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Why carbon intensity matters—and a new way to track it

Carbon intensity is arguably the single most important indicator of progress in Canada’s energy transition, but has been extremely complex to measure—until now.

What’s new?

As the global energy transition accelerates, industry and governments are under increasing pressure to track and report their carbon emissions. At the same time, consumers want to know their carbon footprint so they can make climate-friendly choices. In both cases, what people are looking for is a measurement of carbon intensity—the amount of heat-trapping gases generated by producing and consuming something, measured as the quantity of greenhouse gases released per unit of activity.

For the majority of the Canadian economy, however, a simple, unified dataset of carbon intensities did not exist—until now.

The Canadian Carbon Intensity Database  is a new tool from 440 Megatonnes that unlocks our ability to calculate the carbon intensity of every act of production and consumption in Canada. For 60 economic sectors in Canada and 51 categories of final demand and exports, such as food or cement, the database provides carbon intensities from direct combustion (Scope 1), indirect purchases of electricity and heat (Scope 2), and supply chains (Scope 3).

Having a unified set of carbon intensities will facilitate the efforts of governments, business, and households to lower those intensities over time by increasing efficiency and switching to cleaner energy sources (decarbonization), thereby accelerating Canada’s energy transition towards net zero.

Why it matters

Carbon intensity is arguably the single most important measure for tracking Canada’s energy transition, but it can be hard to measure. The Canadian Carbon Intensity Database offers a straightforward way to calculate carbon intensity for a given activity, sector, or product: users can multiply revenue, the value of purchased goods, or GDP by the corresponding carbon intensity for that sector, and voilà.

The database uses Statistics Canada’s Symmetric Input-Output Tables, National Inventory Report emissions, and CEEDC energy and emissions data to develop a comprehensive and consistent set of carbon intensities.

A concrete example

If you are a bank looking to understand the financed carbon of some portion of your Canadian portfolio (that is, the emissions per dollar invested in a sector), or a corporate sustainability wonk looking to estimate the Scope 3 emissions of the products you sell, the Canadian Carbon Intensity Database is the place to go.

Assume, for example, you are a bank looking to estimate the financed carbon across your portfolio of investments in cement manufacturing. The Canadian Carbon Intensity Database can tell you:

  • Total sector emissions. If you head over to the database and scroll down to “Cement and concrete product manufacturing,” you’ll see that carbon intensity from direct emissions (Scope 1) in the cement and concrete manufacturing sector was 10.3 megatonnes CO2e in 2020. Scope 2 emissions associated with indirect emissions in purchased heat and electricity for the sector are 0.256 MtCO2e. Scope 3 emissions associated with all other purchased inputs (i.e. not including electricity and steam) used in cement and concrete manufacturing were 1.7 MtCO2e.
  • Financed carbon. The database includes average national carbon intensities specified by GDP or revenue for Scope 1, Scope 2, and Scope 3 emissions (see Figure 1). Note that Scope 2 and Scope 3 carbon intensities are associated with production and emissions that originate in Canada; they do not include embodied carbon of imports from other countries.

Let’s say a bank financed $10 million dollars in cement and concrete products. The $10 million in financing can be multiplied by the carbon intensity, specified as carbon per dollar invested, to estimate total financed carbon for the investment. The resulting financed carbon from a $10 million investment is 9,570 tonnes of Scope 1 emissions, 240 tonnes of Scope 2 emissions, and 2,255 tonnes of Scope 3 emissions.

  • Carbon intensity in purchased goods and services. The Canadian Carbon Intensity Databasecan also be used to determine the carbon intensity of household, business, or government spending on 51 types of commodities, providing a consumption-based view of national carbon accounting. In our example, approximately 90 per cent of cement and concrete production in Canada is sold to industry, which is where most emissions end up, while 8 per cent is exported and only 2 per cent is sold directly to households as final consumption. Table 1 provides an overview of where the carbon ultimately resides in economic sectors from their purchased cement and concrete.

Seton Stiebert is an advisor to 440 Megatonnes and the Principal of Steibert Consulting. Dave Sawyer is the Principal Economist for the Canadian Climate Institute.