Some want to punish household electricity consumption, but that’s a small slice of our energy use.
There is a good deal of ink spilled on how much energy people use in their homes, and plenty of judgment of those who use a lot, as I discussed last week. It’s not uncommon for me to get frowny faces when I mention our hot tub, even when those same faces were just telling me about their recent vacation in an exotic location or multiple trips to conferences on the East Coast.
The focus on home energy consumption is understandable in some ways, because it’s the thing that society can observe most directly and completely through a single entity, the distribution utility. And, it’s the usage for which price is most under the control of government regulators.
Don’t get me wrong, we should try to make homes as energy efficient as can be done cost-effectively. But the reality is that the vast majority of the energy use we are responsible for takes place outside the home, whether we are driving our car, flying across the globe, dining in restaurants, consuming goods that take energy to create, having those goods delivered to our house, or pretty much any other activity we engage in.
Home Energy’s Role in the Economy
While writing the paper about this that I put out last week, I found the 2021 EIA US energy flows graphic above to be a real eye-opener. It shows that about 15% of US primary energy use – which includes the losses in electricity generation and transport – is attributable to residential electricity consumption (Multiplying the share of energy that goes into electricity generation – 36.7 quads divided by 97.3 quads – by the share of electricity that is used by households – 39%). Adding in residential natural gas, raises it to 20%.
Virtually all US energy use eventually benefits some US households (after a small adjustment for the net impact of imports and exports), yet nearly all of the moral judgment – and use of the term “energy hog” – is reserved for energy consumption in the home. There is discussion and policy about how to make the 80% used outside the home more efficient, but you don’t see the sort of shaming or financial penalties that we see for residential usage, and that in many parts of the country is official policy.
Prices for gasoline, air travel, energy-intensive production goods, housing, food, and all of the other goods and services that constitute the 80% are set by market forces.The prudence of households that consume low or high quantities plays essentially no role in the price they pay. In fact, many such goods are sold with quantity discounts or with additional rewards to customers who consume high quantities, such as through customer loyalty programs employed by airlines and other industries.
Residential energy consumption seems to sit alone as an area of consumption for which some believe payment should be based on the ethics of high usage levels. As a result, households whose consumption preferences tilt more towards staying at home take a disproportionate hit relative to those who choose to spend a higher share of their income on travel, dining out, and consuming other goods and services. It is hard to come up with an equity-grounded argument for such asymmetric treatment.
(Source)
It’s the Environment, Stupid
But talking about energy use is so last century. The concern of most policymakers is really environmental impact. Through that lens, singling out home electricity usage is especially problematic. If we apply the residential share of electricity to the EPA’s emissions accounting, electricity use in the home accounts for only 10% of US GHG emissions.
It likely accounts for an even smaller share of the damages from local pollutants, because coal is in decline as a fuel for electricity and power plants generally are located farther from where people live than polluting freeways and industrial facilities. Not to mention the indoor air quality issues created by combusting natural gas or wood at home. If we really care about GHGs and local pollution emissions, a focus on residential electricity consumption is particularly misplaced.
Hogs, Angels and Air Travel – Some Further Context
While working on this topic and writing the paper, I did a comparison of home electricity consumption to air travel that blew my mind, so perhaps this will also blow yours.
I showed last week that controlling for the number of household occupants and the local climate, and counting total electricity consumption regardless of whether the juice is from the roof or the grid, greatly reduces the usage difference between households that appear to be “energy hogs” and those that appear to be more energy-efficient “angels”. In fact, after adjusting for household occupants, climate and total consumption, I report in the paper that the difference between the 25th and 75th percentile consumption per capita among the customers of California IOUs is 2058 kilowatt-hours per year. The difference between 10th percentile and 90th percentile is 4372 kWh/year.
The marginal emissions rate from electricity generation in California is approximately 0.4 metric tons per MWh, so a 75th percentile household generates about 0.82 metric tons more GHG emissions per year than a household at the 25th percentile. The difference between the 10th and 90th percentiles is about 1.75 tons.
(Source: Author’s calculations as describe in text)
For comparison, the US domestic airline industry gets about 62.6 passenger miles per gallon (details in the paper) and each of those gallons puts out about 0.01 metric tons of GHGs. That means one person’s 5400 mile round-trip between San Francisco and Boston burns about 86 gallons and releases about 0.86 tons of GHGs. In other words, one round-trip coast-to-coast flight cancels out the annual GHG difference between a person living in an “efficient” 25th percentile electricity use home and a person living in a “pretty hoggy” 75th percentile electricity use home. Two roundtrips in a year nearly wipes out the emissions difference between an “energy angel” in the 10th percentile and a “hog” in the 90th percentile. That certainly wasn’t something I knew before, and I suspect it is not something known by other halo wearers who buy high-efficiency appliances, install triple-pane windows, set their A/C to 77 degrees, drive EVs, and generally walk the walk…that is, until we fly the flight, to another conference or well-deserved holiday.
My point is not that we should stop flying entirely or that we should stop producing and transporting goods that we buy in stores or have delivered to our homes. It’s that it is easy to judge people by one kind of behavior and ignore all the other things people do that contribute to pollution and the climate crisis. It is human nature to focus on the metrics by which we appear most socially responsible and downplay the ones that aren’t as flattering.
Unfortunately, when it comes to electricity rate design, some advocates and policymakers seem to think this natural bias should drive policy. What I take away from this research is that residential electricity use is a small, though still important, component of our climate crisis and pollution problems. There is clear evidence, however, that net household electricity consumption is not a good guide to determining which people are imposing more or less damage on the planet and its occupants.
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
