Canadian System of Environmental-Economic Accounts - Physical Flow Accounts (PFA)

Detailed information for 2015

Status:

Active

Frequency:

Annual

Record number:

5115

Physical flow accounts are one of the main elements of the United Nations System of Environmental-Economic Accounting (SEEA) which was adopted as an international statistical standard in 2012. These accounts record, in physical units of measure, the supply and use of natural inputs (e.g. cubic metres of water), products (e.g. terajoules of gasoline), and residuals (e.g. kilotonnes of carbon dioxide emissions).

Data release - September 12, 2017 (Energy use and greenhouse gas emissions)

Description

Statistics Canada's Physical Flow Accounts (PFA) record the annual flows of natural resources, products and residuals between the Canadian economy and the environment. Data are presented to reflect the activities of industries, households and governments, and follow the classification system used in Statistics Canada's Input-Output Accounts (record 1401). The accounts use the same classifications and accounting methods as the System of National Accounts (SNA) to ensure that the data can be linked with the monetary data in the national economic accounts. Classification changes and other improvements were introduced in the SNA with the implementation of the new international standards published in System of National Accounts 2008. This 2012 historical revision to the Canadian System of National Accounts has resulted in substantial impacts on the supply and use tables published by Statistics Canada (see "Modernization of the Input-Output tables" in the Documentation section below). As a result, the new PFA tables are not fully comparable to previously published estimates for the period 1990 to 2008.

Physical flow accounts reach their fullest elaboration in tables that record in physical units of measure both the supply and use of natural inputs, products, or residuals by industry and households. The Physical Supply and Use Tables (PSUT) mirror the structure of the supply and use tables in monetary terms that form the basis of the Input-Output Accounts, however the coverage goes beyond products to include natural inputs and residuals. According to the System of Environmental-Economic Accounting (SEEA), natural inputs are defined as "all physical inputs that are moved from their location in the environment as part of economic production processes or are directly used in production;" products are defined as "goods and services (including knowledge-capturing products) that result from a process of production;" and residuals are "flows of solid, liquid and gaseous materials, and energy that are discarded, discharged or emitted by establishments and households through processes of production, consumption, or accumulation." This extended coverage gives a fuller understanding of the linkages between the environment and the economy.

The implementation of the PFA in Canada has focused on specific elements of the physical supply and use framework rather than the full elaboration of the detailed PSUT structure outlined in the SEEA. Depending on the topic, the PFA can focus on the production of statistics on either supply (e.g. in the case of CO2 emissions) or use (e.g. in the case of water and energy use) data. This is done in an effort to streamline production and maximize the usefulness of the data.

To date, PFA have been developed for energy use, water use and greenhouse gas emissions. These statistics are used in economic-environmental modeling, for studies on eco-efficiency and resource and waste intensities, for environmental indicators, and for trade negotiations related to environmental impacts. Compatibility with the traditional national economic accounts greatly facilitates the integration of the environmental data into macroeconomic models and analysis.

Subjects

  • Economic accounts
  • Environment
  • Environmental and resource accounts
  • Input-output accounts

Data sources and methodology

Target population

The Canadian economy.

Instrument design

This methodology does not apply.

Data sources

Data are collected from other Statistics Canada surveys and/or other sources.

The Input-Output Accounts of the Canadian System of National Accounts (CSNA) provide balanced monetary supply and use tables that are also key data sources.

This information is compiled, integrated and analyzed as part of the process of producing physical flow estimates.

Major suppliers of data within Statistics Canada are the Industry Accounts Division and the Environment, Energy and Transportation Statistics Division. Environment and Climate Change Canada and Natural Resources Canada are the main external data providers. More details on data sources are provided in the estimation section below.

Error detection

Not applicable

Estimation

In the process of preparing statistical estimates, data from various sources are confronted, analyzed by subject-matter experts, and used to compile estimates that are consistent with other estimates in the CSNA to provide a valid and coherent statistical picture of the subject matter. Consistency is a key feature of the statistics produced by the CSNA and the PFA. Data in physical units of measure are confronted with the CSNA's monetary estimates to ensure this consistency. This integration process can lead to revisions to both the physical and the monetary source data, and helps improve the quality of both the source data and the resulting accounts.

