Prospects for a Low Carbon Society:
The Case of Canada
Ralph D. Torrie1
Toronto, Canada
Paper prepared for:Japan-UK Joint Low Carbon Society (LCS) Research Project
Third Workshop, Tokyo, February 2008

The Current Situation and Recent Trends
Greenhouse gas emissions in Canada are currently about 750 Mt CO2e, of which 82% or about
600 Mt CO2e originates with the production and consumption of fossil fuels, and the remaining
150 Mt CO2e is from agricultural, industrial and waste management sources, broken down asshown in Figure 1. With a population of 33 million, per capita emissions are therefore in therange of 23 tonnes, among the highest in the world. There are many reasons for this relatively
high per capita emission level, chief among them being the role of production and export ofenergy intensive commodities, including fossil fuel itself, in the Canadian economy.
Figure 1. GHG Sources in Canada, 2005 (Total Emissions 750 Mt CO2e)

Figure 2 illustrates two alternatives for allocating the energy-related emissions. In the Source
Allocation, emissions are attributed to their sources, so there is a segment called Power
Generation which reflects the greenhouse gas emissions that take place at fossil-fired power
plants. The emissions of the Oil and Gas production industry are partitioned into twosegments, one representing the portion of this industry’s emissions that result from producing
1

Ralph D. Torrie, Vice President, ICF International, Suite 808, 277 Wellington Street West, Toronto, Ontario,
Canada, M5V 3E4. Email: rtorrie@icfi.com. Web: www.icfi.com.

Ralph D. Torrie, ICF International-1-

3rd LCS Workshop, Tokyo, February 2008

Prospects for a Low Carbon Society: The Case of Canada
and supplying the domestic market for oil and gas fuels, and one representing the portion that
corresponds to the emissions related to the production of oil and gas fuels for export. In the
Source Allocation frame, the emissions for the final demand sectors (i.e. residential, commercial,manufacturing, transportation) reflect only the emissions from the end use consumption of oil
and gas fuels.
In contrast, in the End Use Allocation frame, there is no Power Generation sector as theseemissions have been prorated to the final demand sectors, as have the domestic portion of theoil and gas industry emissions. The portion of the oil and gas emissions attributed to
production for export is the same in both the Source Allocation and End Use Allocation
frameworks.
Figure 2
Energy-Related Greenhouse Gas Emissions in Canada in 2003,
by Sector, Source vs. End Use Allocation
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source Allocation

End Use Allocation

Residential
Freight Transportation
General Mfg
Power Generation
Oil & Gas Industry - Export Allocation

Personal Transportation
Services (comm & institutional)
Energy Intensive Mfg, Mining & Agriculture
Oil & Gas Industry - Domestic Allocation

The Source Allocation view is particularly useful for portraying the extent to which energyrelated greenhouse gas emissions originate with the energy industry itself. Power Generation
and Oil and Gas Production constitute about half of Canada’s total energy-related greenhousegas emissions. The End Use Allocation framework is particularly useful for illustrating theimportance of transformative technologies and strategies on the demand side of the energy
commodity equation, where we understand many of the deepest and cheapest emission
reduction opportunities can be found.
The long view of domestic demand for primary energy in Canada is shown in Figure 3.2 The
bottom three layers of this chart – for coal, oil and gas – reflect the exponential growth of fossil
fuel production and consumption in Canada throughout the 20th century. Energy-related
greenhouse gas emissions have tracked this growth in fossil fuel consumption, as shown in
Figure 4, which also shows the relative growth of population and Gross Domestic Product overthis same period.
2

The data shown are for primary energy, including power plant inputs, but net energy exports (primarily of oil andgas) have been omitted so that the chart reflects only the primary energy use of the Canadian economy.

