I believe all members have a copy of our overheads. I will quickly run through the presentation and try to respect a 30-minute deadline for that, and then we will be at your disposal for questions and answers.
On page 2 is the list of all the members of the Energy Dialogue Group. Our focus, as the slide indicates, is to encourage a broader debate around energy policy with all stakeholders. We do interface with the Council of Energy Ministers on an annual basis.
At the most fundamental level, the Energy Dialogue Group exists to encourage a balanced approach to Canada's energy system. We believe that what's needed in Canada are more efficient ways to ensure the development of energy resources, delivery infrastructure, and improved energy services. We recognize the need to adapt to the higher-priced reality that we are all facing with respect to energy by maximizing the choices we have, accelerating energy efficiency, and dealing with the challenges of vulnerable consumers.
Canadians and their governments need to work together to develop real, sustainable solutions to our energy and environment challenges, and I will get into many of those in the course of this conversation. We believe there's a need for a clearly articulated energy framework in Canada that recognizes jurisdictional authorities and the value of working cooperatively across governments.
On the fourth slide, we would like to bring you up to date on what we're doing within the Council of Energy Ministers process. There are four work tracks. There's one on energy efficiency, which has supporting it a working group at the assistant deputy minister level, drawn from federal-provincial governments as well as industry and NGOs. There are several studies that have been completed, and I will talk to those later in the deck. We continue to pursue information and public understanding, technology development, and more effective and efficient regulation. On the latter three work tracks, far less has been accomplished.
The fifth area is not a formal work track but a preoccupation for our industries, and that is the human resources challenges. They are rooted, first and foremost, in the aging of our population, but also in the skills challenge in ensuring we have adequate resources for the major project developments that are under way, particularly well known in the Fort McMurray area.
Slide 5, “Energy Matters”--quite clearly, it does. We're all aware of it, but it doesn't hurt to remind ourselves that energy lies at the heart of any modern economy. It's central to economic development and to productivity, it's fundamental to security and our well-being, and it's critical to environmental management. Many federal responsibilities exist, such as cross-border energy transportation, energy efficiency, R and D, nuclear, environmental files, national security, aboriginal issues, skills and infrastructure, trade, etc.
The next slide is a table of contents, and we can flip right past that to slide 7. I'll get into some of these attributes in this section.
The energy system includes everything from energy sources to energy services. On this slide, in the box entitled “Sources”, you can see some of the resources that go into our energy system, from crude oil, to natural gas, to the flow of rivers that are dammed, to the use of uranium and coal. All of those are then transformed through technologies such as those embedded in our refineries, through our hydro generators, through various processes into energy commodities. Those commodities--gasoline, electricity, natural gas--then power technologies that deliver the final end services to Canadians, be it the automobile, the light bulb, the furnace--those are illustrative. There are many technologies used that then deliver what people really come to expect when they pay their energy bill: heating, light, motive power, etc.
Each of those has unique attributes. For example, gasoline, motive fuel, has to be portable and has to have a high-power density to be efficient. We've struggled with this in trying to address some of the issues of the transportation sector, and there are no easy solutions.
On home electricity, again, reliability, stability, etc., nobody wants to readjust their clocks every time they come home.
On space heating, there are many options, but the degree of responsiveness and reliability are core to Canadians' expectations.
The next slide talks about long-term demand growth and what is basically the picture. I won't dwell on this slide. There are two interesting things to take away: Canada's energy demand increased by 1.5% per year between 1990 and 2003. That's a pretty typical number. If you look at the graph, the really interesting fact there is that GDP growth and energy consumption have been decoupled to some considerable extent since about the mid-1990s. That's reflective of energy efficiency in our industrial sector and structural change from high consumption industries to a more service-based economy. That's the one area in which we've seen significant energy efficiency growth.
On the next slide you see a little bit more granularity in terms of what underlies that 1.5% growth rate. You see the 1.3% decrease in energy intensity. That's the good news. On the flip side, you see that economic activity per person has actually increased, so you have 1.8% growth there, and population has increased as well. What it nets out at is that 1.5% growth figure.
