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 1. Comparison of oil projections by Dincer et al. [6] and the actual data.
Projected production
Coal Production and Consumption (PJ)
2500
Projected consumption Actual production Actual consumption
2000
1500
1000
500
0 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 2. Comparison of coal projections by Dincer et al. [6] and the actual data.
Projected production
Gas Production and Consumption (PJ)
8000
Projected consumption 7000
Actual production Actual consumption
6000 5000 4000 3000 2000 1000 0 1990
1992
1994
1996
1998
2000
2002
Year Fig. 3. Comparison of gas projections by Dincer et al. [6] and the actual data.
2004
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18,000
Natural Gas Oil Coal
16,000
NGL Nuclear/Hydro Total
Production (PJ)
14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 4. Energy production from 1990 to 2004.
determined for hydro and nuclear (hydro/nuclear = 13.10 103 + 7.299 year) will not be used in further analysis and no future projections will be made based on this equation. The significant equations can be used to make future projections. In 2025 Canadian crude oil production is expected to increase to 8733 PJ (49% increase compared with 2004 and 1.9% annually) and the natural gas liquids production is expected to increase to 1122 PJ (73% increase comparing with 2004 and 2.6% annually). Natural gas production is expected to increase to 12,327 PJ in 2025, which means an increase of 73% comparing with 2004 and a 2.6% annual growth. Coal is expected to decrease to 952 PJ, which is a decrease of 33% compared with 2004 and a 1.9% annual decrease. The total primary energy production is expected to reach 25,258 PJ in 2025, which is an annual increase of 2.0% and a total increase of 52% comparing with 2004. 2.2.2. Predictions of future primary energy consumption per fuel type Canadian consumption of primary energy and electricity per unit of GDP is among the highest in the world [14] and Canada is the world’s largest consumer of energy per capita [6]. There are important structural reasons for such a large energy intensity of the Canadian economy: many energy-intensive sectors (non-ferrous metals, pulp and paper, oil and gas), a very cold climate, high living standards and large travel distances, because of low population density, which causes a high transportation energy demand. Given the historic data of the primary energy consumption per fuel type Fig. 5 can be made, presenting the historic fuel consumption and the trend lines, which are made using a regression analysis. The primary energy consumption (all in PJ) can be modelled with the following regression functions:
Coal ¼ 49:26 103 þ 25:27 year 3
Crude Oil ¼ 142:8 10 þ 73:58 year 3
ð6Þ ð7Þ
Natural Gas ¼ 145:3 10 þ 74:35 year
ð8Þ
Natural Gas Liquids ¼ 17:86 103 þ 9:112 year
ð9Þ
3
Hydro=nuclear ¼ 15:48 10 þ 8:4439 year 3
Total consumption ¼ 368:3 10 þ 189:5 year
ð10Þ ð11Þ
These equations can be used to make future projections. In 2025 Canadian primary coal consumption is expected to increase to
1911 PJ, which is an increase of 48% comparing with 2004 (1.9% annually growth). The primary crude oil consumption is expected to increase to 6153 PJ, which is a 29% growth comparing with 2004 (1.2% annually). Natural gas consumption is expected to increase to 5267 PJ in 2025 (total increase of 46% and an annual growth of 1.8%), while NGL is expected to increase from 468 PJ in 2004 to 593 PJ in 2025 (27% total growth, or 1.1% annual growth). Primary hydro and nuclear consumption is expected to increase to 1620 PJ, which means an increase of 9% comparing with 2004 (0.4% annually). Finally, the total primary energy consumption is expected to reach 15.52 103 PJ in 2025, which means a total growth of 34% comparing with the total primary energy consumption of 2004. The annual growth rate over this period is expected to be 1.4% per year. 2.2.3. Regression analysis and future projections for population and GDP growth The economic development of nations has been closely linked to the increased use of energy. A method of measuring the economic development of a country is by measuring its Gross Domestic Product (GDP) growth. The GDP measures the total output of a country’s economy and represents all goods produced and services rendered by residents and non-residents within the political boundary in one year. The amount of energy used to produce a unit of output (the energy/GDP ratio) is known as energy intensity. This relationship is an indication of the level of economic development of a country. Energy intensity is influenced by various factors, such as technological changes, sociodemographic changes, country output, energy cost and sectoral energy use [5]. Also the rate of population growth plays an important role in increasing the consumption of energy [5]. Based on population and GDP data from StatCan (www.statcan.ca) and energy demand data from the Energy Statistics Handbook 2006 [2] can be calculated that the energy intensity decreased more than 34% since 1989, while energy per capita increased 12% since 1989. Given the historic data of GDP, population and energy demand Figs. 6–8 can be made, presenting the close relationship between energy demand, GDP and population, which are made using a regression analysis. The future projections for GDP population and energy demand can be modelled with the following regression functions:
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Natural Gas Oil Coal
12,000
NGL Nuclear/Hydro Total
Consumption (PJ)
10,000 8,000 6,000 4,000 2,000 0 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 5. Primary energy consumption from 1990 to 2004.
12000
Total Energy Demand (PJ)
11000
10000
9000
8000
7000 25
26
27
28
29
30
31
32
Population in Canada (in Million) Fig. 6. Energy demand per capita.
Population ¼ 591:8 106 þ 311:2 103 year 6
ð12Þ
3
GDP ðmillionCADÞ ¼ 119:5 10 þ 60:30 10 year ð13Þ Total Primary Energy demand ðPJÞ ¼ 778:4 þ 2:3264 population þ 2:691 103 GDP
ð14Þ
GDP ðmillion CADÞ ¼ 5:057 106 þ 0:1987 population ð15Þ
ergy being delivered to the international market [15]. In the near future the Canadian energy production will still exceed the domestic energy consumption, because of a high amount of export, mainly to the United States. There are no reasons to assume that the current trends in the energy sector will not continue in this way. 3. Sustainable energy sector
2.3. Summary from statistical analysis The Canadian energy consumption is increasing by 1.4% per year. This does not seem like a big increase, but this means that by 2025 the total energy consumption is 34% higher than the energy consumption in 2004. The main reasons for the growth in energy consumption are the GDP and the population growth. Another trend worth noting is the much larger growth in energy production than in energy consumption between 1990 and 2004. This is a consequence of Canada’s large fossil fuel resources and an economy geared to take advantage of them, with increasing quantities of en-
Before describing how Canada can develop further (meaning further population growth and further GDP growth) in a sustainable manner from an energy availability point of view first the concept of ‘‘sustainable development” needs to be worked out a little further. Sustainable development means the satisfaction of present needs without compromising the ability of future generations to meet their own needs [4]. Hence, in the Canadian context, sustainable energy development can be defined as maximising energy’s contribution to economic growth and to the development of the Canadian economy while enhancing environmental quality and
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12000
Total Energy Demand (PJ)
11500 11000 10500 10000 9500 9000 8500 8000 6
7
8
9
10
11
12
13
GDP (100 billion CAD) Fig. 7. Energy intensity (primary energy demand per GDP).
