Canada’s diverse array of energy resources is a source of comparative advantage for the country and a key driver of our future prosperity. By combining smart government policy with private sector commitment and innovation, Canada can demonstrate to the world that it can be a reliable and environmentally responsible supplier of energy to meet growing domestic and international demand. This includes investing in advanced energy technologies that can create new business and employment opportunities and position Canada to compete successfully in a world of rising energy prices.

Fundamentally, however, Canada needs to begin with a renewed commitment to energy conservation. We must use existing and future energy supplies as efficiently as possible, embracing the maxim that the cheapest form of energy is the unit that is not used. Better conservation practices will help to insulate Canadians from volatile energy prices, reduce costs for public institutions such as schools and hospitals and improve the international competitiveness of Canadian companies.

Cutting our energy use would bring other benefits to society as well. Reduced use of carbon-based fuels would make urban air more breathable. Smart transportation choices would diminish traffic congestion and improve workplace productivity. And better urban design would make cities more livable and help Canadians achieve a better work-life balance.

Few of us deliberately waste energy. Yet the day-to-day choices we make cause energy waste that cascades through the system. For instance, because of inefficiencies and losses at nearly every stage in production, transmission and end use, the amount of energy actually delivered to a light bulb in our home or to a fuel tank in our car is usually at least 50 percent, and sometimes as much as 90 percent less, than the energy content at source.

In a recent paper, “Energy-Wise Canada: Building a Culture of Energy Conservation,” the Canadian Council of Chief Executives (CCCE) examined the record over the past two decades, for the country as a whole as well as the major sectors of Canadian society: industry, residential, commercial and institutional, transportation, municipalities and agriculture.

Canada’s consumption of energy is somewhat greater than the average of developed countries, in both energy use per capita and energy use per dollar of GDP. This is not particularly surprising given that we are a large energy exporter, our economy is more energy-intensive than the OECD average and we also face more extremes of climate and distance. Indeed, comparative analysis tends to confirm that energy consumption per capita is highest in countries that develop and export large amounts of energy resources, especially in relation to the size of their population.

Still, there are some signs of progress in our quest for energy efficiency. The overall energy intensity of our economy — the amount of energy consumed per unit of GDP — improved 22 percent between 1990 and 2008. Yet energy use overall has grown, and quite significantly in some sectors (see figure 1).

The manufacturing sector overall used 8 percent less energy and produced 25 percent more output in 2008 compared with 1995. Perhaps more than any other segment of Canadian society, Canada’s industrial firms have compelling reasons to pursue energy conservation and efficiency, since energy costs are among their largest line items and energy savings translate immediately to the bottom line. In the relentless race to stay com-petitive in global markets, managers seek to develop or adopt leading-edge technologies that improve efficiency and performance and reduce operating costs. In particular, Canadian firms increasingly are investing in information technology and sophisticated supply chain management systems, which among other benefits should help reduce their need for energy. Smaller manufacturing firms — even those that are not significant exporters — face similar pressures to reduce energy costs. What they often lack is the expertise necessary to pinpoint inefficiencies in their operations, evaluate new technologies and identify opportunities to reduce energy costs.

Canada needs to begin with a renewed commitment to energy conservation. We must use existing and future energy supplies as efficiently as possible, embracing the maxim that the cheapest form of energy is the unit that is not used.

New building codes and better construction materials are helping to make Canadian homes more energyefficient, yet the number of houses continues to grow with immigration and shifting demographics. Moreover, the average size of a house is larger and the percentage of homes with air conditioning has doubled since 1990, to 45 percent. Today’s televisions and computers are more efficient than those manufactured as recently as five years ago, but many homes now have several of each, operating for many more hours. In fact, the number of such “small” appliances (computers, TVs, music systems, DVD players, espresso machines, etc.) In Canadian households increased by 55 percent between 1990 and 2008, and the energy consumption attributed to them grew by almost 150 percent, according to the 2011 Energy Use Data Handbook from Natural Resources Canada.

Between 1990 and 2008, total commercial/institutional energy demand across Canada increased 39 percent. At the same time, the sector’s output grew 73 percent, employment increased 40 percent and floor space grew 37 percent. Aside from the overall increase in activity levels and floor space, the biggest factors behind this increase in energy consumption have been higher utilization of building air conditioning and greater use of auxiliary equipment, mainly computers and related equipment. Higher energy use in the retail sector reflects in part longer hours of operation, as stores compete with one another on the basis of convenience and accessibility.

Since much of a building’s energy use over its life is determined by decisions made in the formative stages, a key focus has to be on improving the design of new commercial buildings. Programs such as LEED (Leadership in Energy and Environmental Design) are redefining how new commercial and public buildings are designed for overall energy and environmental coherence. And there are encouraging signs that more and more major building projects are incorporating sustainability standards as the costs of doing so come down and tenants increasingly demand efficient and healthy workspaces.

