Energy and the economy

Our nation’s prosperity and competitiveness are tied to achieving sustainable economic growth and a successful transition to a lower carbon future.

Canada is committed to creating a cleaner environment for future generations by investing in clean technologies and increasing energy efficiency.

Key facts

  • In 2016, Canada’s energy sector directly employed more than 270,000 people and indirectly supported over 600,000 jobs
  • Canada’s energy sector accounts for almost 7% of nominal Gross Domestic Product (GDP)
  • Government revenues from energy were $12.9 billion in 2015
  • Almost $900 million was spent on energy research, development, and deployment by governments in 2015-16
  • Canada is the sixth largest energy producer, the fifth largest net exporter, and the eighth largest consumer

Find out what Canada is doing to advance the economy through energy

Canada: A global energy leader

The amount of primary energy produced in Canada in 2014 was 25% greater than in 2000. The world, on average, has increased energy production by over 37% in the same period.

Canada has a diverse abundance of energy resources including crude oil, coal, nuclear energy, renewable energy, natural gas and more. Find out how Canada’s energy ranks on an international scale:

Top Energy Producers
Top Energy Producers, 2014 (measured in PJs)
Rank Country Percentage
1 China 18%
2 United States 15%
3 Russia 10%
4 Saudi Arabia 5%
- - -
6 Canada 3%
Global Energy Rankings for Canada
Global Energy Rankings for Canada
Energy Resource Proved Reserve/Capacity Production Exports
Crude Oil 3 4 3
Uranium 3 2 2
Hydroelectricity 4 2 -
Electricity 7 6 3
Coal 15 12 8
Natural Gas 17 4 4

Canadian energy production

Primary energy is energy that is found in nature before any processing or conversion. This type of energy production is calculated using two methods.

  1. Method one treats the energy embodied in uranium as primary energy, thereby capturing the uranium Canada produces and then exports.
  2. Method two—also employed by the International Energy Agency (IEA), the U.S. EIA, and others—treats domestic electricity production from nuclear energy as primary energy. Uranium is energy dense and Canada exports most of its uranium production, which explains why the two methods produce such different results.

Primary energy production by source

Primary energy production by source
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Method 1

According to method 1, Canada produced 27,227 petajoules of primary energy in 2014. The breakdown by fuel was: crude oil 31.1%, uranium 30.1%, natural gas 23.8%, hydro 5%, coal 4.9%, other renewables 3.1%, natural gas liquids 2.0%.

Method 2

According to method 2, Canada produced 19,386 petajoules of primary energy in 2014. The breakdown by fuel was: crude oil 43.6%, natural gas 33.4%, hydro 7%, coal 6.9%, other renewables 4.3%, natural gas liquids 2.9%, nuclear 1.9%.

Primary energy production by region and source

Primary energy production by source
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Method 1

According to method 1, Alberta produced the most energy in 2014 at about 12,400 petajoules, the majority of which is crude oil and natural gas. Saskatchewan produced the second most with 9720 petajoules, most of which is uranium. British Columbia produced the third most with about 2,820 petajoules, mostly natural gas and coal.

Method 2

According to method 2, Alberta produced the most energy in 2014 at 12,400 petajoules, the majority of which is crude oil and natural gas. British Columbia produced the second most with 2,820 petajoules, mostly natural gas and coal. Saskatchewan produced the third most with 1,520 petajoules, most of which is crude oil.

Trade

International trade of energy is a vital part of the Canadian economy. Canada traded energy with 155 countries in 2016.

Exports

  • $85.7 billion in 2016
  • 18% of Canadian domestic merchandise exports in 2016
  • Oil and gas domestic exports totaled over $75 billion, of which 97% were to the U.S.
  • Canada exported energy products to 144 countries in 2016. The U.S. accounts for 92% of energy exports by value ($78.2 billion)

Imports

  • $35.9 billion in 2016
  • 7% of Canadian merchandise imports in 2016
  • Canada imported energy products from 107 countries in 2016. The U.S. accounts for 65% of energy imports by value ($23.2 billion)