14
GDP (100 billion CAD)
13 12 11 10 9 8 7 6 5 27
27.5
28
28.5
29
29.5
30
30.5
31
31.5
32
Population in Canada (in million) Fig. 8. GDP per capita.
meeting the needs of present and future generation [4]. A sustainable energy sector has a balance of energy production and consumption and has a low impact on the environment, but gives on the other hand also the opportunity for a country to employ its social–economic activities. The best approach to the issue of energy, environment and sustainable development is the diversification and localization of energy systems, which is also the best approach to the security of energy [8]. Localization of the energy sector will ensure the energy sector with a balance of energy production and consumption on local level, while diversification of the energy system minimises the negative impact on the environment. In order to reach sustainability the Canadian Government needs to establish an economic framework while still enjoying the maximum benefit from the country’s natural resources, technology, knowledge, labour and capital, while consuming and producing energy in ways that meet the principles of sustainable development [4]. According to the Canadian Government sustainable development does not necessarily imply preserving one particular source of energy or another. Hence, the challenge of sustainable development is not to guarantee future generations with specific reserve levels for any particular form of energy, but the challenge is to pro-
vide secure, safe, efficient, reasonably priced and increasingly environmentally-friendly access to energy services [4]. 3.1. Production and consumption balance The first requirement for sustainability in the energy sector is a balance of energy production and consumption on local level (localization). Canada has good possibilities to apply energy localization, but currently Canada is still exporting and importing major amounts of energy and is still very dependent on fossil fuels. For other countries localization and diversification of energy might be a challenge, because they lack of sufficiently reliable energy resources and are currently dependent on other countries’ resources. These countries have to search for alternative energy resources in order to develop further in a sustainable manner. Analyzing the future energy projections made above, can be concluded that in Canada the production of energy will still exceed the energy demand in the future, so the export rate is higher than the import rate. This means that, from a localization of the energy sector point of view, there is still space for further development for Canada with current production levels, in case Canada does not export energy anymore.
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By substituting the equation for GDP per capita (Eq. (16)) in the equation for energy demand per capita and GDP (Eq. (15)), the following equation for energy demand based on population growth can be formulated
Total Primary Energy demand ðPJÞ ¼ 778:4 þ 2:326 104 population þ 2:691 103 ð5:057 106 þ 0:1987 populationÞ 3
¼ 12:83 10 þ 7:673 10
gasses in Canada increased from 599,000 kiloton CO2 equivalent in 1990 to 758,000 kiloton CO2 equivalent in 2004 [15]. This means a total increase of 27% and an annual increase of 1.7%. The current emissions are 35% above Kyoto target [15]. A regression analysis is done in order to project future greenhouse gas emissions. With a goodness of fit (R2) of 99.0% the following regression functions are found to project the Canadian greenhouse gasses emissions (in 1000 ton CO2 equivalent): Greenhouse gas emission ¼ 8257 þ 65:18 energy demand
¼ Energy demand ðPJÞ 4
Population
ð16Þ
Under the condition of balance in production and consumption, this equitation can be used to calculate the possible population increase, while keeping the production levels on the current level of 16,600 PJ per year. With current production the population can increase to over 38 million inhabitants (20% growth compared with 2004) and the Canadian GDP can grow to 2.5 106 million CAD (which means a grow of 98% growth compared with 2004), if all energy production is used for domestic energy demand. 3.2. Minimal negative environmental impact In order to analyse whether the current development can be called sustainable it is necessary to consider the second requirement, namely the negative impact on environment of the current energy production and consumption, too. Currently the energy sector has a considerable negative impact on the environment. First of all, the combustion of fossil fuels cause climate change and air pollution. Secondly, the extraction and transport of the fossil fuels has a big negative impact on the surrounding environment. Lastly, the amount of fossil fuels left are finite, hence the current major energy use does influence the ability of future generations to meet their needs. The emissions from the combustion of fossil fuels such as coal, oil and natural gas account for more than three-quarters of the total Canadian greenhouse gas emissions in 2001 [14], while non-energy sources (like industrial and agricultural processes) are responsible for about 12% of total emissions [16]. The main greenhouse gas is carbon dioxide (CO2), which accounts for over 80% of Canada’s greenhouse gasses [16]; other greenhouse gasses are methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluorocarbons and hydrofluorocarbons [15]. Being a natural product of all combustion, CO2 produced in combustion is perhaps not strictly pollutant [7], but the current major emissions from fuel combustion have disastrous consequences: they cause climate change and environmental pollution of air, land and water, which has also impact on human health. Climate change is predicted to manifest itself differently in different regions of the world, but in general, temperatures and sea levels are expected to rise and the frequency of extreme weather is expected to increase. The main objective is to achieve stabilization of greenhouse gasses concentrations in the atmosphere at a level that would prevent dangerous interference with the climate system [17]. The combustion of fossil fuel causes other air pollution as well. According to the Ontario Medical Association’s analysis [18] air pollution results in almost 5800 premature deaths in Ontario and costs the province almost a billion dollars per year. If nothing is done to further improve the quality of air in Ontario, the number of premature deaths is estimated to hit 10,000 lives by the year 2026. The combined healthcare and lost productivity costs are expected to reach well over a billion dollars [18]. In 1997 at Kyoto the Canadian Government made the commitment to reduce Canada’s greenhouse gas emissions to 6% below 1990 levels by 2008 tot 2012 [4,19,20]. But, instead of reducing Canada’s GHG emissions, the total amount of emitted greenhouse
413
ð17Þ
Greenhouse gas emission ¼ 24:30 106 þ 12:50 103 year ð18Þ
Both functions are used to calculate the emission projections for 2025 (all in 1000 ton CO2 equivalent). Three different methods are used to calculate these predictions and all three methods have only slightly different outcomes (less then 10% difference between the lowest and highest prediction), as shown below. Method 1: Population (2025): Y = 591.8 106 + 311.2 103 year = 38.38 106 inhabitants GDP (2025): Y = 119.5 106 + 60.30 103 year = 6 2.608 10 million CAD Total primary energy demand (2025) = 778.4 + 2.3264 population (2025) + 2.691 103 GDP (2025) = 16.72 103 PJ Total greenhouse gas emission (2025) = 8257 + 65.18 energy demand (2025) = 1.098 106 Method 2: Total consumption in PJ (2025) = 368.3 103 + 189.5 year = 15.44 103 PJ Total greenhouse gas emission (2025) = 8257 + 65.18 energy demand (2025) = 1.007 106 Method 3: Greenhouse gas emission (2025) = 24.30 106 + 12.50 103 year = 1.013 106 With the current GDP and population growth the energy demand will grow as well, which causes a major growth of the emission of greenhouse gasses. According the predictions the emissions of greenhouse gasses will grow by 33–45% within 2025 compared with 2004 level. Only new technology or restricted emission policy can break these trends. The second issue is the extraction of fossil energy, which has a major negative impact on the environment. Extracting oil from the oil sands ruins the surrounding environment, the same happens with the surroundings of coalmines. For the transportation of the fuels from source to production centre and on to the place of final use roads, railways or pipelines are necessary, which imposes significant negative environmental impact [20]. The damming of large rivers results in flooding and waste from nuclear energy has longterm disposal issues to be resolved [4]. The third point of negative impact is the decreasing availability of energy for future generations. According to the Canadian Government the challenge of sustainable development is not to guarantee future generations with specific reserve levels for any particular form of energy. But currently, without any available alternatives for the future, further growth based on availability is not sustainable growth. Future generations are not secure of sufficient energy production to satisfy their needs. According to the Office of Energy Efficiency, Government of Canada [4] the total uranium reserves are estimated at 40 years of production at current rates and the coal recoverable reserves are 6578 million ton (equal to 115 years of production at current rates). However, future projections show even a further growth in energy production and demand, such that these resources might be depleted even earlier. Experts do not agree about the amount of natural gas and re-