ENERGY ACCOUNT

This account describes the annual use of energy products by industry, governments, institutions and households. It covers the following energy sources: coal, natural gas, motor gasoline, diesel, aviation fuel, light fuel oil (including kerosene), heavy fuel oil, refinery fuel gas, coke oven gas, liquefied petroleum gases (including natural gas liquids), electricity, coke, steam, wood, and spent pulping liquor. The unit of measure is terajoules. Only uses of energy products for their energy content are published - the use of energy products as material inputs is not included in the energy use account (e.g. oil products used to produce plastics) but is available on request.

In general, energy surveys provide the data for large energy consumers. Where consumption data in physical units is not available, estimates are made based on expenditure data in the Input-Output Accounts.

Statistics Canada's Report on Energy Supply-Demand in Canada (RESD) provides the control totals for the consumption of the fuel types. It also provides the basic data for producer consumption and non-energy use of fuels. Statistics Canada's Industrial Consumption of Energy Survey provides detailed fuel consumption data for the manufacturing industries. This is combined with the RESD data to yield the estimates for manufacturing industries.

Data for mining, oil and gas extraction are benchmarked to the RESD totals with additional data added for energy transformation and producer consumption. Detailed fuel consumption data for the mining industries are taken from the Census of Mines produced by Natural Resources Canada.

Data for agriculture and construction are taken directly from the RESD and distributed across the various sub-industries according to the fuel expenditure data contained in the Input-Output Accounts.

Transportation surveys provide fuel consumption data for airlines. This covers international use of aviation fuel by Canadian carriers in accordance with SEEA guidelines. Transportation surveys also provide fuel consumption data for rail and passenger bus and urban transit industries.

Motor gasoline and diesel purchases are benchmarked to the RESD but are distributed across industries according to expenditure data in the provincial Input-Output Accounts. The use of provincial accounts controls for price variations across provinces. This is done to distribute retail pump sales which are not disaggregated by purchasing industry in the RESD and for which detailed physical consumption data by industry do not exist.

Data for household use of energy is taken directly from the RESD residential category, except for motor gasoline and diesel consumption, which is part of the retail pump sales distribution above.

Consumption of wood and spent pulping liquor is taken directly from the Industrial Consumption of Energy Survey.

GREENHOUSE GAS ACCOUNT

The greenhouse gas account covers annual emissions of the residuals carbon dioxide, methane, and nitrous oxide by industry, governments, institutions, and households. The unit of measure is kilotonnes.

The main data sources for the emissions estimates are the Energy Account and the National Inventory Report on Greenhouse Gas Sources and Sinks (NIR) published by Environment Canada.

The NIR is Canada's official government response to Canada's obligations under the United Nations Framework Convention on Climate Change (UNFCCC). It provides estimates of emissions for seven greenhouse gases from energy use, industrial processes and other sources. The reporting requirements of the UNFCCC differ from the methodological guidelines of the SEEA, and as such there are differences between the totals reported in the Greenhouse Gas Account and the NIR. A reconciliation table is included with the Greenhouse Gas Account to explain these differences, which are also outlined in more detail below.

Greenhouse gas emissions estimates are calculated based on the Energy Use Account and emissions factors provided in the NIR. Emissions from industrial processes and other sources are taken directly from the NIR and attributed to the appropriate industries using the detailed data tables that Environment Canada submits to the UNFCCC.

The differences between the greenhouse gas emissions according to Environment Canada's NIR and Statistics Canada's Physical Flow Accounts (PFA) are due to two main reasons: a) conceptual differences between the UNFCCC reporting guidelines and the SEEA, and b) different data sources or lack of data preventing an accurate allocation of some types of emissions.

The largest conceptual difference between the NIR and the PFA is in the treatment of emissions stemming from the combustion of biomass (specifically wood and spent pulping liquor). UNFCCC guidelines exclude CO2 emissions from biomass combustion because this CO2 can also be absorbed through biomass production. SEEA guidelines focus on the estimation of emissions from economic units without accounting for the potential re-absorption of those emissions later.

