Key factors affecting greenhouse gas emissions in the Canadian industrial sector: A decomposition analysis

Abstract

Abstract The industrial sector, accounting for 30% of global greenhouse gas (GHG) emissions, is among the key drivers of human-induced climate change impacts. Given this volume of emissions, the sector could play a critical role in mitigating climate change. Canada is among the top 10 global GHG emitters and its industrial sector is responsible for more than 39% of national emissions. GHG emissions from the sector increased by almost 32% between 1990 and 2017 and are expected to almost double by 2050 if no measures are taken. This paper aims to evaluate how different technical and economic factors have contributed to the increasing GHG emission trends in Canada’s industrial sector between 1990 and 2014. The Logarithmic Mean Divisia Index was developed and implemented as the decomposition method. Results from the analysis suggest that activity level is the biggest contributor to the increase in industrial GHG emissions between 1990 and 2014, which ranged from 5 Mt CO2eq in 1994 to 57 Mt CO2eq in 2014 compared to the 1990 baseline. Increased shares of low carbon-intensive industries and fuel switching contribute to GHG emission mitigation from the sector. The structural change is responsible for GHG reductions of 1.1 and 23.4 Mt CO2eq in 2000 and 2014, respectively. The impacts from fuel mixs and increased shares of low-carbon fuel ranged from −1 Mt CO2eq in 1994 to 16 Mt CO2eq in 2011. Despite improvements in process-energy-intensity (i.e., the energy consumed per unit of product) in several industries, changes in economic energy intensity (energy consumed per unit of economic output) have resulted in increased GHG emissions. These changes are mainly driven by changes in the process-energy intensity of the oil sands mining sector, the largest contributor to industrial GHG emissions in Canada.