Ralph D. Torrie, ICF International-2-

3rd LCS Workshop, Tokyo, February 2008

Prospects for a Low Carbon Society: The Case of Canada
Figure 3

Canadian Domestic Demand for Primary Energy, 1926-2003
14,00012,000PETAJOULES

10,000

8,000

6,000

4,000

2,000

0
1926 1931 1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001
Coal

Petroleum

Natural Gas and NGLs

Hydro

Wood

Nuclear

The challenge represented by the goal of a low carbon society is evident; it represents a
dramatic reversal in a 100 year pattern of increasing fossil fuel consumption and related
emissions. Growth in population and economic activity has driven energy consumption andgreenhouse gas emissions up for decades, although there are moderating factors at work. There
has been a gradual but longstanding reduction in the greenhouse gas intensity of Canadianenergy use, reflecting the progressive shift from coal to oil to natural gas. In addition, thedevelopment of hydropower resources (and to a lesser extent nuclear power) has allowed several
Canadian provinces to produce electricity with lower levels of greenhouse gas emissions than injurisdictions dependent on fossil fuel-fired power plants.
The second and more important moderating influence on greenhouse gas emissions growth has
been the ongoing improvement in the energy productivity of the economy, as measured by thevalue of economic output generated per unit of energy consumption. Particularly during thepast 30-40 years, growth in energy consumption has been moderated by shifts in the output of
the Canadian economy from primary to secondary manufacturing and from manufacturing toservices, from a move to higher value added production in the primary processing industries,
and from increased technological efficiency of fuel and electricity consumption. As is the casewith all the OECD economies, for the past thirty years the decoupling of energy commodity andeconomic growth -- in other words energy productivity improvement -- has been far and away
the largest source of energy security and moderated emissions and environmental stress fromthe energy system, outweighing the impact of fuel switching and commodity supply growth.

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Prospects for a Low Carbon Society: The Case of Canada
Figure 4
Relative Growth of Gross Domestic Product
Domestic Energy Demand, CO2 Emissions and Population, 1926-2003
3.00

2.50

1971=1.00

2.00

1.50

1.00

0.50

1926 1931 1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001
GDP

CO2 Emissions

Domestic Energy Demand

Population

Canadian policy efforts at both the national and provincial level to reduce greenhouse gas
emissions have been ineffectual to date. Under the Kyoto Protocol, the Canadian government
committed to reducing emissions to six percent below 1990 level by the 2008-2012; currently,
emissions are 25% above 1990 levels, or fully a third above the Kyoto target of 564 Mt CO2e.
Given the capital stock turnover rates of energy-using technologies, there is no prospect for
Canada meeting its Kyoto target, and this is now widely acknowledged. In fact, in the absenceof effective federal and/or provincial mitigation policies, Canadian GHG emissions are on acourse that will see them raise to 950 Mt CO2e or more by 2020, at which point they will be 58%
above 1990 levels and 68% above the original Kyoto target of 565 MtCO2e.
One typical such projection is shown in Figure 5, based on economic growth averaging 2.1% overthe projection period. Expansion of petroleum production from the Athabasca oil sands, mostly
for US and other export markets, is a primary driver of growth in both economic output andgreenhouse gas emissions. Current production from the oil sands is about a million barrels per
day but will double in the next few years as over a dozen new projects come on line, and it isgenerally projected that production will redouble by 2020 to four million barrels per day.
Mining and in situ extraction production techniques will be about equally important in thisexpansion; both are energy and greenhouse gas intensive. The projection of future emissions issensitive to economic growth rates and in particular to growth in the oil and gas production
sectors; at a growth rate of about 0.6% per year in economic output, greenhouse gas emissions
growth flattens out.

