Market Snapshot: GHG emissions from on-site electricity generation and cogeneration at Canada’s energy-intensive facilities are increasing

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Release date: 2024-01-10

Industries that require large amounts of energy for their production processes are known as energy-intensiveDefinition*. Given their high dependence on process heatDefinition* and electricity, various energy-intensive facilities in Canada have their own stand-alone electricity generationFootnote 1 or cogenerationDefinition* plants. Greenhouse gas (GHG) emissions from these facilities nearly doubled between 2005 and 2021, reaching over 25 megatonnes of carbon-dioxide equivalent (Mt of CO2)–with two-thirds of that increase coming from the oil and gas sector (Figure 1). By 2021, GHG emissions from Canada’s energy-intensive electricity generation and cogeneration facilities accounted for 5% of the country’s energy-related GHG emissions; compared to just over 2% back in 2005.Footnote 2

Total electricity generation at these facilities ranged from around 60 terawatt-hours (TWh) in the mid-2000s to over 80 TWh in 2015 and was about 70 TWh in 2021 (Figure 1)–around 1/10th of all electricity generated in Canada that year.Footnote 3 Electricity generated but unused at these facilities is exported to local electrical grids.

Figure 1: Electricity generation by energy-intensive industries and associated GHG emissions 2005-2021

Source and Description

Source: CEEDC, NAICS Database – Energy, Emissions, and Production for Canadian Industry

Description: These stacked area charts show electricity generated in terawatt-hours (TWh) (top) and greenhouse (GHG) gas emissions from that electricity generation in megatonnes of carbon dioxide equivalent (Mt of CO2) (bottom), by energy-intensive industry, and by fuel type, for the years 2005, 2010, and 2015-21. Industries include oil and gas extraction, metal and non-metal mining, wood and paper products manufacturing, chemical manufacturing, and other manufacturing. The latter category is made up of aluminum smelting and refining, and to a much lesser extent petroleum products and food manufacturing. Fuels include natural gas, wood, spent pulping liquor, hydro, wind, solar, and other fuels–mostly refined petroleum products.

Various factors like production levels, energy requirements, fuel and commodity prices, access to energy supplies, and broader economic and product market conditions affect electricity generation or cogeneration in Canada’s energy-intensive industries. From 2005 to 2021:

  • Increased bitumenDefinition* extraction levels led to electricity generation from oil and gas facilities nearly doubling–with over 90% of it coming from natural gas.
  • Natural gas is also the main generation fuel across the metal/non-metal mining and chemical manufacturing industries–both industries in which generation levels increased.
  • Total generation from wood and paper products facilities fluctuated with industry conditions. And, while bioenergy (including wood and spent pulping liquorDefinition*) remains the dominant fuel source, natural gas increasingly accounted for a larger share of generation from these facilities.
  • Hydroelectricity generation at aluminum production facilities (see “other manufacturing industries” in Figure 1) was lower in 2021 than in 2005.
  • A small but growing share of generation from energy-intensive facilities comes from wind and solar, which increased from less than 1% of the total in 2015 to close to 2% in 2021.

In 2021, energy-intensive industries accounted for 10% of Canada’s economy,Footnote 4 but around 40% of total energy demandFootnote 5 and GHG emissions.Footnote 6 Although GHG emissions from electricity and cogeneration at Canada’s energy-intensive facilities increased, the growing use of cogeneration means:

  • More efficient use of fuel–since separate production of process heat and electricity is more energy-intensive.
  • Lower GHG emissions–in cases where grid-purchased electricity was more emissions-intensive.

The government of Canada’s recently released draft Clean Electricity Regulations establishing “performance standards to reduce GHG emissions from fossil fuel-generated electricity starting in 2035”, which applies to fossil-fueled facilities with a generation capacity of 25 megawatts or greater, and that export electricity to the grid, including energy-intensive facilities. As these facilities look for ways to reduce their GHG emissions in the coming years, some options may includeFootnote 7:

  • Efficiencies or improvements in production processes and/or energy intensity that reduce electricity and process heat requirements per unit of output.
  • Process heat and electricity production from low or non-emitting energy sources like nuclear, bioenergy, hydrogen, or renewables.
  • Retrofitting existing facilities consuming natural gas or other fossil fuels to use a blend of lower-emitting fuels (e.g., natural gas combined with renewable natural gas or hydrogen), or with carbon capture and storage (CCS)Definition* capabilities.
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