Canada – U.S. Energy Trade in 2016

Primary energy production by source
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In 2016, Canada’s energy exports to the United States accounted for the following percentages of total production: crude oil 79%, natural gas 53%, uranium 31%, petroleum products 21%, electricity 11%, coal 2%. Those same exports accounted for the following percentage of U.S. energy consumption: crude oil 20%, natural gas 11%, uranium 22%, petroleum products 2%, electricity 2%, coal 0.1%. Those exports accounted for the following percentage of U.S. energy imports: crude oil 41%, natural gas 97%, uranium 25%, petroleum products 25%, electricity 90%, coal 11%. Canadian imports from the U.S. account for the following percentage of Canadian energy consumption: crude oil 27%, natural gas 19%, petroleum products 9%, electricity 2%, coal 17%.

Energy’s nominal GDP contribution for Canada

Primary energy production by source
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The energy sector contributed 187 billion dollars to the nominal gross domestic product in 2016, or 9.9% of total nominal gross domestic product. The energy sector directly contributed 127 billion dollars and indirect contributed 61 billion dollars to nominal gross domestic product.

Including indirect activities, Canada’s energy sector accounts for almost 10% of GDP.

Primary energy production by source
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The province with the highest energy sector contribution to the nominal gross domestic product in 2015 was Alberta, with over 68 billion dollars. Followed by Ontario with over 15.5 billion dollars, Quebec with almost 15 billion, Saskatchewan with almost 14 billion, and British Columbia with over 8 billion.

Government revenues

Federal and provincial/territorial governments in Canada receive direct revenues from energy industries through:

  • corporate income taxes;
  • indirect taxes (such as sales and payroll taxes);
  • crown royalties – the share of the value of oil and gas extracted that is paid to the Crown as the resource owner; and
  • crown land sales - paid to the Crown in order to acquire the resource use for specific properties.
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Annual average revenue to governments from the energy sector between 2011 and 2015 amounts to 20.8 billion dollars. Royalties accounted for 54% , income taxes for 23%, indirect taxes for 12% , and land sales for 11% .

The largest share of government revenues is collected from the oil and gas industry, which averaged $19.0 billion over the last five years, including $16.1 billion from upstream oil and gas extraction and its support activities.

Between 2011 and 2015, the energy sector’s share of total taxes paid by all industries was 9% and brought in over 12% of all operating revenues earned in Canada.

Primary energy production by source
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The amount of taxes paid by energy industries averaged around 11 billion dollars annually between 2005 and 2009, decreasing significantly in 2010, and then stabilizing to about 7 billion dollars from 2010 to 2015. The decrease in 2010 was primarily due to lower taxes paid by oil and gas extraction and support activities industries.

The amount of taxes paid by oil and gas companies fell by around 50% in 2010 and 2015 as a result of declines in oil and gas prices.

Employment in Canada’s energy sector

About 16,400 Indigenous peoples living off-reserve are directly employed in the energy sector.

Industry Employment(jobs) % of total employment
Energy (Direct) 271,517 1.5%
Crude oil 76,043 0.4%
Electricity 75,479 0.4%
Energy (Indirect) 612,905 3.4%
Construction 327,177 1.8%
Total 884,422 4.9%

Energy sector employment by province/territory

Primary energy production by source
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Employment in the energy sector totalled 884,000 jobs in 2016: 271,000 were direct jobs and 613,000 were indirect jobs. This represents 4.9% of total employment in 2016. Energy employment was largest in Alberta with 141,145 jobs, Ontario followed with 36,710, then Quebec with 24,435.

Investing in Canadian energy

Capital expenditures

Capital expenditures in Canada’s energy sector total $75 billion in 2016, a decrease of 36% from its peak in 2014. Energy accounted for 29% of total investments of non-residential and machinery and equipment in Canada.

Oil companies cut back investment in 2015 to deal with short term finances impacted by lower oil prices.

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Capital expenditures in the energy industry rose from 54 billion dollars in 2009 to 117 billion dollars in 2014, decreasing to 75 billion in 2016. Annual variations are mostly attributed to oil and gas extraction expenditures.

International Investments and Investors

Canada’s energy industries operate in free markets, where investments by both Canadian and foreign companies ensure an efficient, competitive and innovative energy system.