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Prospects for a Low Carbon Society: The Case of Canada

Figure 5.
Historical (1990-2005) and Projected Greenhouse Gas Emissions in Canada (Source: ICF International)
1,100,000

1,000,000
900,000

800,000

GHGs kt

700,000
600,000

500,000
400,000

300,000

200,000
100,000-

Oil and Gas Industry
Non-Regulated Industry & Manufacturing
Commercial/Services (Fuel Use Only)

Power Generation and Delivery
Personal Transportation
Residential (Fuel Use Only)

Other Regulated Industry & Manufacturing
Freight Transportation

The current federal government has committed to reducing emissions to 20% below 2006 levels,or to about 600 Mt (i.e. 1990 levels) by 2020, and to much deeper reductions, on the order of 50%
or more, by 2050. Some provinces have declared similar targets, but to date neither the federal
nor the provincial governments have implemented or announced policies the would come closeto achieving the espoused targets, targets which themselves fall short of what would be required
to put Canada on a path to a low carbon society by mid-century.
The most significant policy announced to date (but not yet implemented) is the federal
government’s Regulatory Framework, a scheme that would cap the emissions intensity of themost emissions-intensive industries. There are still many details yet to be determined, but inbroad terms the policy would require the regulated industries (power plants, oil and gas
producers, industrial chemicals, cement, refining, steel, primary metals, etc.) to reduce theintensity of their greenhouse gas emissions by 18% by 2010 (relative to 2006), and then by anadditional two percent per year after that for at least another four years. The policy allows for
trading among the regulated industries, as well as for a limited role for domestic andinternational offsets. If successfully implemented, it is estimated that the Regulatory
Framework would reduce emissions in 2020 by about 100-120 Mt CO2e, as shown in Figure 6.
The cost and the extent to which the emission reductions would be achieved in the regulatedindustries themselves, as opposed to various forms of offsets, will depend on yet-to-beannounced rules of the game, but the effective result would be an initial reduction of emissions
form these industries (when the 18% reduction kicks in), followed by a sustained period inwhich the ongoing intensity reductions would offset output growth in the regulated industries.
As difficult this policy is proving to finalize and implement, the 100-120 Mt CO2e of reductions

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Prospects for a Low Carbon Society: The Case of Canada
it would achieve falls well short of the roughly 350 Mt CO2e it would take to bring emissions in2020 down to 1990 levels, let alone put them on a path toward a low carbon society.
Figure 6. Canadian Greenhouse Gas Emissions from Regulated Industries in the Proposed
Regulatory Framework: Reference Projection vs. Effective Emissions Level after Implementation of
the Intensity Cap
520,000
480,000
440,000
400,000

GHG Emissions (kt)360,000
320,000
280,000
240,000
200,000
160,000
120,000
80,00040,000
1990

1995

2000

2005

2010

Gap Between BAU EI and Target EI

2015

2020

2025

2030

Framework Target EI

Another significant policy initiative, this one taken at the provincial level, is the commitment by
the Province of Ontario to phase out all coal-fired electricity generation by 2014. If successfully
implemented, this will constitute perhaps the single most effective GHG reduction policy
measure taken to date by any North American government. Power plant emissions drop by 85%
from 46 Mt CO2e in 2003 to less than 7 Mt CO2e by 2014 when the last of the coal plants isretired.
Figure 7. Greenhouse Gas Emissions in the Province of Ontario, Reference Projection and Emissions after
Phase-Out of Coal Power and Other Current Policies
300
Mt CO2e/yr

Emissions after
impact of current
government policies

Reference Case
Emissions

250
Historic

Projected

200
6% below1990 level

150

15% below
1990 level

100

50

0
1990

1994

1998

2002

2006

Passenger Transportation
Household Fuel
Other Industry Fuel
Agriculture GHG
Industrial Process GHG

Ralph D. Torrie, ICF International

2010

2014

2018

Freight Transportation & Off-road
Commercial & Institutional Fuel
Energy Intensive Industry, Mining, & Agriculture FuelLandfill & Waste GHG
Power Plants-6-

