6.2 Methodology for Estimating LCGS Market Size and Growth Potential
Framing the Future: Embracing the Low-Carbon Economy
GLOBAL:
1 // Sourced data from IEA’s World Energy Outlook 2011.
2 // Extended forecast from 2035 to 2050 using additional data from IEA’s Energy Technology Perspectives 2010.
3 // Supplementary forecast information for efficient vehicles was used to estimate total low-carbon investment from additional investment relative to the current IEA’s World Energy Outlook 2011 scenario. Additional information included short-term forecasts for efficient vehicles and investment costs from J.D. Power and Associates.159
DOMESTIC:
1 // Reviewed literature to estimate current domestic LCGS investment and economic activity for wind, solar, biomass, hydro, nuclear, biofuels, carbon capture and storage (CCS), and efficient vehicles.
2 // Used CIMS model to estimate current LCGS investment for geothermal, buildings and industrial processes; CIMS is an economy-environment model that estimates investment in technologies based on equilibrium in the markets for energy, goods and services.
3 // Forecasted future spending for all LCGS sectors using CIMS model.
4 // Apportioned total investment of each LCGS sector into different capital components, drawing from project implementation costs identified through economic reviews.
5 // Related (mapped) each capital component to the corresponding North American Industry Classification System (NAICS) Codes of the highest possible resolution, or using trade information on individual product/service codes (HS codes) where possible.
6 // Extracted Statistics Canada data on employment, trade, GDP and output for identified six-digit NAICS sectors and forecasted future NAICS economic activity using Informetrica forecasts.
7 // Compared market size of each LCGS sector to market size of NAICS parent sectors to determine apportionment ratios for spending, employment, trade and GDP.
8 // Applied apportionment ratios to break-out Statistics Canada data for each LCGS sector from the NAICS parent sectors, thereby specifying the spending in each NAICS sector.
9 // Developed multipliers from Statistics Canada data to relate total spending to employment, trade and GDP for all relevant NAICS sectors.
10 // Applied identified multipliers to spending identified for each NAICS sector to quantify employment, trade, GDP and output based on forecast future spending from CIMS model.
11 // Applied additional Statistics Canada multipliers to estimate indirect and induced effects of LCGS on the economy.
KEY LIMITATIONS:
1 // The CIMS Model is a domestic model, independent of and unresponsive to the level of global investments. As a result estimated LCGS investment and trade is related only to the assumed policy scenario in Canada and is not affected by the global demand for LCGS. Given the strong international focus of the Canadian clean technology industry, this may result in an underestimation of the growth in LCGS sectors particularly under the Reference Case. The CIMS model has no capacity to measure the effect of international demand on the development of Canadian LCGS sectors or compare its influence to that of domestic policy.
2 // Whereas characterization of technology for some LCGS sectors such as solar and wind energy is fairly straightforward, and statistics concerning production and trade exist and are for the most part accessible, characterization of other LCGS sectors — including efficient industrial processes, low-carbon buildings and efficient vehicles (low-carbon transportation) — is more complex. For these sectors, individual technology components may be considered low-carbon or not, depending on the manner or context in which they are used. An added complication is the evolutionary aspect of these sectors, For example, what is “efficient” or “low-carbon” now, may be standard or inefficient in 10 years. No authoritative definition for these sectors has been published and as a result, NRT’s characterization may be different from that used by the IEA or other organizations. This makes direct comparison with other estimates difficult.
3 // The CIMS model draws from a database of known technologies as well as technologies that are anticipated to become commercially viable within the study period. It does not consider breakthrough technologies that may result from innovation — by their very nature these are impossible to predict. Were major breakthroughs to occur, it would likely lower the estimated overall low-carbon investment. On the other hand, if costs for presently non-commercial technologies (e.g., CCS) were found to be higher than anticipated, the overall investment in low-carbon technologies could be higher.
4 // The CIMS model assumes capital and operating costs related to different technologies and employs declining cost functions over time to capture the technology “learning curve.” Estimation of costs and development of declining cost functions for markets that are evolving rapidly — e.g., solar energy — presents a challenge. As a result, some sectors with rapidly evolving cost structures may be under-represented.
5 // The apportionment of LCGS apparent domestic demand to NAICS is an indirect method of estimating the output, trade, GDP and employment of the LCGS sector. Actual production of LCGS is likely to have a different profile than the other goods and services that are also included within the NAICS sector and it is likely that there are many additional smaller NAICS sectors contributing to the LCGS than identified in the analysis. This introduces uncertainty with respect to the estimates.
6 // While every effort has been made to align the global and domestic forecasts, the global LCGS forecast has many inherent assumptions including economic growth, technology costs, energy prices and country policies that may be different from Canada’s projected baseline. For this reason, our use of comparative analysis in this regard is limited, and readers should employ caution in directly comparing outputs from domestic and global scenarios.
[159] J.D. Power and Associates 2011
© 2013