The last 20 years has seen a significant shift in North American vehicle purchases from what we traditionally think of as “cars” to what are classified as “light duty trucks” — pick-ups, minivans and SUVs (table 1). The popularity of air travel in Canada is also growing, and there has been a corresponding decline in intercity travel by train. With respect to the movement of goods and commerce, the biggest change has been the growth of trucks as the mode of choice for freight transportation.

The inner workings of government
Keep track of who’s doing what to get federal policy made. In The Functionary.
The Functionary
Our newsletter about the public service. Nominated for a Digital Publishing Award.

This is in large measure a reflection of increased Canada-US trade since the FTA and NAFTA, the significant growth of supply chains within Canada and across the continent and the prevalence of just-in-time inventory systems.

Vehicle fuel efficiency is set to increase significantly with the new North American standards recently announced, but this must be balanced against the fact that the number of registered passenger vehicles in Canada increased from 14.2 million to 18.8 million between 1990 and 2008.

Vehicle fuel efficiency is set to increase significantly with the new North American standards recently announced, but this must be balanced against the fact that the number of registered passenger vehicles in Canada increased from 14.2 million to 18.8 million between 1990 and 2008. As well, overall passenger-kilometres travelled grew by 37 percent over this time period, according to a National Research Council study. This suggests the short-term priority has to be to get more people out of their cars into public transit and car-pooling, cycling and walking. Many of the levers are at the municipal level, where local authorities can put in place infrastructure to facilitate greater use of alternatives to driving. Employers also can help by encouraging telecommuting and other flexible work arrangements that mean fewer vehicles on the road at peak times.

Canada’s pattern of urban and suburban community design, as well as a significant portion of our energy infrastructure, has been built around the model of the private automobile as the favoured mode of transport. Over the longer term, this has to be addressed by significant changes to urban form — density and land use in particular. There will be multiple benefits: lower greenhouse gas (GHG) emissions, reduced urban smog, less traffic congestion and more livable communities.

A recent study by the Pembina Institute illustrates this challenge. While Canada’s largest cities have made some progress toward encouraging higherdensity housing and more use of public transit, these gains have been offset by population shifts to suburban areas surrounding the urban core, where there are longer commuting distances and higher reliance on the automobile.

Despite such setbacks, it is clear that the local governments can contribute a great deal to the search for energy efficiencies. The key is to adopt a holistic approach to land-use planning, transportation and water and waste management so as to optimize energy use, minimize waste and improve the quality of life in Canada’s urban centres. Important work is being undertaken by QUEST (Quality Urban Energy Systems of Tomorrow), a collaborative network of representatives from energy industries, governments, utilities, local communities and research organizations. Their mission is to examine the potential for reduced energy use and GHG emissions, while enhancing economic growth, through advanced application of integrated community energy solutions.

A review of these trends leads us to two main conclusions. First, governments, industry and public-spirited groups should work together to improve Canadians’ energy literacy. We do not underestimate the challenge of changing consumers’ behaviour. After all, governments have been preaching the merits of energy conservation and efficiency since the oil price shocks of the mid-1970s, with limited success. Nevertheless, Canadians need to understand the energy choices that the country faces so that they can make informed decisions based on realistic assessments of their respective costs and benefits.

A second, closely related, conclusion is that the most effective means of promoting energy conservation is to allow energy prices to rise. It seems clear that higher prices will influence Canadians’ behaviour in a way that public exhortation and appeals to the greater good have not. That is why the CCCE has previously stated its support for a broad-based carbon pricing scheme in Canada. Canadians — as business owners, farmers, building managers and individual consumers — need to see the everyday cost of inefficient use of energy and be motivated to change their energy consumption patterns and investment decisions. To be sure, carbon pricing would have to be introduced gradually, both to allow businesses and consumers time to adjust and to avoid any disproportionate impact on Canada’s competitive position. (For Canadians on fixed incomes, the impact could be offset through other social or fiscal policies.)

The bottom line is that governments must resist the temptation to shield Canadians from higher energy prices. By any reasonable measure, energy remains a comparative bargain for Canadians (figure 2). Electricity in particular is cheaper today on an inflation-adjusted basis than it was 20 years ago. In most provinces the regulated electricity rates paid by households and some industries do not even cover the cost of producing and delivering it; ultimately these costs will have to be recouped through the broader tax base.

Canada’s vast array of natural resources, our growing population, our climate and geography push us toward above-average energy consumption. But the present trend is unsustainable. It is time for Canadians to get serious about energy conservation, for the health of our economy as well as the environment.

Photo: Shutterstock

John Manley
John Manley is president and chief executive of the Business Council of Canada, a nonpartisan research and advocacy organization composed of the CEOs of Canada’s leading enterprises. He is a former deputy prime minister, and from 1993 to 2003 he was a minister in the governments of Jean Chrétien, serving in the portfolios of Industry, Foreign Affairs and Finance.

You are welcome to republish this Policy Options article online or in print periodicals, under a Creative Commons/No Derivatives licence.

Creative Commons License