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Prospects for a Low Carbon Society: The Case of Canada
There is without doubt a growing priority being given to greenhouse gas mitigation policy
development at both the federal and provincial levels in Canada. Like the federal government,
several provinces have targeted bringing emissions down to 1990 levels or lower by 2020, but ingeneral the policies and programs for achieving these targets are still under development, or
have yet to be specified at a level of detail that would support assessment of their likely
effectiveness. Meanwhile, high oil prices have increased already intensive development
activities in the oil and gas production sector, and in particular in the emissions-intensive oilsands. Finally, Canada has been and will be deeply affected by U.S. government policy withrespect to greenhouse gas mitigation, policy which seems poised for a reversal.
Nevertheless, in the context of the low carbon society, it must be noted that even the mostaggressive of the North American policies for greenhouse gas mitigation (e.g. California) fall far
short of the reductions and the rates of reduction that would be necessary to get on track for
50%+ reductions in emissions by 2050, if we can take that as a rough benchmark of the low
carbon society criterion.
There has been a tendency in greenhouse gas response policy to put forward the same
instruments for increasing energy efficiency or for increasing the amount of renewables or low
carbon/no carbon fuels in the mix that were put forward in the 1980’s when the public policy
objectives were quite different. The promotion of energy efficiency and alternative energy in the
1980’s was essentially intended to achieve a combination of security and economic efficiency
objectives and had little to do with environmental imperatives. The improvement in energy
efficiency and the increase in the renewable and low carbon energy that will be necessary toachieve the low carbon society go far beyond the incremental objectives of energy security and“least cost” energy policy of the 1980’s, and it seems unlikely the policy instruments forpromoting efficiency and renewables in the 1980’s will be sufficient for achieving deep carbon
reductions on a 2050 time scale.

Low Emission Scenarios for Canada
The first low emission scenario for Canada was developed for the David Suzuki Foundation andfocused on what it would take to cut Canada’s greenhouse gas emissions by 50% by 2030,3 as
illustrated in Figure 8. Utilizing a standard, bottom-up, end use focused methodology; theanalysis systematically evaluated the technological potential for reducing emissions in Canada
with existing and economically feasible technologies. By far the most important conclusion fromthe study was that the key to achieving deep and sustainable reductions in greenhouse gas
emissions is on the demand side of the energy economy, and it also introduced to the policy
debate in Canada the idea the low emission future could bring with it significant economic
benefits.

3

Ralph Torrie et. al., “Kyoto and Beyond: The Low Emission Path to Innovation and Efficiency”, David Suzuki
Foundation, Vancouver, October 2002. Available on line at www.torriesmith.com.

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Prospects for a Low Carbon Society: The Case of Canada
Figure 8. A Low Emission Scenario for Canada(R. Torrie, et. a., “Kyoto and Beyond: The Low Emission Path to Innovation and Efficiency”, 2002)

The National Round Table on the Environment and the Economy subsequently sponsored amore detailed “bottom-up” analysis of the technological potential for a deep emission reduction
in Canada, this time for a 60% reduction from current levels by 2050.4 The results were
published in the form of a modified Socolow wedge, as shown in Figure 9. Based on this work,
the National Round Table developed an advisory note for the government that began to set out
the road map to a low emission future for Canada.5 The key findings of the NRTEE Advisory
began to shape the emerging policy for a low carbon society for Canada:
•
•
•
•
•

A low emission future for Canada is possible with domestic solutions, but can beachieved only if energy is used more efficiently and if energy is emitted while emitting
less carbon. Improvement in energy efficiency is key to the low emission future.
Canada’s growing oil and gas production sector could be compatible with a low emission
future, but only if carbon capture and sequestration can be perfected.
Increased deployment of cogeneration and renewable electricity will be needed totransform the power sector to a low emission regime, along with clean coal technology
incorporating CCS.
There is an urgent need for a long term policy signal to give the private sector theconfidence it needs to bring GHG considerations into investment decisions
Air pollution and other co-benefits of GHG emission reduction measures are importantto both the implementation and the acceptance of the low emission future.

