Analysis

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Total environmental protection expenditures

Businesses ¹  operating in Canada spent $8.6 billion in 2006 to protect the environment. Almost half of this amount was spent on pollution abatement and control ²  and waste management and sewerage services (Chart 1). These results follow a long-standing trend where the largest share of environmental protection expenditures was made to deal with pollutants after they were created.

The oil and gas extraction industry spent more on environmental protection than any other industry, accounting for almost one-third of the total. The second highest spender was the petroleum and coal products industry, accounting for approximately 10% of total environmental protection expenditures.

The oil and gas extraction industry directed the largest proportion of its expenditures for reclamation and decommissioning, while the petroleum and coal products industry concentrated over 71% of its expenditures on pollution prevention processes. In both cases capital expenditures made up the bulk of these expenditures.

Provincially, Alberta businesses spent the most to protect the environment, once again surpassing Ontario, the largest spender up until 2002. The largest proportion of the environmental protection expenditures in Alberta went towards pollution prevention processes. Businesses in Ontario, similar to the national results, spent more for waste management and sewerage services.

Total environmental protection expenditures by business size

The Survey of Environmental Protection Expenditures underwent a methodological redesign for the 2006 reference year. The improvements included better quality estimates for small and medium-sized businesses as well as new estimates for businesses with 20 to 50 employees. ³  Very small businesses, those with less than 50 employees, made up almost half of the survey population and accounted for 10% of the total environmental protection expenditures made in 2006 (Chart 2).

Medium sized businesses, those with 100 to 499 employees, made up less than a quarter of the population, but contributed the largest amount to environmental protection (Tables 4 and 6).

Examining the amount businesses spent to protect the environment on an expenditure per employee basis, very large businesses tended to spend the most (Tables 5 and 7). However, very small businesses made large operational expenditures when looked at per employee for waste management and sewerage services. Though all businesses face some costs in dealing with their solid waste and sewage, on an expenditure per employee basis, the smallest businesses made the largest expenditures.

Business capital expenditures on environmental protection

Although businesses spent the most overall in 2006 to deal with pollutants and waste after they were generated, they made the largest capital expenditures on pollution prevention. Pollution prevention includes technologies, equipment and processes that eliminate pollution and waste at the source before they are created.

Over 40% of investment by businesses for environmental protection in 2006 was for pollution prevention projects (Table 1). In all provinces and most industry groups businesses spent the largest share of environmental protection investments on these types of projects. The exceptions were the oil and gas extraction, mining, wood product manufacturing and primary metals manufacturing industries, for which pollution abatement and control processes received a higher proportion of investment expenditures. Although pollution prevention projects accounted for the largest share of capital expenditures, this type of expenditure was made by only 14% of businesses.

On a provincial basis, Alberta businesses invested nearly $1.9 billion in environmental protection in 2006, almost half (49%) of the national capital expenditures for this purpose. Ontario businesses reported $827 million in capital expenditures, followed by those in Quebec ($371 million).

Alberta's position at the top of environmental protection capital spending was due mainly to high expenditures by the oil and gas extraction industry. Investments by Canadian oil and gas producers, most of which operate in Alberta, in areas such as pollution abatement and control, waste management, pollution prevention, and reclamation and decommissioning totalled over $1.7 billion in 2006. Put in perspective, for every $100 invested by the oil and gas extraction industry, $4 was invested in environmental protection. ⁴ 

Nationally, the petroleum and coal products industry was the second largest investor in environmental protection ($596 million) as that industry continued to upgrade refineries to meet new sulphur regulations. Environmental protection capital expenditures represented about $20 out of every $100 invested by the petroleum and coal products industry. ⁵ 

Combined, the oil and gas extraction and petroleum and coal products industries accounted for almost two-thirds of total investments in environmental protection.

Capital expenditures on pollution prevention, abatement andcontrol by type of environmental medium

The majority of capital investments made by businesses for both pollution prevention, and pollution abatement and control were made to prevent or reduce those pollutants emitted to air (57% and 60% respectively) (Tables 8 and 9).

