Environment Accounts and Statistics Analytical and Technical Paper Series
International Trade in Environmental and Clean Technology Products by Origin and Destination, 2007 to 2017

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1. Introduction

This report presents annual estimates of international exports and imports of environmental and clean technology products from 2007 to 2017 by region and country of origin and destination. The federal budget 2017 provided funding for a period of four years starting in 2017-18 to develop the Clean Technology Data Strategy, including funding for the ongoing production and enhancements of the Environmental and Clean Technology Products Economic Account (ECTPEA). This study is part of the work related to this initiative.

Throughout the paper, environmental and clean technology products, which include merchandise (goods) and services, will be referred to as ECT products. The data are consistent with those presented in the ECTPEA, although minor differences may arise due to revisions in the international trade data. The ECTPEA quantifies the size and scope of environmental and clean technology activity in the Canadian economy and is an important component of the measurement for the sector (Appendix A1).

Several tables and a summary of findings are included in this document. However, in many cases, more detailed data are available on the destinations, origins and commodity breakdown of exports and imports.

It should be noted that all merchandise trade data in this report are on a custom basis rather than a balance of payments (BOP) basis. As such, normal Canadian System of Macroeconomic Accounts adjustments for freight and timing as well as certain valuation adjustments have not been applied. Moreover, provincial detail reflects province of clearance rather than production and final destination.

2. Results

International trade in environmental and clean technology (ECT) products has increased strongly over the past 10 years, with exports rising from $8.3 billion^Note in 2007 to $12.4 billion in 2017, a 49.6% increase, compared with 23.3% growth in exports for the overall economy. Imports also rose over the same period, from $6.6 billion to $12.1 billion, an increase of 83.2%. Imports for the overall economy advanced 41.1%. With electricity and waste products excluded, total exports reached $6.6 billion while total imports were $10.2 billion in 2017. With this exclusion, exports grew 87.9% from 2007, while imports increased by 132.4% over the same period.

In 2017, Canada had a $312 million trade surplus in ECT products compared with a $48.8 billion trade deficit for the overall economy. A surplus indicates that Canada exported more to a region than it imported. The trade deficit in ECT products for Canada was $3.6 billion when excluding electricity and waste products. By international region, Canada had a $1.9 billion trade surplus in ECT products with the United States and a trade deficit with most other regions. Trade deficits with Europe and Asia, the two largest markets for ECT products after the United States, amounted to $470 million and $755 million respectively.

2.1 Exports

Exports of ECT products from Canada grew steadily from $8.3 billion in 2007 to $12.4 billion in 2017 for an increase of 49.6%. The majority of the value of Canadian exports of ECT products were destined for the United States, 74.7% in 2017. In the same year, 12.0% of ECT exports were shipped to Europe and 9.6% to Asia. Central American countries received approximately 0.9% of Canadian environmental products exports, with all other regions receiving 2.9%.

In 2017, importers from the United States received $6.3 billion in ECT goods, a further $2.2 billion in re-usable waste products and $783 million in ECT services for a total of $9.3 billion. The largest single environmental and clean technology export to the United States was electricity, totalling $2.3 billion in 2017. Waste and scrap of iron and steel reached $1.0 billion while waste and scrap of non-ferrous metals totalled $945 million.  Other than electricity and waste, the next largest exports were heavy fuel oils from clean sources and chemical products such as biofuels totalling $907 million in 2017.

European importers received $827 million in environmental goods, $406 million in re-usable waste products and $257 million in environmental services for a total $1.5 billion in 2017.  Environmental and clean technology exports to Europe were predominately destined to a handful of countries, with over 80% of merchandise^Note exports heading to just 5 countries. Merchandise exports include only goods (not services) and are derived from customs-based trade data.

The United Kingdom was the biggest European export market for ECT products, receiving $406 million in goods and re-usable waste products, or 32.9% of total ECT merchandise exports to Europe. Turkey was the second largest European export market. The rest of the top 5 importers in 2017 were Norway, the Netherlands and Germany.

