Understanding energy systems change in Canada: 1. Decomposition of total energy intensity

- Decomposition of the 23% decrease in Canada's Energy Intensity between 1995 and 2010:
- A shift in the GDP toward less energy intensive production accounted for 48% of the E/GDP decline;
- The impact of the growing per capita GDP on the energy intensity of the household sector accounted for 24%;
- Lower overall energy intensity of businesses contributed 22%, despite a higher energy intensity in the oil and gas sector;
- Lower per capita energy use in residential and personal transportation contributed 6.3% to the E/GDP decline.

Between 1995 and 2010, the total energy intensity (E/GDP, PJ/Gross Domestic Product in 2002$) of the Canadian economy declined by 23% or − 2.64 MJ/$. To understand why, the Logarithmic Mean Divisia Index (LMD-I) method was used to decompose a large body of government statistical data supporting the observed E/GDP decline. The analysis shows that (a) 48% (1.27 MJ/$) of the decline was associated with an inter-sector structural change in the economy (i.e. an increased contribution to the total GDP of the low energy-using commercial and institutional sector compared with the high energy-using manufacturing and heavy industry sectors); (b) 24% (0.62 MJ/$) was attributed to the impact of the Canadian GDP growing faster than population; (c) 22% (0.58 MJ/$) of the decline was associated with an overall decrease in business energy intensity. A deeper analysis of business sectors shows a positive impact of 0.4 MJ/$ from increased energy intensity in the oil and gas sector, offset by a 0.98 MJ/$ decline due to energy intensity declines in the other business sectors; (d) 6.3% (0.17 MJ/$) of the decline was associated with an improvement in the energy intensity of households, mostly from residential energy use rather than personal transportation energy use. These results provide insights for policy makers regarding those aspects of the Canadian economy that contribute to, or work against, efforts to transform energy systems toward sustainability.

Changes in the energy intensity of the Canadian economy, from 1985 to 2010, showing the results of a decomposition analysis for the 1995-2010 period when the energy intensity declined by 23%.118