Slide 10 gives us demand by sector. Again, you can see the overlay of generally rising demand. Again, different segments exhibit different velocities, but overall there is absolute growth in demand. The box shows you that in some areas energy intensity is improving. That's a good news story. Again, the most dramatic area is industrial, with a negative 1.8% average intensity decline.
Slide 11 talks about the growing supply for domestic use. We are a very fortunate country to have the energy resources we have. They are substantial. The basic share, as you can see, is 41% petroleum, 31% natural gas, 12% coal, and 13% primary electricity. Each source has its own unique characteristics and its unique production and transformation system. We'll talk a little bit more about that.
Slide 12 talks about one of the challenges we hear most about today, and that's energy affordability. What does it mean for consumers? It means a great deal to our economic competitiveness. You can see in the upper box some sectoral energy intensity examples, paper being the most dramatic at almost 25% of the end value. The value-added is energy, so the price of energy is extremely important in that business. It's pretty significant in the other three, including total manufacturing at something in the area of 6% or 7%.
It's also important for consumers whose well-being is affected by their purchase of energy commodities. In the lower box you can see there is a differentiated impact depending upon whether you're comparatively well off or comparatively challenged. For those least fortunate, energy can account for up to something less than 10% or 9% of their income, whereas for the most advantaged quartile it's about 5%, so it does have a differentiated impact on our citizens.
Slide 13 talks about energy affordability. The reality is input costs continue to escalate for virtually all energy forms. More remote and unconventional resources are being brought to market, and there is the ongoing need to meet our environmental goals, all of which requires investment and technological progress. So we certainly need to have a competitive investment climate. We need predictable and enduring policy that attracts investors to Canada as a means of enhancing the system's sustainability.
The reality of rising costs is reflected in prices, and policy should facilitate, in our view, adaptation by both industry and consumers. Obviously, energy efficiency is a key strategy in dealing with that. Citizens don't buy a commodity in its own right so much as they buy the services. So if we can have efficient transformation technologies at the point of use, then we can help them manage their bills. Again, the capital stock turnover at the consumer level also takes substantial time, so we need to continue the processes we have under way in improving the efficiency of consumer capital stock as well as our own.
The next slide talks about industry as a major contributor to the economy. The numbers are all big, as would be expected. Canada, as I said earlier, is extremely fortunate in its energy resource endowment. That translates into a great deal of contribution to GDP, and to our exports. We do import a great deal of energy resources as well, but as you can see, we're clearly a net exporter. We invest a great deal in the capital stock of our industry, and in terms of our companies, we're capitalized at a level of some $375 billion.
We're a major employer, and we're a major contributor to government coffers as well. The upstream oil and natural gas industry, for instance, employs something in the order of half a million Canadians and contributed $18 billion to governments in 2004.
The next slide is a bit of a replay of an earlier one that we shared with you. It speaks about the environmental footprint of the energy system. There is nothing we do that does not have an environmental implication--that's just a reality of it. Managing our environmental footprint is a key and core challenge for us; different sources have different types and different magnitudes of footprint. We affect land, air, water, and wildlife to one degree or another, so we have to focus on the challenge of balancing benefits and impacts.
Slide 16 talks about one particular challenge that gets a great deal of attention today, and that's greenhouse gas emissions. Energy is an important source of greenhouse gas emissions, and as you see from the chart on the right, the annual growth rate between 1990 and 2002 is almost the same as the energy growth rate. So there's clearly a close relationship between the two. Again, the one mitigating factor is the energy to GDP relationship, which helps to reduce the greenhouse gas emissions by improving that intensity.
The latest figures for 2004, which are not on your chart, we're told just came out. There was some 758 tonnes. That's up 0.6% from 2003. It's a relatively modest increase, and part of that is as a result of a decrease in electricity emissions. Again, there is a mix of technologies.