The majority of ECT merchandise exports to the United Kingdom in 2017 consisted of waste and scrap of wood and wood by-products ($265 million)^Note , mostly wood pellets. The second largest export to the United Kingdom were self-propelled work trucks powered by an electric motor ($79 million). The main exports to the Turkish market were waste and scrap of iron and steel ($214 million) and wood chips ($20 million).

Asian importers received $358 million in ECT goods from Canada, $772 million in re-usable waste and $58 million in services for a total of $1.2 billion in 2017. The majority of these exports were to mainland China, which received 57.6% of ECT merchandise exports to Asia. These exports were mainly re-usable waste, coming from non-ferrous metals ($259 million), from paper and paperboard ($202 million) and from iron and steel ($73 million). South Korea and Japan were the second and third largest markets in Asia in 2017.

2.2 Imports

Imports of ECT products into Canada grew steadily from $6.6 billion in 2007 to $12.1 billion in 2017 for an increase of 83.2%. The majority of the imports came from the United States with $7.4 billion being traded in 2017, representing 61.0% of the total imports. Other major regions for import of ECT products were Europe with 16.2%, Asia with 16.0% and Central America with 4.1% in 2017, while all other regions accounted for 2.7%.

Of the $7.4 billion imported from the United States in 2017, goods (excluding waste products) accounted for $5.3 billion, re-usable waste consisted of $1.1 billion and services contributed the remaining $966 million. The largest ECT merchandise imports from the United States were other basic organic chemicals, with ethanol ($769 million) being the main contributor. Other leading import categories of goods were electric motors and generators ($530 million) followed by chemical products not elsewhere classified, which includes biodiesel ($468 million).  Waste and scrap of non-ferrous metals totalled $721 million in 2017.

The total imports of ECT goods and re-usable waste from Europe into Canada totalled $1.7 billion in 2017, with ECT services adding an additional $264 million. The main contributing imports from this region were turbines and turbine generator set units ($443 million).

By country, Germany had the most merchandise exports to Canada valued at $381 million in 2017, with the country’s main exports being transformers and electric motors and generators ($80 million each). Spain, Denmark and the Netherlands followed. Imports from these three countries have increased significantly from their historical levels, which can be attributed to wind-powered electric generating sets from Spain and Denmark and biodiesel from the Netherlands.

Canada’s imports of goods and reusable waste from Asia has been steady for the past few years and totaled $1.9 billion in 2017. Environmental services from the region accounted for an additional $87 million. China made up 41.1% of total merchandise imports, with the main imported commodities being electric motors and generators ($214 million) and printed and integrated circuits ($177 million) mainly used in solar panel production. Other major Asian exporters include Japan, South Korea and Singapore. A significant percentage of the imports from Japan were made up of waste and scrap of non-ferrous metals ($73 million) such as scrap gold jewellery ($70 million). The second and third largest imports from Japan were printed and integrated circuits ($46 million) and electric motors and generators ($44 million).

2.3 Merchandise Trade with the United States by State^Note

Total Canadian ECT merchandise exports to the United States were $8.5 billion in 2017, with a distribution of $6.3 billion in goods and $2.2 billion in reusable waste. The top goods exported to the U.S. were electricity ($2.3 billion), waste and scrap of iron and steel ($1 billion), waste and scrap of non-ferrous metals ($945 million) and heavy fuel oils from clean sources ($583 million). Canadian merchandise exports to the U.S. were $4.0 billion in 2017 with the exclusion of electricity and waste products.

For Canadian ECT merchandise imports from the United States, a total of $6.4 billion was traded with a distribution of $5.3 billion in goods and $1.1 billion in reusable waste. With the exclusion of electricity and waste, imports totalled $5.1 billion. The top imports of merchandise goods were other basic organic chemicals such as ethanol ($770 million), waste and scrap of non-ferrous metals ($721 million), electric motors and generators ($530 million) and chemical products not elsewhere classified such as biodiesel ($516 million).

