Canadian industry's expenditures to reduce greenhouse gas emissions

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Jeff Fritzsche, Environment Accounts and Statistics Division

Between 1990 and 2005, Canada's total greenhouse gas (GHG) emissions rose 25%, to 747Mt,1 a level 33% higher than the nation's Kyoto target. Much of the increase in emissions is a result of the extraction, processing, refinement and transportation of oil and gas.2

Canadian industry is working to reduce GHG emissions. Overall, businesses spent $955 million on GHG reduction technologies in 2004. This represented a decline of 25% from $1.3 billion in 2002.3 This reduction was largely due to the completion of major projects in the Oil and Gas Extraction Industry and the substitution of nuclear and hydro energy production for coal-fired generation.

What you should know about this study

This study uses data from the 2002 and 2004 Survey of Environmental Protection Expenditures. The survey, conducted every two years, targets establishments in 16 manufacturing and primary industries, including the Oil and Gas Extraction industry.

Respondents were asked how much money they spent to reduce their greenhouse gas (GHG) emissions, what types of techniques and tools were used to reduce those emissions, and whether they had put into operation new or significantly improved systems or equipment that reduced GHG emissions between 2002 and 2004.

These new questions were introduced in 2002 in order to collect data on industry's initiatives to reduce GHG emissions.

This change was made possible through five years of funding provided by the Statistical Monitoring of Climate Change Technologies project under the federal government's Action Plan 2000 on Climate Change. The material was developed as part of a multi-departmental Working Group on Climate Change Technologies co-chaired by Industry Canada and Statistics Canada.

This study compares businesses' GHG reduction activities and expenditures by establishment size. Businesses are grouped by the number of employees: small (fewer than 100 employees), medium (100 to 499 employees), large (500 to 999 employees) and very large (more than 999 employees).


Capital investment down
Small firms spend the most per employee to reduce greenhouse gas emissions
Energy conservation activities widespread

Capital investment down

Declines in GHG emission reduction expenditures between 2002 and 2004 were reported in 12 of the 16 industries covered by the Survey of Environmental Protection Expenditures. Overall, operating expenditures decreased 10% from $641.0 million to $575.8 million, while capital investments fell 41%, from $640.2 million to $379.3 million (Table 1).

Much of the decline in investments to reduce GHGs was due to decreased expenditures by industries involved in the production and distribution of energy related products.

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Table 1
Total operating and capital expenditures on environmental processes and technologies to reduce greenhouse gas emissions by industry, 2002r and 2004

For example, the Oil and Gas Extraction industry reported $124.8 million in capital expenditures in 2004, down $82.1 million compared to 2002. The Pipeline Transportation industry also reported a steep decline in investments, from $32.0 million in 2002 to $3.1 million in 2004—a 90% reduction.

Respondents indicated that declining expenditures resulted from the completion of large scale projects between 2002 and 2004.

The Electric Power Generation, Transmission and Distribution industry also reported lower investments, citing the completion of several major projects. After reporting $119.1 million in 2002, investments shrunk to $21.2 million in 2004, an 82% reduction.

According to Environment Canada, GHG emissions from electricity generation decreased by over 6 Mt due to a reduction in emissions from coal-fired generation and an increase in nuclear and hydro electricity production between 2003 and 2005, despite increasing demand for electricity.4

Four industries reported increased investments in 2004. The Wood Products industry was responsible for the largest increase, investing $45.9 million in 2004, a $19.7 million increase over 2002. The Petroleum and Coal Products industry followed, investing $37.1 million compared to $25.3 million in 2002.

Small firms spend the most per employee to reduce greenhouse gas emissions

When comparing GHG expenditures by establishment size, very large establishments spent the most on average (Table 2), while small establishments spent the least.

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Table 2
Average expenditures made per establishment for greenhouse gas technologies, by establishment size, 2004

A different picture emerged when comparing how much was spent per employee. The smallest establishments actually spent the most per employee to reduce GHG emissions in 2004 (Table 3) while the largest companies spent the least.

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Table 3
Expenditures for greenhouse gas technologies per employee, by establishment size, 2004

For the very large establishments, total expenditures made to reduce GHG emissions accounted for approximately one tenth of their total environmental protection expenditures. For small establishments, GHG reduction expenditures formed almost one third of the total environmental protection amount they spent.

While small establishments increased their overall expenditures to reduce GHG emissions by $25 million and large firms increased expenditures by $44 million between 2002 and 2004, medium and very large establishments decreased their expenditures by $188 million and $172 million respectively. The majority of the decline came from reductions in capital spending.

Viewing the trend another way, the average expenditure per establishment declined by $69 thousand for medium-sized businesses and by $1.7 million for very large establishments.

Although small establishments spent the least on GHG reduction initiatives on an individual basis, as a group they actually spent more ($172.9 million) than the largest establishments ($137.6 million) because of their overall larger numbers. Medium-sized establishments spent the most in total at $441.7 million (Table 4).

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Table 4
Total expenditures for greenhouse gas technologies, by establishment size, 2004

Energy conservation activities widespread

Energy conservation is one way businesses are able to reduce their GHG emissions. Almost 6 in 10 businesses used energy conservation techniques or renewable energy technologies in 2004. The likelihood businesses used these processes increased with establishment size.

The most common technology or process used to conserve energy was an energy management or monitoring system. One third of all establishments used these systems to improve energy efficiency (Table 5). However, very large establishments were more than three times more likely to use this method than the smallest firms (65% versus 20%).

Waste energy recovery and reuse and the implementation of an energy audit were also popular, with 29% of establishments making use of each of these processes or technologies to conserve energy.5

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Table 5
Distribution of energy conservation processes and technologies, by establishment size, 2004

Overall, just over one-quarter of establishments reported that they adopted new systems or had significantly improved old systems or equipment in order to reduce GHG emissions.

These innovative establishments6 used an average of 3.5 technologies to reduce GHG emissions. In contrast, non-innovative establishments reported using less than half as many technologies on average (1.2 technologies per establishment).


  1. One megatonne equals one million tonnes.
  2. Environment Canada, 2007, Canada's 2005 Greenhouse Gas Inventory: A Summary of Trends, (accessed January 8, 2008).
  3. The 2002 expenditure estimates related to the reduction of greenhouse gases have been revised. Please see: Statistics Canada, 2008, Catalogue no. 16-001-X, no.5, Ottawa.
  4. Environment Canada, 2007, Canada's 2005 Greenhouse Gas Inventory: A Summary of Trends, (accessed January 8, 2008).
  5. Results related to tools and technologies to reduce greenhouse gas emissions are reported values only. No estimation was done for non-response or for the non-surveyed portion of the population.
  6. For the purposes of this study, businesses who answered "yes" to this last question were considered innovators, while those that answered "no" were considered non-innovators.