Where Do Greenhouse Gases Come From?

A couple of weeks ago, Jeffrey Simpson inaccurately accused the NDP of “ignoring the fact that most emissions come from individuals.” Andrew Coyne is similarly fond of suggesting that, while half of greenhouse-gas emissions are generated by large final emitters, the other half are generated by “consumers”. Both commentators have, to varying degrees, commended the Liberals for introducing a plan that is fairly comprehensive of emissions.

After a decade of One-Tonne Challenges and other exhortations to change personal behaviour, Canadians cannot be blamed for believing that individuals account for half or more of emissions. In fact, households directly emit below one-sixth of Canada’s greenhouse gas. Businesses emit almost five-sixths of the total. Any serious plan to reduce emissions must place more emphasis on industry than on individuals.

I calculated the following figures for 2003, the most recent sectoral breakdown available, from data provided by Statistics Canada’s Environmental Accounts and Statistics Division:

 

 Sector

 Fuel(s)

 Megatons

 1.

 Household

 Gasoline

  67.5

 2.

 Household

 Others

  44.9

 3.

 Non-Profit

 All

  18.2

 4.

 Business

 Gasoline

  22.8

 5.

 Business

 Coal and Coke

 124.9

 6.

 Business

 Natural Gas

 141.6

 7.

 Business

 Others

 151.7

 8.

 Business

 None

 137.1

 Total Emissions

 708.7

 

How comprehensive is the Liberal Green Shift? It does not affect gasoline (row 1, row 4, and a bit of row 3), which is already subject to a federal tax deemed equivalent to the proposed carbon tax. Taxing fuels also exempts emissions from industrial and agricultural processes other than burning fuel (row 8). In total, about one-third of emissions (230 Megatons) would be completely untouched by the Green Shift.

Of course, a cap-and-trade system would not be totally comprehensive either. Such a system would only cover those businesses classified as large final emitters, which account for about half of total emissions. However, it seems a bit odd of pundits to criticize the NDP for an approach that exempts half of emissions from carbon-pricing, while applauding the Liberals for an approach that exempts a third of emissions.

The approximately one-sixth of emissions that would be priced by the Green Shift but not by cap-and-trade are mainly from heating homes, public and non-profit buildings, and businesses that are not large final emitters. While higher heating costs might promote conservation, this source of emissions is relatively unresponsive to price signals. Whatever emissions could be abated by raising heating costs and cutting income taxes must be compared to the emissions that would be abated by a massive program of building retrofits, which the NDP proposes to finance with cap-and-trade revenue.

Neither approach to carbon-pricing would change the cost of gasoline. However, gasoline consumption could be reduced by modernizing driving infrastructure and investing in public transit. Here again, the main difference between the Liberal and NDP approaches is that the former gives away all carbon revenue through tax cuts while the latter retains this revenue for environmental purposes. When both the expenditure and the revenue sides of the ledger are considered, the NDP would clearly address a wider swath of greenhouse-gas emissions.

13 comments

  • I did my own calculation a few month ago and I came out to 49% from individuals and small businesses. I think the main difference is that I allocate electricity to the individuals that use it rather then the businesses (mostly crown corporations) that generate it.

    Also my number of transportation (Gasoline) where much higher then your’s for some reason.

    According to this, out of a total of 747 000 kt CO2

    * 200,000 from transportation of which only 39,000 is from Heavy-Duty Diesel Vehicles, with most of the rest from individuals and small businesses
    * 129,000 from electricity which is also mostly individuals and small businesses.
    * 42,000 and 36,800 from Residential, Commercial and Institutional uses, mostly for heating homes and businesses.

    That gives about 49% from individuals and small businesses.

    Not included is 130,000 is from the fossil fuel industry half of which goes to generate to fuel for individual users.

  • I have e-mailed you the Statistics Canada figures. They are based on input-output data, which eliminates the guesswork as to how transport emissions are divided among sectors.

    You have indeed treated electricity differently than Statistics Canada and I.

    I am counting diesel as an “Other” fuel rather than as gasoline. (The Green Shift applies new charges to diesel, but not to gasoline.)

    I think that you have grouped many or most businesses that are not large final emitters with individuals. One of the points that I am trying to make is that these businesses, as distinct from households, emit quite a bit of greenhouse gas.

  • janfromthebruce

    Thanks Erin. Great information post based on facts and stats rather than spin.

  • Good stuff Erin. The role of agriculture in GHG emissions is underplayed by Al Gore, and, it appears from your table, StatCan. However the FAO itself attributes a significant part of global warming to livestock. To my knowledge no political party is raising the role of livestock for meat processing in global warming. Lots of citizen ecologists seem to get it though, including children of many of our friends.

  • Erin,

    I think this is a pretty good start, but I do think we need to examine this question from an economic perspective with a lot more effort. We need to have some quite rigorous investigation into this. I am not calling your exercise a back of the envelop process, but we need to get together some within the PEF to perform a quite rigorous query on such a topic.

    We need to house it somewhere and I was thinking that the CCPA would be an ideal host.

    I would also think that some of the Statistics could be better estimated and the methodologies more grounded. We need to come up with something that is quite extensive and thoroughly researched. This is a good start. I don’t think we are going to get to the Stern report overnight, but maybe just answering this one question. Where do green house gases come from?- is seemingly simple enough, yet not well understood. At least in Canada anyway. Given the fact that we apparently have all this information, then why is it not more thoroughly understood. I think it has something to do with all the spin., I just had another individual come up to me and insist that global warming is a farce. It is time that the numbers were dug out.

    Anybody on the blog willing and wanting to help out on such a project please email me at my website.