For Canadian ECT merchandise exports to the U.S., New York was the largest destination with $1.1 billion in 2017 which represented 13.2% of the total. The states proceeding New York were California, Vermont, Michigan and Ohio. The largest single commodity being shipped to New York was electricity, which totalled $447 million in 2017. Exports to California consist almost entirely of goods (98.9%) with electricity being the largest single commodity being shipped to the state. Vermont imported mainly electricity from Canada comprising 92.9% of the state’s total. Michigan had a more even distribution between goods and re-usable waste with $398 million or 68.6% being goods and the rest being mainly composed of waste and scrap of iron and steel and of non-ferrous metals.

Canadian ECT imports from the U.S. came from most states, with the largest contributors being the states of Texas, New York and Michigan. For Texas, the majority of its exports to Canada consisted of clean energy products such as ethanol ($130 million) and biodiesel ($120 million). In New York, the largest non-waste commodity was material handling equipment ($63 million). Michigan’s largest non-waste exports to Canada were other motor vehicle parts for environmental protection ($93 million) and electric motors and generators ($28 million).

2.4 Merchandise^Note Trade by Province

This section provides details on trade data by origin and destination using customs based sources.  It should be noted that balance of payments adjustments for freight and other adjustments will not be included.  Additionally, customs based data uses the port of exit or entry and does not reflect the province of production, which may be different.  Published macroeconomic account data for provinces is however, based on production and differences may exist in this analysis for these reasons. 

Nearly half of all environmental and clean technology merchandise exports in 2017 exited Canada from Ontario (47.9%). Quebec accounted for 22.7% of merchandise exports while British Columbia made up 13.5%. Alberta, New Brunswick and Manitoba exported between 4.3% and 4.9% in 2017. Exports originating in Nova Scotia made up 1.4% of the total while all other provinces and territories made up less than 1.0%. Excluding electricity and waste, Ontario had the majority of merchandise exports from Canada with 57.6% of the total, with Quebec and British Columbia at 15.5% and 11.1% respectively.

Conversely, over half of all environmental and clean technology merchandise imports in 2017 entered Canada through Ontario^Note (54.5%). Similar to exports, Quebec and British Columbia were the next largest import markets for ECT products. In 2017, 17.3% of these products were cleared through Quebec while 11.2% were cleared through British Columbia. Alberta, Manitoba and Saskatchewan received 6.3%, 4.9% and 3.3% respectively of ECT products in 2017. Imports destined to New Brunswick accounted for 1.3% of total ECT imports, while Nova Scotia comprised 0.9%. Newfoundland, Prince Edward Island and the three territories accounted for less than 0.5% of total merchandise imports. The exclusion of electricity and waste resulted in a similar distribution of the total by each province.

2.5 Services Trade

In 2017, total annual exports and imports of ECT services reached $1.2 billion and $1.4 billion respectively. Excluding waste management, exports and imports of ECT services were $1.1 billion and $1.0 billion respectively. The main trading partner for both imports and exports of ECT services with Canada was the United States which accounted for 64.8% of Canada’s total exports and 71.2% of total imports in 2017.

The top three exports of services to the United States^Note in 2017 consisted of research and development, management and administrative services associated with ECT, and environmental services, which consists primarily of sanitation, waste storage, waste management services, and environmental consulting and audits.

The top three imports of services from the United States in 2017 were environmental services, patents and industrial design, as well management and administrative services associated with clean technology.

3. Data Sources

Several major sources of data were used in this report to define and measure environmental and clean technology (ECT) exports and imports. Information used to identify ECT products included international merchandise trade data^Note , the intergovernmental taxonomy of ECT products, the Doha classification for clean technology products and Eurostat documentation of Environmental Goods and Services. Data sources for the measurement of ECT trade included international merchandise trade data for goods and Balance of Payments (BOP) based data on services. The Annual Electricity Supply and Disposition Survey as well as supplementary material from the International Scrap Trade database were also used.

3.1 Goods

All customs-based trade in goods are classified according to the Harmonized Commodity Description and Coding System (HS).  The HS is an international classification system that is used to classify the import and export of goods^Note . Customs declarations are only used to record the import and export of goods and are not used to record the import and export of services. Goods are tracked as exports, re-exports^Note and imports. Exports and re-exports are combined to form a single export category. Imports are reported separately.