Emissions from solid waste are the second largest conceptual difference. Emissions from landfill gas could be allocated to the waste management industry, but these emissions are not a result of current production: they represent releases associated with the decay of waste discarded in previous accounting periods. As such, they are not included in the Greenhouse Gas Account since they would not vary with current period economic output and thus would not yield proper conclusions if used in conjunction with the Input-Output tables for modeling purposes.

International aviation fuel purchases are the third largest conceptual difference. The UNFCCC requires airline emissions to be calculated based on the national territory. The SEEA requires that those emissions are based on the residence principle, meaning that the Greenhouse Gas Account must include purchases and thus emissions of aviation fuel abroad by domestic airlines and exclude those purchases and related emissions of foreign airlines in Canada. The NIR total for emissions covers those that occur over Canadian territory regardless of the ownership of the airline, and excludes emissions of domestic aircraft abroad (although these are included elsewhere in the NIR for information purposes).

Four gases are covered in Environment Canada's NIR that are not covered in the Greenhouse Gas Account, namely HFCs, PFCs, SF6 and NF3. These are excluded from the PFA since there are no data available to allocate these emissions across industries and households. Several of these substances are refrigerants used in many industries, and attributing the leaks of the gases properly cannot be done with current data sources. The small amount of SF6 emissions is a result of processes in several distinct industries, and the data to do this allocation properly are also not available. Emissions from non-energy products from fuels and solvent use suffer from the same data gap.

Another conceptual difference is the inclusion in the PFA of prescribed burns in the forestry industry as an industrial process that is part of the production function for forestry. This is allocated to the Land Use, Land-Use Change and Forestry section of the NIR.

The final difference between the NIR and the greenhouse gas account relates to the consumption of motor gasoline and diesel. United Nations Framework Convention on Climate Change (UNFCCC) guidelines exclude carbon dioxide emissions (CO2) from biomass combustion (specifically ethanol and biodiesel) because this CO2 can also be absorbed through biomass production. The System of Environmental-Economic Accounting guidelines focus on the estimation of emissions from economic units without accounting for the potential re-absorption of those emissions later. In addition, Environment and Climate Change Canada treats all transportation activity as a separate sector in the NIR. The fuel use from this activity is modeled so that it can be attributed to different vehicle types for the calculation of emissions. The modeling process leads to different emissions estimates than those based on fuel consumption from the energy use account where the composition of the vehicle fleet is not known for each industry.

The remaining statistical difference results from other sources including changes to source data that are required to reconcile that information with other data sources.

WATER ACCOUNT

The Water Account, produced every two years, describes the use of the natural resource input of water and of water accessed through municipal water supply or irrigation systems by industry, governments, institutions, and households. The unit of measure is thousand cubic metres.

The main data source for this account is a set of three Statistics Canada surveys administered as the Industrial Water Use Survey. This set of surveys covers direct water intake and the use of municipal water by the mining, thermal power, and manufacturing industries.

Water use by the agriculture industries is taken from two sources. The primary source is the use of water for irrigation in Alberta, the largest consumer of irrigation water, which is taken from estimates published by Alberta Agriculture and Rural Development. Other provinces are estimated based on the Agricultural Water Use survey from Statistics Canada combined with precipitation measures for the growing season produced by Agriculture Canada. Water use for livestock is based on livestock estimates from Statistics Canada combined with water use coefficients for watering and cleaning provided by Agriculture Canada.

Water use in the oil and gas industry is provided from the Canadian Association of Petroleum Producers. It includes both fresh and saline water used in oil and gas extraction.

Household water use is based on the municipal water supply from Statistics Canada's Survey of Drinking Water Treatment Plants combined with an estimate from the producers of the proportion of this water supply that serves households. In addition, the water use of households not served by the municipal supply is estimated based on average household consumption figures.

Estimates of the amount of municipal water supply lost to leakage are based on historical data from Environment Canada's Municipal Water Use Database and more recent survey information from Statistics Canada's Survey of Drinking Water Treatment Plants. This leakage amount is recorded as water use by the water supply industry.

The amount of municipal water use that is not residential and not assigned to industries in the Industrial Water Use Survey is distributed across the remaining industries based on expenditure data for water supplied through mains from the Input-Output Accounts.