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sources left, because there are supposed to be undiscovered and unconventional reserves, which can extend the years of supply left. Sure is that the reserves are consumed quickly. 3.3. Summary Based on the requirement of energy balance there is room for further development for Canada. However, considering the requirement of no or minimal environmental impact, there is no room for development. The fossil resources are finite and currently there are no alternative resources available for future generations. Another major concern is the fact that the current energy consumption has a major impact on the environment. The emissions from the combustion of fossil fuels cause global climate change and air pollution and are projected to grow by 33–45% within 2025. Also the extraction of fossil fuel causes major damage to the surrounded environment. Further development of Canada in a sustainable manner is only possible if Canada changes its current practice. Canada must stop using so many fossil fuels and emitting so many greenhouse gasses and start becoming more energy efficient and using more renewable energy in order to decrease the negative impact on the environment. However, this is unlikely to occur without government regulation. 4. Role of the government The best approach to reach sustainability (which means a balance of production and consumption and a minimal negative impact) in the energy sector is the diversification and localization of energy systems. Two major changes are necessary for a successful application of energy localization and diversification. The first step is using more renewable energy, which are energy sources that produce electricity or thermal energy without depleting resources. Renewable energy has minimal environmental impact and produced from solar, hydro, biomass, wind or geothermal, etc. [21]. Secondly, energy efficiency and hence the saving of energy will be necessary in order to decrease the amount of energy consumed. Lower energy consumption, while keeping up the same comfort level, will reduce the amount of fossil fuels needed. Moving to a less energy-intensive economy, by adopting more renewable energy and reduce energy demand, and at the same time ensuring continued growth is a big economic and political challenge for Canadian energy policy in the coming years [14]. The Canadian Government should play a key role in stimulating both a switch towards renewable energy sources as well as stimulating energy demand reductions (efficiency), in order to make sure that Kyoto targets will be reached and the availability of energy is guaranteed for future generations. 4.1. Current policy Currently the Canadian Government does not provide the right incentives and does not implement the necessary energy regulations for further sustainable energy development, because of the current trend in the Canadian energy market, which is ‘‘more market and less government”. The Canadian Government is also concerned about adopting stricter regulations, because they think that these regulations will hinder its international competitiveness, possibly resulting in large job losses and out-migration of business. Canada’s main trading partners face less stringent greenhouse gas reductions than Canada, for example the US, which is the destination of 87% of Canada’s exports, has not ratified the Kyoto agreement at all [10]. In Canada’s constitution, jurisdiction over energy is divided between the federal and the provincial government [4]. Federal powers in energy are primary associated with the interprovincial and international movements of energy and energy-using
equipment, and with the works extending beyond a province’s boundaries. This permits the government to develop policies and regulate interprovincial and international trade, pipelines and power lines. The federal government is also responsible for promoting the overall economic development of Canada and is responsible for preserving national interests such as environmental protection [14]. Provincial governments have jurisdictional responsibility for resource management within their borders, including intra-provincial trade and commerce, transportation and environmental impact. They have more jurisdictions over energy than the subnational governments of other federal countries in the IEA [14]. Traditionally, Canadian energy policy has been devoted to the development of Canada’s large oil, gas and coal resources. Royalty, tax and other fiscal policies, as well as provincial land-use policies, have helped to encourage the development of this non-renewable natural capital. In addition, government support for research and development of new technologies has made the production of bitumen and synthetic crude oil from Alberta’s vast supply of oil sands economically viable [1]. According to the Canadian Association for Renewable Energy (CARE) renewable energy received 7.3% of the total spending in research and development of the energy sector, while nuclear took 29%, fossil fuel received 24% and conservation received 25% of the total budget [22,23]. Between 1990 and 1998 the Government of Canada reduced its GHG emissions from an estimated 3847–3102 kilo tonnes (19.4%). By reducing emissions from its own operations and demonstrating leadership in the climate change issue, the government seems to be in a strong position to encourage other sectors of the economy to do likewise and to build a national consensus on addressing climate change [20,24]. But in order to encouraging other sectors to reduce their GHG emissions, the government must do more than giving the good example. Federal government policy over the last decade is based on noncompulsory policies, such as voluntary targets and information provision. These policies have been relatively ineffective in providing the incentives and regulatory structure for dramatic technological and behavioural changes, which are required for significant greenhouse gas emission reductions [10]. Voluntary energy policies will have limited effect, because the public will not change unless there is a good reason to do so. If the current energy source is doing the job, there will be a resistance to change, especially when it takes time, money and effort. Energy prices are low, so changing habits will not be an easy task [11]. Rapid large-scale diffusion of clean energy technologies can provide discounted social benefits, which exceed social costs [25]. However, without any incentives, private companies are not willing to make the investments needed, because they will make the costs, while the society as a whole will have the benefits. At the moment the Canadian energy policy does not create significant incentives for technological and behavioural change [10], because voluntary programs will not be effective to reduce GHG emissions; they must be complemented by regulations [11]. Without a major change in the direction of more compulsory policies, it seems unlikely that Canada will achieve the Kyoto targets in the set time frame [10]. 4.2. New policy Instead of non-compulsory policies, Canada’s policy approach should have more compulsory policies for behavioural and technological change dominated by market-oriented regulation. These compulsory policies are necessary in order to switch towards more renewable energy sources as well as stimulating energy demand reductions, which will lead towards better energy localization and diversification. The sharing of responsibilities between federal and provincial government requires the introduction of complementary and mutu-
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ally reinforcing policies. Close consultation between the federal and provincial governments is essential if Canada wants to move forward towards a better localization and diversification of the energy sector. According to the Canadian Association for Renewable Energy (CARE), Canada urgently needs a new agency to promote renewable energy, which should include federal and provincial departments, utilities, local municipalities and industry, to work collaboratively on exploiting the opportunities offered by renewable sources [23]. This is the first step to be taken by the Canadian Government. This agency can help for close consultation between the federal and provincial governments and make sure that government responsibilities are clear. This agency can initiate the following non-voluntary steps towards a further Canadian energy development: According to Rivers and Jaccard [10] obligatory standards for vehicle emission, renewable portfolio, residential energy efficiency, combined heat and power and carbon sequestration will help to make a technological change. A carbon emission cap and a tradable CO2 permit policy for large industrial emitters are efficient low-cost opportunities for a switch towards more renewable energy sources as well as stimulating energy demand reductions. Under this policy, the government sets a maximum level of emissions and then allocates tradable emission permits to all emitters. All emitters determine their emission levels themselves and whether they will buy or sell emissions in the market [10]. In order to reduce the emissions the carbon taxes must be high enough or carbon emission permits must be scare enough, which will definitely cause a lot of opposition. The Canadian Government has its concerns about implementing the emission cap and tradable permit system, because they do not want to negatively influence the position of Canada in comparison with the US [17]. The Canadian Government should invest in research and development and new deployment of new renewable energies instead of nuclear and fossil fuels. All royalty, tax and other fiscal policies, as well as provincial land-use policies, should encourage the development of renewable energy instead of non-renewable natural capital [1]. Also a supportive fiscal framework for households and small businesses will encourage them to reduce their energy demand and using more renewable energy. For example, currently in the Netherlands 1.3 million households (20%) are purchasing green power. The main driver for this is the Dutch Ecotax, which made conventional energy increasingly more expensive. Green energy and conventional energy now have the same price and together with a massive media campaign this has resulted in a massive switch to green power [9]. All these non-voluntary policy instruments are only likely to make a behavioural and technological change for both a switch towards renewable energy sources as well as stimulating energy demand reductions in the next coming years. They also create a market environment for stimulating the technological change necessary for addressing the long-term nature of the climate change problem at reasonable costs [10]. If, by increasing the energy efficiency and increasing the amount of renewable energy used, the amount of greenhouse gasses emitted can be decreased by 3% per year, then the Kyoto goal of 35% reduction of current emission levels can be achieved in within 15 years. Time is too limited for Canada to achieve a significant change in the Kyoto time frame, but adoption of the policy instruments as mentioned above would make sure that future goals will be achieved [10]. 