    There is also a need to follow this cross section up with some annual or biennial event. I guess the starting point would be to ensure that nobody is already doing some such estimate from a progressive perspective. If anybody has seen such reports please post them.

    paul tulloch

  • Erin may be correct about the direct emissions that come from households, but I suspect the reason that Coyne and others say that half the emissions from from households is because, according to Statistics Canada, the indirect domestic emissions associated with household consumption of goods and services added up to 217 megatonnes in 2003.

    This means that total direct and indirect domestic emissions associated with household consumption added up to 330 megatonnes, or 47% of Canada’s total in 2003.

    This doesn’t include the foreign indirect emissions associated with household consumption of imported goods and services, which were estimated at another 101 MT in 2003.

    I included the domestic indirect household emissions in the calculations of the impact of a carbon tax by household income group that I’ve done so far Canada, B.C. and NB in different publications, as I believe it is reasonable to assume that the price of carbon from a carbon tax or a cap and trade system would be passed on to consumers in most cases.

    As far as I’m concerned the issue isn’t whether the NDP plan is better than the Liberals or vice versa. None of the plans proposed by any political party so far in Canada would be sufficient to achieve the deep emission reductions required, or that various organizations and bodies have committed themselves to.

    Paul: I’m planning to do analysis of the impact of carbon taxes for the other provinces as well. Statscan has some info. The national inventory reports from Environment Canada are a good source while NRCan is responsible for forecasts of energy use and GHGs. All good sources of information.

  • Toby, I have the following breakdown of 2003 emissions by final demand: 267 megatons (MT) from exports, 217 MT from Canadian personal consumption, 112 MT from other internal demand, and 113 MT from direct household use. (I posted this breakdown for 2002 a year ago.)

    One can add 217 MT to 113 MT and conclude that almost half of emissions are ultimately driven by Canadian household demand and that the other half are ultimately driven by other sources of demand. However, that is not at all the same as saying that one half of emissions comes from large final emitters and the other half comes from consumers.

    A significant portion of greenhouse gas from large final emitters (e.g. electricity) is part of the 217 MT for households. A significant portion of greenhouse gas from other emitters is part of the 267 MT for exports.

    I agree that final-demand categories are the best way to estimate the incidence of carbon-pricing, if one assumes that industry can pass along all costs.

    We are breaking-down the numbers in two different ways for two different purposes. My point is that climate-change policy needs to focus on business, which directly emits the lion’s share of greenhouse gas.

  • Hi Erin again,

    Both bill C-30 and C-377 involve a commitment of 80% emission reductions from Canada’s 1990 level of emissions by 2050. This means total emissions of 119 megatonnes in 2050.

    In recent years, our total emissions as reported through the National Inventory Reports have come down. However, the BAU case from NRCan is for a projected emissions level of 940 MT in 2020.

    At that rate of growth, our emissions in 2050 would be at least double our 1990 levels, e.g. to over 1,200 MT. The commitments in C-30 and C-377 would then imply a 90% reduction from BAU for that year. My point is that if we are to have any hope of reaching those targets, let alone the interim targets, we need to focus on all sectors.

  • “My point is that climate-change policy needs to focus on business, which directly emits the lion’s share of greenhouse gas.”

    Wouldn’t it make the most economic sense to focus on reducing the emissions that are cheapest to reduce. I suspect the cheapest places to reduce emission is on the consumer side. For example, encouraging switching to a smaller car or using transit actually saves money by reducing emission.

  • I certainly agree about the need to reduce household emissions. Indeed, the final two paragraphs of this post discussed how to do so.

    However, an accurate picture of current emissions will be essential in developing policies to reduce future emissions. Simpson and other commentators have painted an inaccurate picture.

    Darwin, I agree about targeting the low-hanging fruit. As outlined in my subsequent post, the cheapest emissions to abate are likely among those from business.

  • Since it appears we are heading into a deep recession and a deflationary housing situation, I would hazard a guess that Canadians will not be so altruistic as to embrace a Carbon Tax to save the planet. Rising energy prices will cause Kyoto to be shelved until it becomes affordable.

    Politicians promising to save the environment by imposing new taxes on individuals and businesses will not survive .. even if they promise to make it ‘revenue neutral’ .. because who would trust and vote for such a politician given the economic instability facing Canadians ..?!

  • The Liberals are also proposing cap-and-trade as well, having clearly stated in the Green Shift document that their cap-and-trade commitment made in the March 2007 ‘Carbon Budget’ is still on. Cap-and-trade, however, is complex to put in place, and so far has not been successful in Europe, which has been actively using it without success for several years now.

    In comparison, a carbon tax is much easier to implement, and when implemented as a shift, is able to compensate families for price increases due to the tax — something not seen in the NDP and Conservative cap-and-trade plans. This is especially important to low income families, who cannot afford to be hit with extra costs. Also, low income families are not the drivers of GHG emissions, emitting 2.5 times LESS GHGs than the average.

    The Green Shift will start reducing our emissions sooner. When Europe has sorted out their cap-and-trade issues, we’ll be in a position to leapfrog ahead, and implement a hybrid system.

    Taxing/pricing carbon will lead to a very efficient economy. Currently, we are immensely wasteful with energy. Study after study has pointed out that the modest costs of reducing our carbon footprint will reap far greater rewards.

    I think that naysayers who say that Canadians will abandon the economy in poor economic times underestimate the commitment many have towards their children.

  • Very interesting material Erin. You might want to Email copies to some of the ENGOs and academics who’ve lined up in Premier Gordon M. Campbell’s climate change chorus line.

    I am wondering what Toby Sangster means by the phrase “total direct and indirect domestic emissions associated with household consumption”? Am I right in guessing that he means those emissions that come from factories producing consumer goods?

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