Direct investment in Canada and abroad

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The stock of foreign direct investment in Canada and the amount of Canadian direct investment abroad in the energy industry have both increased from 107 billion and 80 billion dollars in 2007 respectively to 208 billion and 134 billion dollars respectively in 2016.

Stock of foreign direct investment in Canada and Canadian direct investment abroad

  • The stock of foreign direct investment (FDI) in the energy sector reached $208 billion in 2016, up from $107 billion in 2007
  • The energy industry’s share of overall FDI in Canada was 25% in 2016, up from 21% in 2007
  • The stock of Canadian direct investment abroad (CDIA) reached $134 billion in 2016, up from $80 billion in 2007
  • Investment in oil and gas extraction accounted for $63 billion of the CDIA stock in 2016

Foreign control of Canadian assets

Foreign control is a measure of the extent to which foreign entities operate in Canada. Generally, a corporation is deemed to be foreign-controlled if more than 50% of its shares are owned by one or more foreign companies.

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The percentage of Canadian utilities under foreign ownership remained between 7% and 10% between 2004 and 2015. It has been on a downward trajectory since 2011, reaching a low of 7% in 2015. The same trend exists for all non-financial industries with foreign ownership between 23% and 28%, reaching 26% in 2015. Foreign control of oil and gas extraction and support activities sees more variation: from 43% in 2004, it decreased to a low of 34% in 2010, rising again subsequently, reaching 44% in 2015.

Canadian energy assets

The total value of Canadian energy assets (CEA) fell slightly in 2015 to $535.7 billion, a decrease of 2% from $548.4 billion in 2014. In 2015, domestic CEAs totaled $390.2 billion, down from $397.3 billion in 2014, while Canadian energy assets abroad totaled $145.5 billion, down from $151.1 billion. Assets abroad accounted for 27% of total assets.

A Canadian company is here defined as a publicly traded company headquartered in Canada and not foreign controlled.

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In 2015, Canadian energy assets abroad totalled 145.5 billion dollars and were distributed as follows: 110.4 billion in North America, 15.6 billion in Europe, 8.4 billion in central and South America and the Caribbean, 4.7 billion in Africa, 3.6 billion in Oceania, and 2.8 billion in Asia.

Research, development and demonstration

In 2015-2016, federal energy RD&D expenditures were $500 million and provincial/territorial (P/T) government energy RD&D expenditures, including those of utilities and other publically owned entities were $394 million for a combined total of $894 million, down from $936 million in 2014-2015.

In 2015-2016, an increase in federal spending was more than offset by a decrease in P/T spending.  This decrease in spending was largely due to a decrease in carbon capture, utilization and storage (CCUS) related spending after construction of a large CCUS project in Saskatchewan was completed in 2014-2015.

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Canadian public expenditures on energy research, development, and deployment increased from 1.02 billion dollars in the 2011-2012 fiscal year, to 1.35 billion dollars in 2013-2014, decreasing to 894 million in fiscal year 2015-2016. Public expenditures on carbon capture, utilization, and sequestration increased from 87 million dollars in 2011-2012 to 409 million in 2013-2014, but decreased to 184 million in 2015-2016. Most years, Federal and Provincial/Territorial expenditures were evenly matched; however, in fiscal years 2011-2012 and 2015-2016, Federal expenditures were more than double that of Provincial/Territorial governments.

A subset of this data is used to report Canada’s progress under Mission Innovation, an international initiative of 23 governments aimed at accelerating global clean energy innovation. Canadian federal departments, agencies and organizations increased their Mission Innovation related expenditures to $479 million in 2015/16, or 24% higher than the baseline level in 2014/15.

The Canadian industry spent about $2.1 billion on energy R&D in 2014, a slight increase from $2.0 billion in 2013.

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In the 2015-2016 fiscal year, federal expenditure on energy research, development, and deployment was 92 million on fossil fuels (including carbon capture, utilization, and sequestration), 243 million on renewable and clean energy, and 165 million on energy end use, totalling 500 million dollars. Provincial and territorial governments invested 228 million on fossil fuels, 113 million on renewable and clean energy, and 52 million on energy end use, totalling 394 million. Industry, in 2014, invested 1,392 million on fossil fuels, 509 million on renewable and clean energy, 186 million on energy end use, totalling 2,087 million. Renewable and clean energy supply includes renewables and nuclear energy. Energy end use includes energy efficiency related to transport, industry and buildings and communities.