5. Conclusions Canada’s primary energy production and consumption have been growing much faster than past predictions, and are projected to increase by 52% and 34%, respectively, by 2025 over 2004 if busi-
415
ness as usual, based on the statistical data analysis. Therefore, without additional policy measures Canada is very unlikely to achieve the set goals for Kyoto, nor to have a sustainable development. The present study aims to find out how Canada can develop further in a sustainable manner from an energy point of view and what the role of the Canadian Government in this is. From an energy balance point of view there is still room for further growth, but this will have a major negative impact on the environment if business as usual. Important in this is the role of the Canadian Government. They have to take care of providing incentives for more renewable energy and a higher efficiency, which is necessary to have a diverse and localised energy market. Instead of non-compulsory policies like subsidies and voluntarism in order to meet its Kyoto targets, Canada’s policy approach should have more compulsory policies. More renewable sources and less energy demand will be the necessary steps towards a more localised and more diverse energy system, which will be the basis for further sustainable development of Canada. References [1] Islam M, Fartaj A, Ting D. Current utilization and future prospects of emerging renewable energy applications in Canada. Renew Sust Energ Rev 2004;8:493–519. [2] Government of Canada, Statistics Canada. Energy Statistics Handbook July to September 2006. Ottawa: Government of Canada; 2006. [3] World Commission on Environment and Development (WCED). Our common future (The Brundtland report). Oxford: Oxford University Press; 1987. [4] Government of Canada, Ministry of Natural Resources Canada, Office of Energy Efficiency. Energy in Canada 2000. Ottawa: Government of Canada; 2000. [5] Dincer I, Dost S. Energy intensities for Canada. Appl Energ 1996;53:283–98. [6] Dincer I, Dost S, Li X. Energy reality and future projections for Canada. Energ Sources 1997;19:233–43. [7] Tutmez B. Trend analysis for the projection of energy-related carbon dioxide emission. Energ Explor Exploit 2006;24:139–50. [8] Li X. Diversification and localization of energy systems for sustainable development and energy security. Energ Policy 2006;33:2237–43. [9] Tampier M. Effective green power policies: green power marketing is not enough. Refocus 2003;4:30–3. [10] Rivers N, Jaccard M. Canada’s efforts towards greenhouse gas emission reduction: a case study on the limits of voluntary action and subsidies. Int J Global Energ 2005;23:307–23. [11] Karimi S. Thirteen years after Rio: the state of energy efficiency and renewable energy in Canada. Bull Sci Technol Soc 2005;25:497–506. [12] Government of Canada, Ministry of Natural Resources Canada, Office of Energy Efficiency. Energy use data handbook tables (Canada): total end-use sector. Ottawa: Government of Canada; 2005.. [13] Government of Canada, Statistics Canada. Energy statistics handbook 1996. Ottawa: Government of Canada; 1996. [14] International Energy Agency. Energy policies of IEA countries: Canada; 2004. . [15] Government of Canada, Ministry of Environment Canada, Greenhouse Gas division. National inventory report: 1990–2004, Greenhouse gas sources and sinks in Canada. Ottawa: Government of Canada; 2006. . [16] Government of Canada, Ministry of Natural Resources Canada, Energy Forecasting Division. Canada’s energy outlook 1996–2020. Ottawa: Government of Canada; 1997. [17] Green C, Baksi S, Dilmaghani M. Challenges to a climate stabilizing energy future. Energ Policy 2007;35:616–26. [18] Ontario Medical Association. The illness cost from air pollution: 2005-2026. Health and economics damage estimates; 2005. . [19] Government of Canada, OEE. Emission reduction from federal operations. Ottawa: Government of Canada; 2001. [20] Cuddihy J, Kennedy C, Byer P. Energy use in Canada: environmental impacts and opportunities in relationship to infrastructure systems. Can J Civil Eng 2005;32:1–15. [21] Midili A, Dincer I, Murat A. Green energy strategies for sustainable development. Energ Policy 2006;34:3623–33. [22] Canadian Association for Renewable Energy; 2003. . [23] Canadian Association for Renewable Energy. Canada needs new agency to promote renewables; 2003. . [24] Government of Canada. Emission reductions from federal operation: an update. Progress report to Canada’s Climate Change Voluntary Challenge and Registry Inc. Ottawa: Government of Canada; 2001. . [25] Rivers N, Jaccard M. Choice of environmental policy in the presence of learning by doing. Energ Econ 2006;28:223–42.
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Applied Energy journal homepage: www.elsevier.com/locate/apenergy
Canada’s energy perspectives and policies for sustainable development Karen Hofman, Xianguo Li * Department of Mechanical and Mechatronics Engineering, University of Waterloo, 200 University Avenue West, Waterloo, ON, Canada N2L 3G1
a r t i c l e
i n f o
Article history: Received 14 September 2007 Received in revised form 14 October 2007 Accepted 16 October 2007 Available online 20 September 2008 Keywords: Canadian Government Energy policy Environmental impact Renewable energy Sustainable development
a b s t r a c t A regression analysis is performed to make projections for the Canadian energy production and consumption. These have been increasing and are projected to increase even further in the near future. The primary energy production and consumption are projected to increase by 52% and 34%, respectively, by 2025 over 2004 if business as usual. The amount of fossil energy resources is finite and the extraction, transportation and combustion of fossil fuels cause environmental pollution and climate change. On the other hand, energy plays an important role in the economic and social development of Canada. Canada can develop further from an energy balance point of view, but this alone cannot be sustainable, because of the negative consequences of the major energy use on the environment. Application of energy localization and diversification is a promising solution, but in order to reach that, better energy efficiency and more use of renewable energy are necessary. Instead of non-compulsory policies Canada’s policy approach should have more compulsory policies. Only then Canada can be made to develop further in a sustainable manner. Ó 2008 Elsevier Ltd. All rights reserved.
1. Introduction Canada is an energy-intensive country: the energy sector is an important part of Canada’s economy in terms of investment, trade, income generation and employment [1]. The Canadian energy demand and production is increasing further every year. Canadian primary energy production increased from 11,495 PJ to 16,594 PJ between 1990 and 2004, an increase of 44%. In the same period the Canadian primary energy consumption increased from 9229 PJ to 11,617 PJ, which is an increase of almost 26% [2]. Not only the Canadian energy consumption has been increasing every year, but also the worldwide energy consumption has been increasing rapidly, because energy is an essential input to all forms of economic and social activities and plays an important role in the economic and social development of a country. The major energy demand of fossil fuels has major consequences. One of the main issues is that the amount of fossil resources is finite and that it is not sure how long these fossil fuels are available for future generations. Another main environmental problem caused by the major energy consumption is the emission of toxic chemical pollutants, greenhouse gases like CO2 and other air pollutants. These cause climate change and environmental pollution of air, land and water, which has a negative impact on the health of humans and all other life forms on earth. Sustainable development (developing sustainable or achieving sustainability) means the satisfaction of present needs without * Corresponding author. Tel.: +1 519 888 4567x36843; fax: +1 519 885 5862. E-mail address: [email protected] (X. Li). 0306-2619/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.apenergy.2007.10.010