The largest investment on the prevention of air pollution was made by the petroleum and coal products industry ($508 million), predominantly for projects to meet ultra low sulphur diesel regulations. In addition, $33 million was invested by this industry on pollution abatement and control projects directed at air pollution. These investments went towards projects such as the installation of flare gas recovery systems and low nitrogen oxide burners.

The oil and gas extraction industry made the second largest investment ($394 million) to address air pollution. Most of its investment was directed towards air pollution abatement and control activities such as reduced flaring and venting of solution gas.

The electric power generation, transmission and distribution industry directed more of their capital investments in pollution prevention to reduce on-site releases to land rather than to air. These investments were typically for containment systems for oil spills and for radioactive waste. The majority of investment for pollution abatement and control made by the electricity generation industry went to the reduction of air emissions.

The majority of capital investments made by the mining industry for both pollution prevention and pollution abatement and control were directed towards pollutants released to surface water. Tailings management and water treatment projects were commonly reported by this industry.

Business operating expenditures on environmental protection

Businesses across Canada reported $4.8 billion in operating expenses in 2006 for environmental protection (Table 2).

The oil and gas extraction industry reported the highest operating expenses ($1.1 billion), mainly for site reclamation and decommissioning, waste management and sewerage services, and pollution abatement and control processes.

Businesses in Ontario reported the highest operating expenses related to environmental protection ($1.6 billion), while Alberta was a close second.

Waste management and sewerage services accounted for the largest proportion of environmental protection operating expenditures ($1.7 billion), accounting for 36% of the total. Most businesses had waste management and sewerage expenses, although 14% of respondents reported none. One possible explanation was that, in some circumstances, the waste produced by a business generated enough revenue to cover the costs through recycling and/or the re-sale of waste material. For example, a forestry company may sell wood waste to an electric power company to generate electricity.

Pollution abatement and control expenditures accounted for almost 22% of operating expenditures on environmental protection. Operating expenses associated with pollution abatement and control were higher than those associated with pollution prevention.

Pollution prevention methods

Overall, just over two-thirds of businesses in Canada used at least one pollution prevention method (text box "Pollution prevention methods"). The three most common methods were good operating practices or pollution prevention training; recirculation, on-site recycling, reuse or recovery of materials; and the prevention of leaks and spills (Table 10).

At the industry level, the proportion of businesses that reported the use of at least one pollution prevention method ranged from just under 60% to over 90%. The pipeline transportation industry, the beverage and tobacco industry and the primary metals industry each reported over 90% participation. The most common pollution prevention methods used by these industries reflected the national results.

Excluding the 'other' category, the least reported pollution prevention method was product design or reformulation. However, unlike the overall pattern, a third of businesses in the petroleum and coal products industry reported using this method. This may have been in response to amendments to federal regulations to reduce sulphur levels in diesel fuel. New restrictions were introduced in January 2006 for off-road, rail and marine diesel fuels setting gradually more restrictive limits starting in 2007 through to 2012. ⁶ 

Provincially, the use of pollution prevention methods was highest in Ontario and Alberta where 73% of businesses used at least one method. The percentage of businesses that used at least one method increased with business size, from only 63% for businesses with less than 50 employees to 97% for businesses with 1,000 or more employees (Table 11).

Business expenditures on energy-related environmental technologiesand their use

Businesses spent close to $2 billion ⁷  in 2006 on technologies that improve energy efficiency or reduce the use of fossil fuels. These expenditures were split almost evenly between operating and capital investments (Table 12).

Compared with industry spending on environmental protection, this amount represents a broader set of expenditures. This reflects a motivation by industry to adopt energy-related environmental technologies that exceed responses to environmental regulations, conventions or voluntary agreements.

The oil and gas extraction industry led the way with almost half a billion dollars in expenditures, the majority directed towards capital projects. Between 2004 and 2006, about 2 in 5 businesses in the oil and gas extraction industry reported the adoption of new or significantly improved systems or equipment to improve energy efficiency. Of those businesses, just over half indicated the impact on their energy use was moderate. Examples of technologies reported by the industry included energy management systems, solar energy systems, waste recovery and reuse, cogeneration and alternative fuel systems.