PHYSICAL FLOWS BY FINAL DEMAND CATEGORY

In the final demand perspective, consumption and emissions by industry are attributed to the end-user of goods and services rather than the producer and can be referred to as indirect consumption and emissions. The results are derived from a hybrid input-output model that combines physical data by industry with economic data on production and consumption of goods and services. This distributes industrial emissions, energy use, and water use across the categories of final demand that generate industrial activity. Note that the energy calculations include an adjustment to account for the production of electricity from fossil fuels which would be double-counted if both the electricity consumption and the fossil fuel consumption used to produce it were included in the model.

Final demand in the Canadian System of National Accounts is broken into the following categories:

Final consumption expenditure (comprised of Household consumption expenditure, Non-profit institutions serving households' consumption expenditure, and Governments consumption expenditure), Gross fixed capital formation (comprised of Construction, Machinery and equipment, and Intellectual property products), Inventories, and Exports and imports. In the CANSIM table on physical flows by final demand category, Inventories are included in the category Gross fixed capital formation.

These data show the drivers of changes in industrial energy use, water use, and greenhouse gas emissions based on the expenditures on goods and services according to the destination of demand. Direct energy use, water use, and greenhouse gas emissions by households are included under the Household consumption expenditure category.

DIRECT PLUS INDIRECT INTENSITY

The direct plus indirect intensities are input-output multipliers derived from the input-output tables. They are used to assess the effects on energy use and greenhouse gas emissions of an exogenous change in final demand for the output of a given industry.

They provide a measure of the interdependence between an industry, the rest of the economy, and the use of energy or production of greenhouse gas emissions.

Direct effects measure the initial requirements for an extra dollar's worth of output of a given industry. The direct effect on the output of an industry is a change in output equal to the change in final demand.

Indirect effects measure the changes due to inter-industry purchases as they respond to the new demands of the directly affected industries. This includes the chain reaction of output up the production stream since each of the products purchased will require, in turn, the production of various inputs. Note that the energy calculations include an adjustment to account for the production of electricity from fossil fuels which would be double-counted if both the electricity consumption and the fossil fuel consumption used to produce it were included in the model.

Induced effects measure the changes in the production of goods and services in response to consumer expenditures induced by additional households income ( i.e., wages) generated by the production of the direct and indirect requirements.

The intensity indicators of the physical flow accounts are simple multipliers that capture the sum of direct and indirect effects. They are based on the assumption that households are exogenous and that there is no feedback between wages and production ( i.e. there is no induced effect included in the calculation).

Simple multiplier = (direct + indirect effects) / $1 exogenous final demand

It is generally acknowledged that simple multipliers underestimate economic impacts since induced households activity is absent. They can be considered as lower bounds of multiplier effects.

Quality evaluation

The quality of the estimates produced is ascertained using time series consistency analysis, as well as analysis of the coherence of the estimates with current economic events and with related data from other programs. Issues arising from the source data are also identified and corrected where appropriate.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data. The PFA follow the confidentiality patterns used in the Input-Output accounts and other source data for any commodities measured.

Revisions and seasonal adjustment

Energy and greenhouse gas accounts are updated annually. Water accounts are produced every two years, following the cycle of the Industrial Water Use Survey.

Preliminary estimates for energy use, greenhouse gas emissions, and water use are produced for reference years that do not yet have a complete Input-Output table available for the expenditure based allocations. In all cases where a preliminary estimate is required, the most recent supply and use table is used to provide proportional allocations across industries without physical survey data. These preliminary estimates are revised upon publication of the supply and use tables for that reference year.

In addition, the greenhouse gas account is revised each time there are revisions to Environment Canada's National Inventory Report. These revisions are generally related to changes in methodology required by the UNFCCC or follow from improved methods, models, or data being used in the compilation of the NIR.

Seasonal adjustment is not necessary given that the calculations of physical flow estimates are only performed on an annual basis.

Data accuracy

No direct measures of the margin of error in the estimates can be calculated. The quality of the estimates can be inferred from analysis of revisions and from a subjective assessment of the data sources and methodology used in the preparation of the estimates. In general, the data derived from survey data and final supply and use tables are considered to be reliable. The preliminary tables are considered reliable in terms of totals and for industries and sectors that have available survey data (generally electric power, manufacturing, mining, agriculture, households, and some transportation industries). Preliminary estimates based on expenditure data from previous years should be used with caution.

Documentation

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