compromising the ability of future generations to meet their own needs [3,4]. Sustainability can be seen as the final goal: a balance of social and economic activities and the environment. Sustainable development is a mean of reaching total sustainability. A sustainable energy sector has a balance of energy production and consumption and has no, or minimal, negative impact on the environment (within the environmental tolerance limits), but also gives the opportunity for a country to employ its social–economic activities. Given this definition and the current trends in the energy sector as described above, it can be concluded that the manner Canada is developing at the moment is definitely not sustainable. Essential steps towards a sustainable energy future must be made in order to make Canada develop in a sustainable manner, because little has changed so far in the Canadian energy behaviour and technology. In order to really break the current trends radical changes are needed, small steps are not sufficient to reach the goal. To make these changes, with improvement in the quality of life and with having room for further development and further population and economical growth, the Canadian Government has to step forward and take the lead. According to Dincer and Dost [5] developing a good energy policy is not possible without enough knowledge of past and present energy consumption and likely future demands. In 1997 Dincer et al. [6] analyzed the current situation of Canada’s energy resources and provided future projections, but a decade after their projections it can be concluded that the total Canadian energy production and energy demand has grown even further as they predicted. Other trend analyses are performed by Tutmez [7] and
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Dincer and Dost [5]. Tutmez performed a trend analysis for the projection of energy related carbon dioxide emissions and forecasted the 2025 world’s carbon dioxide emissions from fossil fuels between 30,000 and 32,000 million metric ton. Dincer and Dost [5] analysed the close relationship between the GDP, the population of Canada and Canada’s energy supply and consumption over the years. Li [8] concludes that the best approach to the issue of energy, environment and sustainable development is the diversification and localization of energy systems, which is also the best approach to the security of energy. The dominance of a single energy source and system, no matter how ‘‘perfect” it might be at a time, would be unsustainable in the long run. Canada has good possibilities to apply energy diversification and localization, but currently Canada is still exporting and importing major amounts of energy and is still very dependent on fossil fuels. An effective energy policy is necessary in order to successfully apply the diversification and localization of energy systems. According to Tampier [9] green power marketing is not an effective green power policy, because the impact of voluntary green power programs is very limited. Rivers and Jaccard [10] have the same opinion about the low effectiveness of marketing, but according to them even subsidies are not effective policies. Without a major change towards more compulsory policies, it will be unlikely that Canada will shift towards more usage of renewable energy and better energy efficiency. Karimi [11] agrees: ‘‘As long as the current energy source is doing the job (at a very low price), there will be a resistance to change by Canadian inhabitants and companies, especially when it takes time, money and effort”. He also states that complete reliance on voluntary programs will not be effective and that voluntary programs must be complemented by regulations. There are many studies about energy statistics and the effectiveness of energy policy, as indicated early. However, not much is directed towards how Canada is able to develop further in a sustainable manner from an energy point of view. The policy of the Canadian Government is of major importance for a sustainable development of Canada. Therefore the goal of this study is to find out how Canada can develop further in a sustainable manner from an energy point of view and what the role of the Canadian Government must be to reach these goals. As stated by Dincer and Dost [5] developing a good energy policy is not possible without enough knowledge of past and present energy consumption and likely future demands. Therefore some statistics about the current situation will be analysed. Historic data will be used to perform a regression analysis. The outcome of that analysis is an equation, which will be used to make predictions of the future developments in the energy sector. Using this prediction the room for further development will be analysed. This will be done from two points of view: from an energy balance point of view (balance between energy production and consumption) and from an environmental impact point of view. This knowledge about the future situation provides more knowledge about what the government will have to do, in order to take care of further sustainable growth. Although energy policy must be considered as a global issue, because the result of energy policy is dependant on global effort, this paper will focus on Canadian energy policy only and analyses only Canadian historic data. Linear regression analysis is used as the method for performing a trend analysis, because this method is suitable to predict the mean future data.
2. Canadian energy statistic analysis The energy data is analysed by performing a trend analysis, which is an analysis that tries to predict the future movements
based on past data [7]. First some historic data is analysed and presented in a graph. Then a linear regression analysis is made to represent these data into an equation of the form
y ¼ a0 þ a1 x The goodness of fit of the regression analysis (R2) is the percentage of variance in the dependent variable projected by the equation. The significance level (F) of the regression analysis must be below 0.05 in order to be able to assume that the projected equation is statistically significant and thus useful. If the significance level is below 0.05, then the equation can be used to estimate future projections. 2.1. Historic projections compared with actual data In 1997 Dincer et al. [6] analyzed the then situation of Canada’s energy resources and provided future projections. A decade after their projections it can be concluded that the Canadian energy production and energy demand has grown beyond what they predicted, with the production and consumption of coal as the only exception. For example Dincer et al. [6] predicted the 2004 oil production and consumption at 4284 PJ and 2689 PJ, respectively, while the actual 2004 oil production and consumption were 5869 PJ and 4763 PJ, which means an underestimation of 37% and 77%, respectively. Figs. 1–3 show the regression lines, for total primary energy consumption and total energy production for coal, natural gas and oil, as projected by Dincer et al. [6] and the actual historic data based on the Energy Statistics Handbook 2006 [2]. 2.2. Regression analysis and future projections Based on historic data from the Ministry of Natural Resources Canada [12] and the Energy Statistics Handbook 1996 and 2006 [2,13] new predictions can be made, using a regression analysis. However, comparing previous projections with actual historic data showed that these expectations can again be too low. The predictions will be made for energy production per fuel type and primary energy demand per fuel type. The economic and demographic development of a country are closely linked to the increased use of energy, hence it is important monitoring developments in this area as well. 2.2.1. Predictions for energy production per fuel type Canada has secure, reliable and diverse sources of energy available, namely oil, gas, coal, uranium and hydro. This availability makes Canada the fifth largest energy producing country in the world, behind the United States, Russia, China and Saudi-Arabia (www.iea.org). Canada does not only produce enough energy for its own major energy demand, but also export significant amounts of energy, mainly to the United States. From 1989 to 1998, the value of energy products averaged about 10% of total exports [4]. Given the historic data of the energy production per fuel type Fig. 4 can be made, presenting the historic fuel consumption and the trend lines, which are made using a regression analysis. The energy production (all in PJ) can be modelled with the following regression functions:
Crude oil ¼ 28:28 103 þ 143:9 year
ð1Þ 3
Natural Gas Liquids ðNGLÞ ¼ 39:21 10 þ 19:92 year ð2Þ Natural Gas ¼ 432:0 103 þ 219:4 year 3
ð3Þ
Coal ¼ 49:47 10 23:96 year
ð4Þ
Total energy production ¼ 751:4 103 þ 383:6 year
ð5Þ
The regression equation that describes the production of nuclear and hydro is not significant, because the F-value is 0.09, which is higher than the 0.05 significance level. Therefore the relation
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Projected production
Oil Production and Consumption (PJ)
6000
Projected consumption
5500
Actual production Actual consumption
5000 4500 4000 3500 3000 2500 2000 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 1. Comparison of oil projections by Dincer et al. [6] and the actual data.
Projected production
Coal Production and Consumption (PJ)
2500
Projected consumption Actual production Actual consumption
2000
1500
1000
500
0 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 2. Comparison of coal projections by Dincer et al. [6] and the actual data.
Projected production
Gas Production and Consumption (PJ)
8000
Projected consumption 7000
Actual production Actual consumption
6000 5000 4000 3000 2000 1000 0 1990
1992
1994
1996
1998
2000
2002
Year Fig. 3. Comparison of gas projections by Dincer et al. [6] and the actual data.
2004
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18,000
Natural Gas Oil Coal
16,000
NGL Nuclear/Hydro Total
Production (PJ)
14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 4. Energy production from 1990 to 2004.