4

Ralph Torrie et. al., “Energy-Related Greenhouse Gas Emissions in Canada in 2050: A Low Emission Scenario”,
ICF International for NRTEE, Ottawa, 2006.
5
National Round Table on Environment and the Economy, “Advice on a Long Term Strategy on Energy andClimate Change”, Ottawa, June 2006.

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Prospects for a Low Carbon Society: The Case of Canada
Figure 9. GHG Reduction Wedges for Canada(From Ralph Torrie et. al., “Energy Related Greenhouse Gas Emissions in Canada in 2050 – A Low Emission
Scenario”, prepared for the National Round Table on Environment and the Economy, Ottawa, 2006)
GHG Reduction Wedges for Canada -- All Wedges

1400
Megatonnes eCO2
1200

1000
800

600
400

200
0
2005
Target

2010

2015
2020
Carbon Capture

2025

2030
Freight
vehicle eff

2035

2040
2045
EE in Oil and Gas
SectorCogeneration

Electricity Intensity Improvements

Urban FormWind pow er

Auto fuel eff

Tran propane & CNG

Ethanol

EE - Secondary Mfg

Ind Eff - Energy Intensive

Oil and Gas - Reduce Fugitive

New nuclear

Biomass

New res bldg

Retro comm bldg

Retro res bldg

New comm bldg

Commerical Lights and equip

Industrial Shift

Wave pow er

Large hydroRes w ater heat

TKT Reduction/Mode Shifts

Res Appliances

Geothermal

Small hydroPassenger Mode Shift

Landfill gas electricity

Solar Water Heat

Hydrogen

Biodiesel

RESIDUALEl transmission

2050

Work is continuing on refining our understanding of what a low emission future would like for
Canada, and the policies and programs that would get us there. Recent work has coupledmacroeconomic models with multi-sector energy and emissions models in order to evaluate theeconomic impacts of greenhouse gas reduction policies. While the policies typically subjected tosuch analysis fall short of those that would be required to achieve deep emission reductions,they do indicate that the net economic impacts of the portfolio of GHG reduction policies
currently in vogue in North America (e.g. carbon cap-and-trade; efficiency standards forbuildings, cars and appliances; renewable portfolio standards, etc) will have modest andpossible net positive impacts on employment, net output and per capita disposable income, even
without, even without valuing the environmental damage avoided by the lower emissions.

Conclusions and Strategic Directions
The roadmap to a low carbon society has begun to take shape in Canada, first in the form of anunderstanding of the changes in the way we use and produce energy that will have to takeplace, and more recently in the form of a debate over the policy responses to get there.

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Prospects for a Low Carbon Society: The Case of Canada
With regard to the technological shape of the low emission future, there are a number of key
elements that must be achieved:
9 New residential and commercial buildings constructed with best available energy design
and technology
9 Retrofit all existing buildings (except where technically not feasible) for 30-50%
improvements in energy efficiency
9 Double and redouble the fuel efficiency of passenger vehicles.
9 Double or triple the fuel efficiency of trucks.
9 Efficiency standards for office equipment, home appliances, motors, lighting to ensure
rapid deployment of the new technologies
9 Cogeneration of heat and power as standard practice going forward
9 Continued rapid deployment of wind and other renewable electricity options
9 Continued development of environmentally sustainable biofuels, commercialization of
lignocellulosic ethanol technology
9 Emission caps on energy-intensive industry to encourage innovation for more efficient
production technologies
9 More efficient utilization of industrial process heat
9 Eliminate landfill methane emissions
9 Alternative industrial processes for non-energy industrial GHG emission sources
9 Low emission techniques and technologies for agriculture
9 Reforestation and afforestation programs to alleviate net Canadian emissions on a 50
year time frame.
9 Carbon capture and storage technology successfully deployed, especially in the oil andgas production industry.
Other insights from our work in Canada on low emission scenarios:¾ Greenhouse gas reduction policies must be comprehensive. There is no single wedge ofthe greenhouse gas emission pie that can shoulder more than a fraction of the overall
challenge of reducing society’s emissions to much less than half today’s levels. Everysource sector must be addressed.
¾ An integrated approach is mandatory. There are very strong interactions between
different greenhouse gas reduction measures, and it is important to understand theseinteractions in order to set the most effective priorities. The total emission reductions
from a set of measures will typically by 40% less than the sum of the individual
measures considered, due to supply/demand, inter-sectoral and economic feedback
effects.
¾ Long lived capital stock is a priority to avoid lost opportunities. Affecting today’s
investment decisions is an urgent necessity for the achievement of low emission futures
decades hence.
¾ Co benefits are crucial. The air quality and other benefits of greenhouse gas emission
reduction measures are important on many levels. GHG reduction measures usually
deliver superior technology (e.g. high performance buildings) that can be worth more to
the investor than the GHG reduction. More efficient technology enhancescompetitiveness and GHG reduction measures create employment across a broad
spectrum of skills and professions.