3.2 Services

Services are derived from quarterly and annual international trade in service business surveys. These services are included in import and export flows presented in this report.

3.3 Other Sources

Some goods such as electricity are available through the Annual Electricity Supply and Disposition Survey. While there is also an HS code for electricity, the survey data are used to generate ratios for clean technology (section 4.2) as well as a secondary data source in addition to the trade data. The Statistics Canada Supply Use Tables were also referenced to fill data gaps not covered by other existing sources. It also provided supplementary coverage for ratio development.

4. Methodology

4.1 Identifying ECT Products

The first step in calculating the origins and destinations of ECT exports and imports was to identify which products should be considered to be environmental or clean technology products. This process was established while producing the ECTPEA and this study used the same product list.

4.1.1 Goods

Working with subject matter experts from Natural Resources Canada (NRCAN), Innovation, Science and Economic Development Canada (ISED) and Global Affairs Canada (GAC), Statistics Canada started by separating commodities into ECT and non-ECT categories. Using various sources, such as Statistics Canada's previously established Intergovernmental Clean Technology Taxonomy, Canada’s submission to the Doha trade round on clean technology and GAC research, commodities which had no ECT content and those that contained some proportion of ECT content were determined.

This methodology yielded a list of 401 HS8 codes expected to contain environmental and clean technology exports. The identification of ECT trade series focused on the export (HS8) level. Once these series were selected, they were matched to HS10 import trade series using an internal concordance at Statistics Canada. In most cases there was a one to one match between HS8 and HS10, but in certain cases several HS10 categories were matched to one HS8 series. This assumed that all HS10 codes that matched an HS8 code took the same proportion of environmental and clean technology intensity that was assigned at the HS8 level. This exercise led to the identification of 828 HS10 import codes. 

4.1.2 Waste

In the case of waste products, extensive work was undertaken to determine whether they should be included or excluded from environmental and clean technology products. While typically waste does not have any value, there is extensive trade of waste metals and other scraps where the ‘waste’ can either be sent for re-processing into a useable good, or valuable materials can be extracted from waste and reused in the production process. Since the definition of environmental and clean technology includes resource management (Appendix A1), it was determined that waste products that had a monetary value and were traded, primarily for recycling into useable goods or for the extraction of materials, were in scope for the ECTPEA.

4.1.3 Services

While HS codes cover goods, there is also trade in clean technology services. Clean technology services would include waste management and remediation, environmental disaster response services, clean construction and architectural services among others. Using the taxonomy as a guide, these services were identified using Statistics Canada’s BOP system, which provides import and export data on all traded services. Similarly to the HS process, all BOP services were investigated and the services identified as containing environmental and clean technology activities were selected. International trade in services are categorized according to the international Extended Balance of Payments Classification System (EBOPS). 

4.2 Development of ECT Ratios

Once the import and export series were identified, they were assigned ratios that represent the intensity of environmental and clean technology in each category. Despite the detailed classification of products in the HS system, many are not fully used for environmental and clean technology. For example, a product like chlorine has a variety of non-ECT uses, but is a component of water treatment. While 100% of chlorine is not used for environmental and clean technology, some proportion of it is, requiring the development of ratios for all products whose proportion of ECT activity is between 0% and 100%.

Ratios are derived from a variety of sources. One important source is the input ratio that can be derived from the Statistics Canada Suply Use Tables. Some ratios have specific sources such as the proportion of clean electricity being derived from Statistics Canada’s Annual Electricity Supply and Disposition Survey. Finally, other ratios are calculated by matching series to the Supply Use Commodity Classification (SUCC) codes and determining the proportion of activity in a corresponding industry. For example, the amount of concrete products used in electric power engineering construction (for hydroelectric dams) among other industries was used to determine the ‘environmental and clean technology’ ratio for concrete.

For HS code ratios assigned at the HS8 level, it was assumed that the proportion of environmental and clean technology at the import level was identical to the proportion at the export level.