determined for hydro and nuclear (hydro/nuclear = 13.10 103 + 7.299 year) will not be used in further analysis and no future projections will be made based on this equation. The significant equations can be used to make future projections. In 2025 Canadian crude oil production is expected to increase to 8733 PJ (49% increase compared with 2004 and 1.9% annually) and the natural gas liquids production is expected to increase to 1122 PJ (73% increase comparing with 2004 and 2.6% annually). Natural gas production is expected to increase to 12,327 PJ in 2025, which means an increase of 73% comparing with 2004 and a 2.6% annual growth. Coal is expected to decrease to 952 PJ, which is a decrease of 33% compared with 2004 and a 1.9% annual decrease. The total primary energy production is expected to reach 25,258 PJ in 2025, which is an annual increase of 2.0% and a total increase of 52% comparing with 2004. 2.2.2. Predictions of future primary energy consumption per fuel type Canadian consumption of primary energy and electricity per unit of GDP is among the highest in the world [14] and Canada is the world’s largest consumer of energy per capita [6]. There are important structural reasons for such a large energy intensity of the Canadian economy: many energy-intensive sectors (non-ferrous metals, pulp and paper, oil and gas), a very cold climate, high living standards and large travel distances, because of low population density, which causes a high transportation energy demand. Given the historic data of the primary energy consumption per fuel type Fig. 5 can be made, presenting the historic fuel consumption and the trend lines, which are made using a regression analysis. The primary energy consumption (all in PJ) can be modelled with the following regression functions:
Coal ¼ 49:26 103 þ 25:27 year 3
Crude Oil ¼ 142:8 10 þ 73:58 year 3
ð6Þ ð7Þ
Natural Gas ¼ 145:3 10 þ 74:35 year
ð8Þ
Natural Gas Liquids ¼ 17:86 103 þ 9:112 year
ð9Þ
3
Hydro=nuclear ¼ 15:48 10 þ 8:4439 year 3
Total consumption ¼ 368:3 10 þ 189:5 year
ð10Þ ð11Þ
These equations can be used to make future projections. In 2025 Canadian primary coal consumption is expected to increase to
1911 PJ, which is an increase of 48% comparing with 2004 (1.9% annually growth). The primary crude oil consumption is expected to increase to 6153 PJ, which is a 29% growth comparing with 2004 (1.2% annually). Natural gas consumption is expected to increase to 5267 PJ in 2025 (total increase of 46% and an annual growth of 1.8%), while NGL is expected to increase from 468 PJ in 2004 to 593 PJ in 2025 (27% total growth, or 1.1% annual growth). Primary hydro and nuclear consumption is expected to increase to 1620 PJ, which means an increase of 9% comparing with 2004 (0.4% annually). Finally, the total primary energy consumption is expected to reach 15.52 103 PJ in 2025, which means a total growth of 34% comparing with the total primary energy consumption of 2004. The annual growth rate over this period is expected to be 1.4% per year. 2.2.3. Regression analysis and future projections for population and GDP growth The economic development of nations has been closely linked to the increased use of energy. A method of measuring the economic development of a country is by measuring its Gross Domestic Product (GDP) growth. The GDP measures the total output of a country’s economy and represents all goods produced and services rendered by residents and non-residents within the political boundary in one year. The amount of energy used to produce a unit of output (the energy/GDP ratio) is known as energy intensity. This relationship is an indication of the level of economic development of a country. Energy intensity is influenced by various factors, such as technological changes, sociodemographic changes, country output, energy cost and sectoral energy use [5]. Also the rate of population growth plays an important role in increasing the consumption of energy [5]. Based on population and GDP data from StatCan (www.statcan.ca) and energy demand data from the Energy Statistics Handbook 2006 [2] can be calculated that the energy intensity decreased more than 34% since 1989, while energy per capita increased 12% since 1989. Given the historic data of GDP, population and energy demand Figs. 6–8 can be made, presenting the close relationship between energy demand, GDP and population, which are made using a regression analysis. The future projections for GDP population and energy demand can be modelled with the following regression functions:
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Natural Gas Oil Coal
12,000
NGL Nuclear/Hydro Total
Consumption (PJ)
10,000 8,000 6,000 4,000 2,000 0 1990
1992
1994
1996
1998
2000
2002
2004
Year Fig. 5. Primary energy consumption from 1990 to 2004.
12000
Total Energy Demand (PJ)
11000
10000
9000
8000
7000 25
26
27
28
29
30
31
32
Population in Canada (in Million) Fig. 6. Energy demand per capita.
Population ¼ 591:8 106 þ 311:2 103 year 6
ð12Þ
3
GDP ðmillionCADÞ ¼ 119:5 10 þ 60:30 10 year ð13Þ Total Primary Energy demand ðPJÞ ¼ 778:4 þ 2:3264 population þ 2:691 103 GDP
ð14Þ
GDP ðmillion CADÞ ¼ 5:057 106 þ 0:1987 population ð15Þ
ergy being delivered to the international market [15]. In the near future the Canadian energy production will still exceed the domestic energy consumption, because of a high amount of export, mainly to the United States. There are no reasons to assume that the current trends in the energy sector will not continue in this way. 3. Sustainable energy sector
2.3. Summary from statistical analysis The Canadian energy consumption is increasing by 1.4% per year. This does not seem like a big increase, but this means that by 2025 the total energy consumption is 34% higher than the energy consumption in 2004. The main reasons for the growth in energy consumption are the GDP and the population growth. Another trend worth noting is the much larger growth in energy production than in energy consumption between 1990 and 2004. This is a consequence of Canada’s large fossil fuel resources and an economy geared to take advantage of them, with increasing quantities of en-
Before describing how Canada can develop further (meaning further population growth and further GDP growth) in a sustainable manner from an energy availability point of view first the concept of ‘‘sustainable development” needs to be worked out a little further. Sustainable development means the satisfaction of present needs without compromising the ability of future generations to meet their own needs [4]. Hence, in the Canadian context, sustainable energy development can be defined as maximising energy’s contribution to economic growth and to the development of the Canadian economy while enhancing environmental quality and
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12000
Total Energy Demand (PJ)
11500 11000 10500 10000 9500 9000 8500 8000 6
7
8
9
10
11
12
13
GDP (100 billion CAD) Fig. 7. Energy intensity (primary energy demand per GDP).
14
GDP (100 billion CAD)
13 12 11 10 9 8 7 6 5 27
27.5
28
28.5
29
29.5
30
30.5
31
31.5
32
Population in Canada (in million) Fig. 8. GDP per capita.
meeting the needs of present and future generation [4]. A sustainable energy sector has a balance of energy production and consumption and has a low impact on the environment, but gives on the other hand also the opportunity for a country to employ its social–economic activities. The best approach to the issue of energy, environment and sustainable development is the diversification and localization of energy systems, which is also the best approach to the security of energy [8]. Localization of the energy sector will ensure the energy sector with a balance of energy production and consumption on local level, while diversification of the energy system minimises the negative impact on the environment. In order to reach sustainability the Canadian Government needs to establish an economic framework while still enjoying the maximum benefit from the country’s natural resources, technology, knowledge, labour and capital, while consuming and producing energy in ways that meet the principles of sustainable development [4]. According to the Canadian Government sustainable development does not necessarily imply preserving one particular source of energy or another. Hence, the challenge of sustainable development is not to guarantee future generations with specific reserve levels for any particular form of energy, but the challenge is to pro-
vide secure, safe, efficient, reasonably priced and increasingly environmentally-friendly access to energy services [4]. 3.1. Production and consumption balance The first requirement for sustainability in the energy sector is a balance of energy production and consumption on local level (localization). Canada has good possibilities to apply energy localization, but currently Canada is still exporting and importing major amounts of energy and is still very dependent on fossil fuels. For other countries localization and diversification of energy might be a challenge, because they lack of sufficiently reliable energy resources and are currently dependent on other countries’ resources. These countries have to search for alternative energy resources in order to develop further in a sustainable manner. Analyzing the future energy projections made above, can be concluded that in Canada the production of energy will still exceed the energy demand in the future, so the export rate is higher than the import rate. This means that, from a localization of the energy sector point of view, there is still space for further development for Canada with current production levels, in case Canada does not export energy anymore.
