In this week’s EconMinute, we’re talking about drivers of Canada’s emissions reductions.
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In April, Canada submitted its 2022 National Inventory Report of greenhouse gas (GHG) emissions to the United Nations, containing the official accounting of national emissions as of 2020.
That year, Canada saw its largest single-year reduction of emissions since this data was first collected in 1990—falling by 8.9% compared to 2019. The primary reason for this change is obvious: the COVID-19 pandemic and accompanying public health measures led to prolonged periods of social isolation, work-from-home mandates, decreased vehicle use, discretionary spending reductions, paralyzed tourism, and correspondingly high unemployment rates.
But to what degree did different factors contribute to these GHG reductions?
Canada’s Kaya Identity (here indexed to 1990) breaks down national GHG emissions into four factors all pushing and pulling against each other: population (more people = more emissions); economic performance as measured by GDP per capita (wealthier populations tend to emit more); energy intensity (the less energy consumption required to earn a dollar, the lower emissions will be); and emissions intensity (the fewer emissions produced per unit of energy consumed, the lower emissions will be).
- From 2019 to 2020, national emissions fell primarily because GDP per capita dropped 6.3% due to the pandemic—the largest year-over-year decline since 1990.
- Canada’s energy intensity and its emissions intensity, both indicative of technology changes economy-wide, fell by 3.9% and held steady, respectively.
- The population grew by 1.2%, partially offsetting emissions declines caused by economic inactivity and technology improvements.
As normal activities—air travel, commuting to work, and so forth—have rebounded since 2020 and GDP per capita has improved, related emissions are expected to rise again in 2021.