Transcript Slide 1

Towards a GHG Reduction Strategy for
Ontario: Industrial Competitiveness,
Investment, Innovation, & Growth
September 2010
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Ontario: Economic Growth & GHG Emissions
180
Index (1990 = 100)
160
58.4%
140
120
8.1%
+2.5% from 1990
100
-6% from 1990
-15% from 1990
80
60
1990
GDP
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1995
Total GHG Emissions
2000
Ontario Target 2014
2005
Ontario Target 2020
2010
Canada Target 2020
GHG Emission Reductions:
Performance & Goals
Average Annual Growth Rates
Ontario
Canada
GDP Growth (1990-2008)
2.6%
2.7%
GHG Emissions (1990-2008)
0.5%
1.2%
Emissions/Output (1990-2008)
-2.1%
-1.4%
GDP Growth Target (2010-2020)
3.0%
3.0%
GHG Emissions (2010-2020)
-2.3%
-1.7%
Emissions/Output (2010-2020)
-5.2%
-4.6%
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The Challenge
• In order to achieve Ontario’s target of
reducing GHG emissions to 15%
below 1990 levels by 2020:
– Ontario needs to reduce emissions by 21.4%
from 2008 levels.
– Ontario needs to accelerate its rate of
technological progress in reducing emissions
per unit of output by a factor of 2.5X.
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Ontario: Manufacturing Growth & Emissions
160
150
140
Index (1990 = 100)
130
29.7%
120
110
100
90
-15% from 1990
80
-19.4%
70
60
1990
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1995
Manufacturing Production
2000
Manufacturing GHG Emissions
2005
Ontario Target 2020
2010
Ontario Manufacturing Performance
Average Annual
Growth Rates
19902000
20002008
Manufacturing
Production
4.5%
-2.0%
GHG Emissions
Emissions/Output
Capital Investment
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-1.9%
-5.8%
5.6%
-0.1%
2.0%
-0.6%
Target Range
20102020
•Stabilize at 2008 Level
3.0%
•21.4% Lower than 2008
3.0%
•Stabilize at 2008 Level
0%
•21.4% Lower than 2008
-2.3%
•Stabilize at 2008 Level
-2.9%
•21.4% Lower than 2008
-5.2%
•Stabilize at 2008 Level
3.5%
•21.4% Lower than 2008
5.0%
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Capital Investment Drives Emission
Reductions in Ontario Manufacturing
30
25
20
Percent Change
15
10
5
0
-5
-10
-15
-20
1990
1995
Emissions/Output
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2000
Capital Investment
2005
2010
Ontario Manufacturing Emission
Reductions
• Between 1990 and 2000:
– Ontario manufacturers cut GHG emissions by 18%
– Manufacturing production increased by 53%
– Emissions per unit of output fell by 47%
• Sources of emission reductions:
– 35% from improved energy efficiency
– 65% from changes in industrial processes
• Emissions from manufacturing:
– 28.4% of provincial total in 1990
– 20.4% in 2000
– 21.2% in 2008
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Ontario Manufacturing
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Companies that produce things = A $225 billion business ($300 billion in 2005)
– 15% of Ontario’s GDP
– 12% of workforce = 785,000 Ontarians
Every dollar of output in manufacturing drives $3.25 of total economic activity
A highly diversified sector
Manufacturing accounts for 80% of Ontario’s exports
Highly integrated with the US market
– Approximately 60% of Ontario production is exported into or through the
United States
– About 50% of manufacturing inputs are imported from the United States
75% of business sector R&D
85% of new product commercialization
A leader in GHG emission reduction (19% reduction since 1990)
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Jobs Depend on Manufacturing
FORESTRY
83%
CROP & ANIMAL PRODUCTION
47%
FORESTRY & AGRICULTURAL SERVICES
46%
31%
UTILITIES
PROFESSIONAL & TECHNICAL SERVICES
29%
MINING, OIL & GAS
29%
ENVIRONMENTAL SERVICES
26%
WHOLESALE TRADE
24%
CONSTRUCTION & ENGINEERING
19%
TRANSPORTATION & WAREHOUSING
19%
INFORMATION & CULTURAL INDUSTRIES
18%
OTHER BUSINESS SERVICES
15%
ARTS, ENTERTAINMENT, RECREATION
15%
11%
FINANCIAL SERVICES & REAL ESTATE
0%
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10%
20%
30%
40%
50%
60%
70%
80%
90%
PERCENT OF EMPLOYMENT ATTRIBUTABLE TO MANUFACTURING
Competitiveness Issues
• Need to boost productivity to ensure business competitiveness as
the basis of a manufacturing strategy – this is also needed to
ensure economic growth, good jobs, and a high standard of living
for Ontarians.
• Manufacturing recovering from deep recession (sales down 30% in
2009) – sustainable recovery still uncertain.
• Need to reverse declining rate of capital investment in the face of
deteriorating production, financial, & investment performance.
• Intense competition for investment, product mandates, and market
share as market power shifting to Asia and other emerging
industrial economies.
• Highly integrated in North American & global supply chains.
• Inability to pass along costs to customers/consumers
• Increasing costs of regulatory compliance, energy, transportation
erode cash flow and investment performance.
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Pre-Requisites for GHG Reductions
• In manufacturing, improvements in emission intensity
performance and GHG emission reductions will continue to be
driven by:
– Certainty with respect to regulatory and investment conditions.
– Investment in new and upgraded facilities, machinery and
equipment
– Process and product innovation to improve energy efficiency and
replace or upgrade industrial processes
– Productivity enhancement to achieve the ROI necessary for
investment
– Customer demand requiring integrated Canadian, North American,
and global approaches to product development and process
improvement
– Practical outcomes that manufacturers can achieve at a competitive
rate of return on investment
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Towards a Strategy for GHG Emission
Reductions
• Goal: Accelerate the rate of technological progress in
reducing emissions in Ontario by a factor of 2.5X.
• In manufacturing, accelerate average annual rate of
capital investment to 5% over the next decade.
• Pre-Conditions for Success:
– Policy certainty with clear and consistent priorities
– Regulatory goals consistent with GHG emission reductions
– Fiscal and regulatory policies that encourage capital investment
and productivity improvement
– Consistent regulatory framework across North America
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Industry Recommendations
• Prioritize and align regulatory goals with competitiveness
objectives
• Encourage emission reductions and productivity improvement by
aligning fiscal and regulatory measures to encourage investment
and capital turnover
• One Ministry to take the lead on regulation
• Simple, efficient compliance requirements – Count Carbon once
• Reasonable, practical, and achievable emission reduction targets
• No conflicting priorities or regulatory requirements
• No competitiveness gaps - Consistent North American approach
• Regular consultations with industry on performance & progress –
Quarterly meetings & Cabinet office liaison
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