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By substituting the equation for GDP per capita (Eq. (16)) in the equation for energy demand per capita and GDP (Eq. (15)), the following equation for energy demand based on population growth can be formulated
Total Primary Energy demand ðPJÞ ¼ 778:4 þ 2:326 104 population þ 2:691 103 ð5:057 106 þ 0:1987 populationÞ 3
¼ 12:83 10 þ 7:673 10
gasses in Canada increased from 599,000 kiloton CO2 equivalent in 1990 to 758,000 kiloton CO2 equivalent in 2004 [15]. This means a total increase of 27% and an annual increase of 1.7%. The current emissions are 35% above Kyoto target [15]. A regression analysis is done in order to project future greenhouse gas emissions. With a goodness of fit (R2) of 99.0% the following regression functions are found to project the Canadian greenhouse gasses emissions (in 1000 ton CO2 equivalent): Greenhouse gas emission ¼ 8257 þ 65:18 energy demand
¼ Energy demand ðPJÞ 4
Population
ð16Þ
Under the condition of balance in production and consumption, this equitation can be used to calculate the possible population increase, while keeping the production levels on the current level of 16,600 PJ per year. With current production the population can increase to over 38 million inhabitants (20% growth compared with 2004) and the Canadian GDP can grow to 2.5 106 million CAD (which means a grow of 98% growth compared with 2004), if all energy production is used for domestic energy demand. 3.2. Minimal negative environmental impact In order to analyse whether the current development can be called sustainable it is necessary to consider the second requirement, namely the negative impact on environment of the current energy production and consumption, too. Currently the energy sector has a considerable negative impact on the environment. First of all, the combustion of fossil fuels cause climate change and air pollution. Secondly, the extraction and transport of the fossil fuels has a big negative impact on the surrounding environment. Lastly, the amount of fossil fuels left are finite, hence the current major energy use does influence the ability of future generations to meet their needs. The emissions from the combustion of fossil fuels such as coal, oil and natural gas account for more than three-quarters of the total Canadian greenhouse gas emissions in 2001 [14], while non-energy sources (like industrial and agricultural processes) are responsible for about 12% of total emissions [16]. The main greenhouse gas is carbon dioxide (CO2), which accounts for over 80% of Canada’s greenhouse gasses [16]; other greenhouse gasses are methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluorocarbons and hydrofluorocarbons [15]. Being a natural product of all combustion, CO2 produced in combustion is perhaps not strictly pollutant [7], but the current major emissions from fuel combustion have disastrous consequences: they cause climate change and environmental pollution of air, land and water, which has also impact on human health. Climate change is predicted to manifest itself differently in different regions of the world, but in general, temperatures and sea levels are expected to rise and the frequency of extreme weather is expected to increase. The main objective is to achieve stabilization of greenhouse gasses concentrations in the atmosphere at a level that would prevent dangerous interference with the climate system [17]. The combustion of fossil fuel causes other air pollution as well. According to the Ontario Medical Association’s analysis [18] air pollution results in almost 5800 premature deaths in Ontario and costs the province almost a billion dollars per year. If nothing is done to further improve the quality of air in Ontario, the number of premature deaths is estimated to hit 10,000 lives by the year 2026. The combined healthcare and lost productivity costs are expected to reach well over a billion dollars [18]. In 1997 at Kyoto the Canadian Government made the commitment to reduce Canada’s greenhouse gas emissions to 6% below 1990 levels by 2008 tot 2012 [4,19,20]. But, instead of reducing Canada’s GHG emissions, the total amount of emitted greenhouse
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ð17Þ
Greenhouse gas emission ¼ 24:30 106 þ 12:50 103 year ð18Þ
Both functions are used to calculate the emission projections for 2025 (all in 1000 ton CO2 equivalent). Three different methods are used to calculate these predictions and all three methods have only slightly different outcomes (less then 10% difference between the lowest and highest prediction), as shown below. Method 1: Population (2025): Y = 591.8 106 + 311.2 103 year = 38.38 106 inhabitants GDP (2025): Y = 119.5 106 + 60.30 103 year = 6 2.608 10 million CAD Total primary energy demand (2025) = 778.4 + 2.3264 population (2025) + 2.691 103 GDP (2025) = 16.72 103 PJ Total greenhouse gas emission (2025) = 8257 + 65.18 energy demand (2025) = 1.098 106 Method 2: Total consumption in PJ (2025) = 368.3 103 + 189.5 year = 15.44 103 PJ Total greenhouse gas emission (2025) = 8257 + 65.18 energy demand (2025) = 1.007 106 Method 3: Greenhouse gas emission (2025) = 24.30 106 + 12.50 103 year = 1.013 106 With the current GDP and population growth the energy demand will grow as well, which causes a major growth of the emission of greenhouse gasses. According the predictions the emissions of greenhouse gasses will grow by 33–45% within 2025 compared with 2004 level. Only new technology or restricted emission policy can break these trends. The second issue is the extraction of fossil energy, which has a major negative impact on the environment. Extracting oil from the oil sands ruins the surrounding environment, the same happens with the surroundings of coalmines. For the transportation of the fuels from source to production centre and on to the place of final use roads, railways or pipelines are necessary, which imposes significant negative environmental impact [20]. The damming of large rivers results in flooding and waste from nuclear energy has longterm disposal issues to be resolved [4]. The third point of negative impact is the decreasing availability of energy for future generations. According to the Canadian Government the challenge of sustainable development is not to guarantee future generations with specific reserve levels for any particular form of energy. But currently, without any available alternatives for the future, further growth based on availability is not sustainable growth. Future generations are not secure of sufficient energy production to satisfy their needs. According to the Office of Energy Efficiency, Government of Canada [4] the total uranium reserves are estimated at 40 years of production at current rates and the coal recoverable reserves are 6578 million ton (equal to 115 years of production at current rates). However, future projections show even a further growth in energy production and demand, such that these resources might be depleted even earlier. Experts do not agree about the amount of natural gas and re-
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sources left, because there are supposed to be undiscovered and unconventional reserves, which can extend the years of supply left. Sure is that the reserves are consumed quickly. 3.3. Summary Based on the requirement of energy balance there is room for further development for Canada. However, considering the requirement of no or minimal environmental impact, there is no room for development. The fossil resources are finite and currently there are no alternative resources available for future generations. Another major concern is the fact that the current energy consumption has a major impact on the environment. The emissions from the combustion of fossil fuels cause global climate change and air pollution and are projected to grow by 33–45% within 2025. Also the extraction of fossil fuel causes major damage to the surrounded environment. Further development of Canada in a sustainable manner is only possible if Canada changes its current practice. Canada must stop using so many fossil fuels and emitting so many greenhouse gasses and start becoming more energy efficient and using more renewable energy in order to decrease the negative impact on the environment. However, this is unlikely to occur without government regulation. 4. Role of the government The best approach to reach sustainability (which means a balance of production and consumption and a minimal negative impact) in the energy sector is the diversification and localization of energy systems. Two major changes are necessary for a successful application of energy localization and diversification. The first step is using more renewable energy, which are energy sources that produce electricity or thermal energy without depleting resources. Renewable energy has minimal environmental impact and produced from solar, hydro, biomass, wind or geothermal, etc. [21]. Secondly, energy efficiency and hence the saving of energy will be necessary in order to decrease the amount of energy consumed. Lower energy consumption, while keeping up the same comfort level, will reduce the amount of fossil fuels needed. Moving to a less energy-intensive economy, by adopting more renewable energy and reduce energy demand, and at the same time ensuring continued growth is a big economic and political challenge for Canadian energy policy in the coming years [14]. The Canadian Government should play a key role in stimulating both a switch towards renewable energy sources as well as stimulating energy demand reductions (efficiency), in order to make sure that Kyoto targets will be reached and the availability of energy is guaranteed for future generations. 4.1. Current policy Currently the Canadian Government does not provide the right incentives and does not implement the necessary energy regulations for further sustainable energy development, because of the current trend in the Canadian energy market, which is ‘‘more market and less government”. The Canadian Government is also concerned about adopting stricter regulations, because they think that these regulations will hinder its international competitiveness, possibly resulting in large job losses and out-migration of business. Canada’s main trading partners face less stringent greenhouse gas reductions than Canada, for example the US, which is the destination of 87% of Canada’s exports, has not ratified the Kyoto agreement at all [10]. In Canada’s constitution, jurisdiction over energy is divided between the federal and the provincial government [4]. Federal powers in energy are primary associated with the interprovincial and international movements of energy and energy-using