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Prospects for a Low Carbon Society: The Case of Canada¾ Emission reductions are consistent with some exogenous trends in Canadian society –these synergies can be exploited to promote lower emissions (urban redensification,
refurbishment of post-War infrastructure, higher value added industrial production)¾ Cap-and-trade initiatives tend to target the most energy intensive sectors of the societythat are most able to manage the transaction costs associated with such schemes. But
because energy is a relatively high factor cost for these sectors, these are also the sectorsthat are most likely to have already adopted low cost measures for energy efficiency andemission reduction. At the same time, research indicates that the largest reservoir of
low cost and even negative cost emissions exists on the demand side, dispersed among
millions of vehicles, buildings and devices that are generally excluded from cap-andtrade initiatives and are also often disallowed as offset options under such trading
schemes under the additionality argument. Cap-and-trade initiatives that target energy
intensive industry without facilitating offset investments in the low cost reservoir run
the risk of failing to deliver on their central promise of minimizing the overall cost ofachieving the environmental objective.
¾ There is a particularly important role for local governments in the transition to the low
carbon society. It is conservatively estimated that at least 50% of greenhouse gas
emissions in Canada come under the direct or indirect control of local government, andthis is true in many countries. The transition to a low emission future cannot be
achieved without the engagement of local governments, and this implies the need formuch greater capacity in city halls to identify how local policies, plans and by-laws affectthe level of greenhouse gas emissions in the community.
¾ Most agree that a backdrop of rising prices will be necessary to facilitate thetransformation to a low carbon future, but that price alone is unlikely to bring about
sufficient change fast enough to achieve deep reductions in emissions by 2050. A
consideration of the relative importance of energy commodity prices in each of thetechnological areas listed above, as compared with non-price factors in decision making,leads to the conclusion that a full spectrum of policy approaches will be required toachieve deep reductions, and also that bending the emission curve down will requirethat those policies be more innovative and aggressive than has been the case to date.
There is a large variation in the types of barriers that stand in the way of more rapid andwidespread deployment of the technologies and techniques we need to bring about the low
carbon society, but in general these barriers are neither technological nor fundamentally
economic. More often there weaknesses in the logistical or financial infrastructure needed. For
example, a combination of front-end costs and a dearth of skilled and available labour hold backthe acceleration of building retrofits, suggesting the need for financing and manpower training
and certification. The development of more fuel efficient trucks is held back by a risk-averse
manufacturing sector with limited R, D&D resources, suggesting the need for market
development policies. For technologies such as home appliances and office equipment, where
the energy costs are a small contributor to the total cost of ownership and operation, welldesigned performance standards can be the most effective, and the most cost effective, policy
approach.
The “geology of low emissions is complex” – for each of the key wedges needed to bring about low
emission futures, a unique policy approach is needed that targets the particular barriers to
deployment for that option.

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