Industrial Energy Use Reduction is “Hot Air”

“Hot Air” is the name given by the international carbon emissions trading community to greenhouse gas emission reductions that result from an economic downturn. It was originally applied to carbon credits from the former Soviet Union, where the industrial economy suffered a massive decline. Now Canada is getting into the same business, though some industry associations seem not to recognize it, meaning that their statements are not only describing “hot air” as if it were a real energy use reduction but, when applauding industrial energy use reductions, are also engaging in greenwashing. [For example, see Manufacturing Demand for Power Drops on the Canadian Manufacturers and Exporters website at http://www.cme-mec.ca/?action=show&lid=JCKNC-E742G-1W6JA&cid=MSU9G-BVXN3-KGGW3&comaction=show ].

It is also interesting to note that, had the Harper government implemented greenhouse gas emission reductions based on carbon intensity (carbon emissions per economic unit of production) instead of on absolute emission levels, as they initially said they were going to do, it might actually have put some industries under a currently more stringent emissions reduction regime than an absolute level would have done!

All of this comes from a recent Natural Resources Canada publication, Industrial Consumption of Energy (ICE) Survey – Summary Report of Energy Use in the Canadian Manufacturing Sector, 1995–2009, available at http://oee.nrcan.gc.ca/publications/statistics/ice09/index.cfm?attr=0 . The report consists primarily of an analysis of previously published Statistics Canada data but it is interesting nevertheless.

Energy consumption of the Canadian manufacturing sector was 11 percent lower in 2009 than in 2008. From 1995 to 2009, the manufacturing sector’s energy use decreased by 18 percent. However, GDP declined by 12.9% between 2008 and 2009, and increased by only 4.5% between 1995 and 2009. Focusing on the 11% decline between 2008 and 2009, as some commentators have done, the fact that GDP declined by 12.9% means that energy intensity, the amount of energy used to create a unit of GDP, actually increased by 2.5% between 2008 and 2009. That’s not the direction that this key measure of energy use should be going!

Interestingly, again focusing on the 2008 to 2009 period, the energy intensity of the paper industry increased by 5.6%, of the primary metals sector by 6.7%, and of the chemicals sector by 3.3%. Only the petroleum and coal sector showed a decline in energy intensity of 1.0%. This is not a one year phenomemon; data in the report show that the energy intensity of Canadian manufacturing as a whole, and of the four sectors studied in detail, has been rising slowly since about 2006, before the economic downturn began. The report does not attempt to explain why.

Though there is no data to enable one to draw such a conclusion, it is very tempting to suggest that something happened in 2005 or 2006 that caused Canadian industry to abandon energy efficiency initiatives. One has to wonder what that might have been!

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