equipment, and with the works extending beyond a province’s boundaries. This permits the government to develop policies and regulate interprovincial and international trade, pipelines and power lines. The federal government is also responsible for promoting the overall economic development of Canada and is responsible for preserving national interests such as environmental protection [14]. Provincial governments have jurisdictional responsibility for resource management within their borders, including intra-provincial trade and commerce, transportation and environmental impact. They have more jurisdictions over energy than the subnational governments of other federal countries in the IEA [14]. Traditionally, Canadian energy policy has been devoted to the development of Canada’s large oil, gas and coal resources. Royalty, tax and other fiscal policies, as well as provincial land-use policies, have helped to encourage the development of this non-renewable natural capital. In addition, government support for research and development of new technologies has made the production of bitumen and synthetic crude oil from Alberta’s vast supply of oil sands economically viable [1]. According to the Canadian Association for Renewable Energy (CARE) renewable energy received 7.3% of the total spending in research and development of the energy sector, while nuclear took 29%, fossil fuel received 24% and conservation received 25% of the total budget [22,23]. Between 1990 and 1998 the Government of Canada reduced its GHG emissions from an estimated 3847–3102 kilo tonnes (19.4%). By reducing emissions from its own operations and demonstrating leadership in the climate change issue, the government seems to be in a strong position to encourage other sectors of the economy to do likewise and to build a national consensus on addressing climate change [20,24]. But in order to encouraging other sectors to reduce their GHG emissions, the government must do more than giving the good example. Federal government policy over the last decade is based on noncompulsory policies, such as voluntary targets and information provision. These policies have been relatively ineffective in providing the incentives and regulatory structure for dramatic technological and behavioural changes, which are required for significant greenhouse gas emission reductions [10]. Voluntary energy policies will have limited effect, because the public will not change unless there is a good reason to do so. If the current energy source is doing the job, there will be a resistance to change, especially when it takes time, money and effort. Energy prices are low, so changing habits will not be an easy task [11]. Rapid large-scale diffusion of clean energy technologies can provide discounted social benefits, which exceed social costs [25]. However, without any incentives, private companies are not willing to make the investments needed, because they will make the costs, while the society as a whole will have the benefits. At the moment the Canadian energy policy does not create significant incentives for technological and behavioural change [10], because voluntary programs will not be effective to reduce GHG emissions; they must be complemented by regulations [11]. Without a major change in the direction of more compulsory policies, it seems unlikely that Canada will achieve the Kyoto targets in the set time frame [10]. 4.2. New policy Instead of non-compulsory policies, Canada’s policy approach should have more compulsory policies for behavioural and technological change dominated by market-oriented regulation. These compulsory policies are necessary in order to switch towards more renewable energy sources as well as stimulating energy demand reductions, which will lead towards better energy localization and diversification. The sharing of responsibilities between federal and provincial government requires the introduction of complementary and mutu-
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ally reinforcing policies. Close consultation between the federal and provincial governments is essential if Canada wants to move forward towards a better localization and diversification of the energy sector. According to the Canadian Association for Renewable Energy (CARE), Canada urgently needs a new agency to promote renewable energy, which should include federal and provincial departments, utilities, local municipalities and industry, to work collaboratively on exploiting the opportunities offered by renewable sources [23]. This is the first step to be taken by the Canadian Government. This agency can help for close consultation between the federal and provincial governments and make sure that government responsibilities are clear. This agency can initiate the following non-voluntary steps towards a further Canadian energy development: According to Rivers and Jaccard [10] obligatory standards for vehicle emission, renewable portfolio, residential energy efficiency, combined heat and power and carbon sequestration will help to make a technological change. A carbon emission cap and a tradable CO2 permit policy for large industrial emitters are efficient low-cost opportunities for a switch towards more renewable energy sources as well as stimulating energy demand reductions. Under this policy, the government sets a maximum level of emissions and then allocates tradable emission permits to all emitters. All emitters determine their emission levels themselves and whether they will buy or sell emissions in the market [10]. In order to reduce the emissions the carbon taxes must be high enough or carbon emission permits must be scare enough, which will definitely cause a lot of opposition. The Canadian Government has its concerns about implementing the emission cap and tradable permit system, because they do not want to negatively influence the position of Canada in comparison with the US [17]. The Canadian Government should invest in research and development and new deployment of new renewable energies instead of nuclear and fossil fuels. All royalty, tax and other fiscal policies, as well as provincial land-use policies, should encourage the development of renewable energy instead of non-renewable natural capital [1]. Also a supportive fiscal framework for households and small businesses will encourage them to reduce their energy demand and using more renewable energy. For example, currently in the Netherlands 1.3 million households (20%) are purchasing green power. The main driver for this is the Dutch Ecotax, which made conventional energy increasingly more expensive. Green energy and conventional energy now have the same price and together with a massive media campaign this has resulted in a massive switch to green power [9]. All these non-voluntary policy instruments are only likely to make a behavioural and technological change for both a switch towards renewable energy sources as well as stimulating energy demand reductions in the next coming years. They also create a market environment for stimulating the technological change necessary for addressing the long-term nature of the climate change problem at reasonable costs [10]. If, by increasing the energy efficiency and increasing the amount of renewable energy used, the amount of greenhouse gasses emitted can be decreased by 3% per year, then the Kyoto goal of 35% reduction of current emission levels can be achieved in within 15 years. Time is too limited for Canada to achieve a significant change in the Kyoto time frame, but adoption of the policy instruments as mentioned above would make sure that future goals will be achieved [10]. 5. Conclusions Canada’s primary energy production and consumption have been growing much faster than past predictions, and are projected to increase by 52% and 34%, respectively, by 2025 over 2004 if busi-
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ness as usual, based on the statistical data analysis. Therefore, without additional policy measures Canada is very unlikely to achieve the set goals for Kyoto, nor to have a sustainable development. The present study aims to find out how Canada can develop further in a sustainable manner from an energy point of view and what the role of the Canadian Government in this is. From an energy balance point of view there is still room for further growth, but this will have a major negative impact on the environment if business as usual. Important in this is the role of the Canadian Government. They have to take care of providing incentives for more renewable energy and a higher efficiency, which is necessary to have a diverse and localised energy market. Instead of non-compulsory policies like subsidies and voluntarism in order to meet its Kyoto targets, Canada’s policy approach should have more compulsory policies. More renewable sources and less energy demand will be the necessary steps towards a more localised and more diverse energy system, which will be the basis for further sustainable development of Canada. References [1] Islam M, Fartaj A, Ting D. Current utilization and future prospects of emerging renewable energy applications in Canada. Renew Sust Energ Rev 2004;8:493–519. [2] Government of Canada, Statistics Canada. Energy Statistics Handbook July to September 2006. Ottawa: Government of Canada; 2006. [3] World Commission on Environment and Development (WCED). Our common future (The Brundtland report). Oxford: Oxford University Press; 1987. [4] Government of Canada, Ministry of Natural Resources Canada, Office of Energy Efficiency. Energy in Canada 2000. Ottawa: Government of Canada; 2000. [5] Dincer I, Dost S. Energy intensities for Canada. Appl Energ 1996;53:283–98. [6] Dincer I, Dost S, Li X. Energy reality and future projections for Canada. Energ Sources 1997;19:233–43. [7] Tutmez B. Trend analysis for the projection of energy-related carbon dioxide emission. Energ Explor Exploit 2006;24:139–50. [8] Li X. Diversification and localization of energy systems for sustainable development and energy security. Energ Policy 2006;33:2237–43. [9] Tampier M. Effective green power policies: green power marketing is not enough. Refocus 2003;4:30–3. [10] Rivers N, Jaccard M. Canada’s efforts towards greenhouse gas emission reduction: a case study on the limits of voluntary action and subsidies. Int J Global Energ 2005;23:307–23. [11] Karimi S. Thirteen years after Rio: the state of energy efficiency and renewable energy in Canada. Bull Sci Technol Soc 2005;25:497–506. [12] Government of Canada, Ministry of Natural Resources Canada, Office of Energy Efficiency. Energy use data handbook tables (Canada): total end-use sector. Ottawa: Government of Canada; 2005.