April 17, 2023

Weekly EconMinute—Update: Drivers of Canada’s emissions reductions

In this week’s EconMinute, we’re talking about drivers of Canada’s emissions reductions.

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Last Friday, Canada submitted its 2023 National Inventory Report of greenhouse gas (GHG) emissions to the United Nations, containing the official accounting of national emissions as of 2021.

That year, Canada’s emissions rose by 1.8% compared to 2020 levels. While an increase in emissions runs counter to Canada’s long-term climate objectives, it actually represents a positive step forward. Between 2019 and 2020, COVID restrictions saw emissions crater by 9.0% — the largest recorded single-year drop. In that context, the increase in 2021 is quite modest. Emissions were still down 53.3 megatonnes (7.4%) compared to pre-pandemic levels.

But to what degree did various factors contribute to this small GHG increase over 2020?

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 (nations that consume more goods and services per person tend to emit more); energy intensity (the less energy consumed per dollar earned, the lower emissions will be); and emissions intensity (the fewer emissions produced per unit of energy consumed, the lower emissions will be).

  • From 2020 to 2021, national emissions grew by just 1.8% (11.6 megatonnes) primarily because of population growth and a rebounding GDP per capita.
  • However, Canada’s energy intensity and its emissions intensity—both indicative of technology changes economy-wide—fell by 2.1% and 1.0%, respectively.
  • Since their 2007 peak, GHGs have decreased by 78 megatonnes (10.4%), with technology changes driving them down faster than population gains or economic performance improvements have made them rise.  

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