For certain products a separate survey or administrative data were available. In these cases, ratios could be derived directly from the survey source.

This exercise was initially completed for the year 2012. The same method was then used to calculate ratios for the years 2007 to 2017. Resulting ratios were then used to derive environmental and clean technology trade estimates by applying them to trade flows for the series identified as containing environmental and clean technology.

4.3 Classification Systems

Trade data for goods and services are compiled using the Harmonized System (HS) for goods and according to Balance of Payments (BOP) categories for services.  While the data were processed and analyzed in their original state, they are aligned to the SUCC system for integration into the ECTPEA. The results for this report are therefore presented using SUCC to align with the final ECTPEA results, however, HS categories are also shown to provide added detail where appropriate.

4.4 Origin and Destination Breakdown

Customs records used in compiling the HS dataset at Statistics Canada provide a vast amount of data on each transaction. For the purpose of this paper, the country of destination, US state of destination and province of origin and clearance are used to assign the trade data by region.

Services data, compiled from Statistics Canada’s BOP survey, were also assigned a country of origin and destination.

References

Eurostat. 2016. “Environmental goods and services sector accounts — Practical guide — 2016 edition.” Eurostat Manuals and Guidelines Product Code: KS-GQ-16-011. Luxembourg.

Statistics Canada. 2017. “Clean technologies and the Survey of Environmental Goods and Services: A technical reference guide.” Statistics Canada Catalogue no. 16-511-X. Ottawa, Ontario.

Statistics Canada. 2018. "Environmental and Clean Technology Products Economic Account, 2017." The Daily. December 17.

Statistics Canada. Table 36-10-0371-01. “Environmental and Clean Technology Products Economic Account, supply and use table (x 1,000,000)”.

World Trade Organization. 2004. “Synthesis of Submissions on Environmental Goods.” Committee on Trade and Environment, Special Session

Appendix

A1 Environmental and Clean Technology Products Economic Account

The Environmental and Clean Technology Products Economic Account (ECTPEA) measures the economic contribution of environmental and clean technology products in terms of output, gross domestic product (GDP), employment (number of jobs), international trade and other economic variables. Estimates are directly comparable with national results for the Canadian economy. It is developed within the framework of the Canadian System of Macroeconomic Accounts (CSMA). As such, estimates are directly comparable to macroeconomic aggregates such as gross domestic product (GDP) and international trade.

Environmental and clean technology is defined as any process, product, or service that reduces environmental impacts: through environmental protection activities that prevent, reduce or eliminate pollution or any other degradation of the environment, resource management activities that result in the more efficient use of natural resources, thus safeguarding against their depletion; or the use of goods that have been adapted to be significantly less energy or resource intensive than the industry standard.

As part of the Government of Canada's initiative to develop a Clean Technology Data Strategy, the ECTPEA provides comprehensive measures of the supply and use of environmental and clean technology products in Canada's economy. The ECTPEA has a broader scope than the Survey of Environmental Goods and Services (SEGS) and captures economy-wide transactions in the environmental and clean technology sector, including elements such as clean energy and scrap metals. The government and non-profit sectors are also fully covered in the ECTPEA.

The compilation of the ECTPEA draws on a variety of data sources, including Statistics Canada's Supply Use Tables, detailed import and export statistics released in Canada's Balance of Payments and SEGS.

Examples of environmental goods and services and clean technologies are available in the publication: Clean technologies and the Survey of Environmental Goods and Services: A technical reference guide (Catalogue number 16-511-X).

A2 Selected Data Tables

A2.1 Canadian environmental and clean technology trade (merchandise and services), by world region

A2.2 Canadian environmental and clean technology merchandise trade, by world region

A2.3 Canadian environmental and clean technology services trade, by world region

A2.4 Top Canadian environmental and clean technology merchandise trade, per supply use commodity classification, by world region

A2.5 Canadian environmental and clean technology merchandise trade, excluding electricity and waste, by world region

A2.6 Canadian environmental and clean technology services trade, excluding waste management services, by world region

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