Investments in clean technology

What is clean technology?

Clean technology is broadly defined as any process, product or service that reduces environmental impacts: through environmental protection activities, through the sustainable use of natural resources, or through the use of goods that have been specifically modified or adapted to be significantly less energy or resource intensive than the industry standard.

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Clean technology and the energy sector overlap with certain technologies, including renewable / non-emitting energy technologies like solar, wind, hydro, wave, tidal, geothermal, biofuels, biomass, nuclear, carbon capture and storage, transmission technologies like smart grids and energy storage, and energy efficiency technologies like green buildings and cogeneration.

Because clean technology is an emerging sector, data that comprehensively captures Canadian clean technology investments, and the clean energy portion of these investments, is not yet available.

In 2017 the federal government committed to providing funding to Natural Resources Canada (NRCan) and Innovation, Science, and Economic Development Canada (ISED), with collaboration from Statistics Canada, to develop the Clean Technology Data Strategy.

The majority of Cleantech companies are early stage firms and small and medium-sized enterprises. The TSX and TSX-Venture exchanges list 98 companies in the Cleantech sector, with a total market capitalization of $42 billion. This includes companies whose operations fall under:

  • Energy Efficiency
  • Low Impact Material and Products
  • Renewable Energy Equipment Manufacturing and Technology
  • Renewable Energy Production and Distribution
  • Waste Reduction and Water Management

86 of those companies are headquartered in Canada, with a total market cap of $38 billion (as of May 31st, 2017).

According to industry estimates, Canadian pure playFootnote 1 Cleantech companies (those who operate solely in one of the five environmental business lines mentioned above) generated over $13 billion of revenues and employed over 55,000 people.

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In Canada, between 2012 and 2016, 13.3 billion dollars were spent on wind energy technology, 6.6 billion on solar energy technology, 0.9 billion on small hydro energy technology, 0.9 billion on biomass and waste energy technology, and 0.7 billion on biofuels technology.

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Clean energy investments in Canada increased from 5 billion U.S. dollars in 2012 to 6.1 billion in 2014, decreasing to 3.8 billion in 2015 and 1.7 billion in 2016. Over half of annual investments go to onshore wind energy, with the majority of the rest going to solar photovoltaic projects.

Energy use in our daily lives

Canadian households use energy every day – to power lights and appliances, heat or cool spaces, run personal vehicles, recharge electronics, and more.

  • 83% of residential energy consumption is used for space and water heating
  • Residential energy efficiency improved by 47% between 1990 and 2014, saving 672 PJ of energy and $12 billion in energy costs
  • Residential energy use increased almost 9.5% since 1990, but would have increased by 57% without energy efficiency improvements
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Residential appliances energy use in Canada totalled 1,560.5 petajoules in 2014. 63.9% is attributable to space heating and 19.2% to water heating. Appliances accounted for 12.3%, lighting for 3.4%, and space cooling for 1.2%.

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Space heating energy use in Canada totalled 996.5 petajoules in 2014. 52.1% of that energy came from natural gas, 25.1% from electricity, 15.3% from wood, 6.3% from heating oil, and 1.3% from other sources.

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Water-heating energy use in Canada totalled 300 petajoules in 2014. 69.4% of that energy came from natural gas, 25.3% from electricity, 3.4% from heating oil, 1.5% from wood, 0.4% from other sources.

Household expenditures on residential and transportation

  • Canadian households spent $4,198 on average on energy in 2015
  • Residential energy expenditures averaged $2,105
  • Transportation energy expenditures averaged $2,093
  • Energy accounted for almost 7% of current household consumption
  • Lower-income households spend a larger share of their disposable income on energy

Energy retail prices

The “energy” component of the consumer price index (CPI) has been volatile in recent years. This volatility reflects mostly the variations of upstream oil and gas prices and their impact on consumer products such as gasoline.

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The annual consumer price index has risen by 30% between 2002 and 2017. The energy portion of the consumer price index is more volatile but has also been on an upward trend increasing by 45% since 2002.

Sources