The electric power generation, transmission and distribution industry also spent close to a half a billion dollars, but unlike the oil and gas extraction industry, most was for operating expenses. This industry was the most likely of those surveyed to report the use of renewable energy technologies. Solar, wind and small-scale hydroelectric energy technologies were the most reported technologies. Of the 41% of businesses in the electric power generation, transmission and distribution industry that made modifications to improve energy efficiency between 2004 and 2006, well over half found the impact on their energy use was low.

Provincially, Alberta accounted for almost 40% of total expenditures, mainly attributable to the dominance of the oil and gas industry in this province. Ontario accounted for another 20% of these expenditures, although spending was not concentrated in one particular industry.

Medium sized businesses accounted for more than half the total expenditures made for energy-related environmental systems and equipment (Table 13).

Distribution of energy-related environmental technology use

Overall, a quarter of businesses used some form of environmental technology to improve energy efficiency or reduce the use of fossil fuels (Table 14). However, no single technology or process showed significant adoption by industry. The most widely reported (between 10% and 12% of businesses) were the use of waste energy recovery technologies; energy management or monitoring systems; and the performance of an energy audit during the previous three years.

Across industries, the results show a large range in the use of energy-related environmental technologies (Table 15). While some industries, such as fabricated metal products and logging, reported little use of these technologies, over 70% of businesses involved in oil and gas extraction used at least one type of energy-related environmental technology.

A larger proportion of businesses in the Northwest Territories, Yukon and Nunavut used an energy-related environmental technology compared to the rest of the country. Almost half the businesses in the territories used an energy management or monitoring system, and 35% used solar energy systems or equipment. Diesel fuel is widely used as an energy source for isolated communities. However, rising fuel costs and a desire to reduce greenhouse gas emissions make alternative energy sources more economically viable in this region. ⁸ 

The likelihood a business used some kind of energy-related environmental technology increased with the number of people employed. Over 80% of all businesses with 1,000 and more employees used an environmental technology compared to only 15% of businesses with less than 50 employees (Table 16).

Efforts to improve energy efficiency

Energy conservation and energy efficiency are practical methods to save money, protect the environment and reduce greenhouse gas emissions and pollutants created as by-products from the generation and use of energy.

In 2006, 22% of businesses reported the use of innovative ⁹  methods to improve their energy efficiency (Table 17). Over 40% of businesses in the oil and gas extraction, electric power generation and pipeline transportation industries introduced innovative methods to improve energy efficiency.

Energy efficiency upgrades were most popular in the territories, where 45% of businesses put new or improved systems into operation. Again, this could be driven by the higher cost of energy in the northern regions of the country.

Businesses in Ontario had the second highest proportion, where 28% of businesses implemented systems to reduce energy consumption. This could be partly attributable to the December 2005 launch of powerWISE^®, a joint provincial and business incentive program to encourage businesses to complete energy conservation projects. ¹⁰ 

Nationally almost two-thirds of businesses that introduced new or improved systems or equipment to improve energy efficiency indicated that the impact on their energy use was either moderate or high.

Overall, businesses reported that 3% of their total investments in machinery and equipment in 2006 were made to improve energy efficiency (Table 19).

Environmental management practices

Environmental management is not an attempt to manage the environment, but rather the management of human interaction with the environment and the impact resulting from that interaction. Life cycle management, ISO 14000 certification and implementation of a pollution prevention plan are examples of environmental management.

In 2006, just over one-third of businesses used an environmental management practice in an attempt to reduce their impact on the environment (Table 26). Of these businesses, 14% reported experiencing a cost savings as a result (Table 29). The most commonly used practice was the use of an environmental management system, followed by the implementation of a pollution prevention plan.

Within industries, there was a wide range in the use of management practices (Table 27). Industries related to energy production in general were most likely to have implemented the practices.

Environmental management practices were more likely to be implemented in larger businesses (Table 28). Almost all very large businesses (95%) used a practice compared to less than a quarter of very small businesses.