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Industries are critical to Canada’s economic development. As the Canadian economy and population grow, so will demand for materials and goods. Their production is reliant on the industrial sector, which includes all manufacturing, mining, forestry, and construction activities.

Canada has abundant natural resources. Canadian industries are also leading producers and exporters of products such as chemicals, forestry and pulp, automobiles, aluminum, gold, and steel. All these industries are energy intensive. In fact, the industrial sector accounts for 43 percent of overall energy use in Canada.

To meet their energy needs, many Canadian industries use natural gas, a vital component both as an energy source and a raw material. The sector’s final natural gas consumption rose from 43.7 billion cubic feet (Bcf) to 684.6 Bcf between 2010 and 2022, a 26 percent increase (see Figure 1).

The industrial sector can be divided into two groups. Heavy industries, such as chemical production and steel making are energy intensive. Light industries, which include a broad range of manufacturing such as food, textile, consumer goods, and machine and transport equipment, are less energy intensive.

In heavy industries such as steel manufacturing, natural gas consumption increased from 64 Bcf to 66.8 Bcf from 2010 to 2021 (the latest year for which data is available). The chemical industry’s natural gas consumption declined to 140 Bcf in 2021, whereas the non-metallic industry, which produces products such as cement, ceramic, and glass, saw its natural gas consumption nearly double between 2010 and 2021 from 19 Bcf to 30 Bcf. Non-ferrous metal industries producing metals such as aluminum, zinc, and copper saw their natural gas use increase from 26 Bcf in 2010 to 37 Bcf in 2021 (see Figure 2).

Although less energy intensive than heavy industries, light industries overall saw natural gas use increase from 2010 to 2021. The food and beverage industry increased its use of natural gas from 40 Bcf to 73 Bcf. The machinery and textile industries saw a decline in natural gas use during this period (from 12 Bcf to 10 Bcf, and from 4 Bcf to 2 Bcf, respectively), but the wood industry’s use of natural gas increased from 8 Bcf to 19 Bcf.

Natural gas is the largest single energy source for the manufacturing sector, accounting for about 28 percent of the energy the sector consumes (see Figure 3).

Natural gas is vital for Canadian industries as both an energy source and a raw material. Its abundance in Canada gives industries in this country an advantage over other manufacturers elsewhere in the world.

Canadian Energy Centre Energy Perspectives are short contextual explanations of energy-related data released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

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The agriculture sector plays a significant role in the global economy, contributing more than four per cent of world GDP in 2021. Global GDP reached US$86.0 trillion in 2021, of which the GDP of the agriculture sector accounted for US$4.3 trillion, an increase from US$1.16 trillion in 1990.

Along with forestry and fishing, the agriculture sector, which includes the production of crops and livestock, has seen demand for its products increase in recent years (see Figure 1). The COVID-19 pandemic emphasized the importance of the sector to the world’s economy.

For the past 100 years, fossil fuels have been essential to the agriculture sector. Today’s food system depends heavily on oil and gas to feed billions of people across the planet.

The sector uses oil and gas both as raw materials and as energy in all stages of agriculture production from planting, irrigation, feeding, and harvesting, to processing, distribution, and packaging. Farm machinery, processing facilities, storage, and shipping all rely on fossil fuels.

DEMAND FOR OIL AND NATURAL GAS IN THE AGRICULTURE SECTOR

Worldwide, demand for oil in the agriculture sector increased from 110 million tonnes of oil equivalent (Mtoe) in 1990 to 118 Mtoe in 2022. The most significant increase was in Africa, with demand increasing by 150 per cent, followed by a 78 per cent rise in Latin America. In Asia, demand increased from 31 Mtoe to 50 Mtoe between 1990 and 2022, a 58 per cent increase. Worldwide, demand between 1990 and 2022 rose from 110 Mtoe to 118 Mtoe (see Figure 2).

Demand for natural gas by the world’s agriculture sector also increased — from 7.5 Mtoe in 1990 to 11 Mtoe in 2022. In North America, the agricultural sector’s demand for natural gas increased from 0.5 Mtoe in 1990 to 2.6 Mtoe in 2022. In Europe, the demand for natural gas in the agriculture sector was 3.3 Mtoe in 2022 (see Figure 3).

In recent years, food price increases have renewed the world’s focus on the agriculture sector. The sector consumes a significant amount of fossil fuels for its operations and is highly dependent on energy for its production. The need for stable food sources is critical to a global economy whose population is set to reach 9.7 billion people by 2050. Fossil fuel energy is critical to production in the agriculture sector.

The Canadian Energy Centre’s “Energy Perspectives” are short analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

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Global trade patterns have changed in recent years due to ongoing political and economic turmoil. In Canada, these changes are apparent at all levels – provincial, national, and international. The share of goods and services exported has been exceptionally high since 2002 and stood at 33.7 per cent of GDP in 2022. In Canada, 1 in 6 jobs are linked to exports.

Exports have always been essential to Canada’s economy. In 2022, Canada exported $779 billion worth of goods and services, double the value from 2002. One main reason for the country’s substantial export numbers relates to soaring oil and gas prices. Oil and gas accounted for more than 50 per cent of the growth in Canada’s goods exports in 2022. Those numbers are part of a trend: in the last 20 years, from 2002 to 2022, oil and gas exports increased significantly, rising from $36.5 billion in 2002 to $182 billion in 2022, most of it going to the United States (see Figure 1).

Canada’s Top Five Exported Products, 2002 vs. 2022

Since 2002, the composition of Canada’s trade has shifted. In 2002, the top exported product was motor vehicle parts. That year Canada exported $61.1 billion worth of automotive parts, accounting for 16 per cent of total exports. Also, that year Canada’s oil and gas exports stood at $36.5 billion, or 9 per cent of exports (see Figure 2).

Since then, the share of automotive exports as a proportion of all Canada’s exports has declined, while the share of oil and gas exports has increased, mainly due to greater demand from the United States. In the last 20 years, on average, Canada exported $82 billion of oil and gas each year.

In 2022, Canada’s annual oil and gas exports reached a record $182 billion, and the sector accounted for 23 per cent of Canada’s total exports. Accompanying the increase in exports from the sector were increased prices for oil and gas, partly as a result of rising demand in the United States.

The Canadian Energy Centre’s “Energy Perspectives” are short analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

Click here to download this edition of Energy Perspectives as a PDF. 

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Aviation has been one of the economy’s fastest-growing sectors. Before COVID, the global air transport sector had been expected to triple between 2030 and 2050.

While the COVID-19 pandemic reduced global air travel significantly, the industry rebounded strongly, with 2.2 billion people flying in 2021.

Global air traffic is now at 95.7 percent of pre-COVID levels. Not only has the industry seen air passenger traffic increase, but the number of flights has also increased—from 24 million in 2004 to 28 million in 2022 (figure 1).

Air travel is highly energy intensive and accounts for two percent of global energy-related CO2 emissions. Aviation fuel is used by commercial, private, and military flights. Commercial aviation includes passengers and freight.

The aviation industry’s demand for oil is dominated by its demand for jet fuel, estimated at between 7 and 8 million barrels per day and accounting for 5 to 6 percent of global oil demand (figure 2).

Less than one percent of the jet fuel consumed is considered to be sustainable aviation fuel. As more countries in Asia and Africa develop and the demand for air travel increases, there will be more demand for jet fuel.

The Canadian Energy Centre’s “Energy Perspectives” are short analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.