Defining Adapted Goods www.statcan.gc.ca Telling Canada’s story in numbers 23rd meeting of the London Group, San José, Costa Rica October 17, 2017 Cindy Lecavalier

Background StatCan's goal is to measure Canada’s transition to a low- carbon economy, which is a high priority for our Government. To achieve this goal, the Federal Government funded four projects*: Expand the scope and frequency of the Survey on Environmental Goods and Services (supply-side) Expand data collection on renewable energy production Develop a Clean Technology Satellite Account Improve information on the adoption of clean technology in the economy, as well as better defining adapted goods (Feasibility Study) *projects engage partners and data users to ensure relevance. Cindy to mentioned; * Jeff Fritzsche’s team is involved into the last 2 items, i.e CTSA and Feasibility Study. * Funding Started in 2016, and for a 4 years period. October 2017

Clean Technology definition The development of the Clean Technology Satellite Account (CTSA) is based on: goods and services that are considered clean technologies; and that fulfill Canadian government (policy) departments’ information needs Canadian definition of Clean Tech “any goods or services that reduce environmental impacts through environmental protection activities, through the sustainable use of natural resources, or through the use of goods that have been specifically modified or adapted to be significantly less energy or resource intensive than the industry standard.” (similar to the International EGSS description) For Cindy’s general information in case a question comes and to distinguish from "cleaner technologies”: Eurostat definition of cleaner technologies = new or modified production facilities designed to ensure that environmental protection is an integral part of the production process, thereby reducing or eliminating emissions and discharges and thus the need for end-of-pipe equipment. This corresponds to pollution prevention technologies. (Ch. 2, Box 4, Eurostat EPEA Handbook 2017) October 2017

Challenges faced: classification and identification of adapted goods Canadian definition identifies adapted goods as “… significantly less energy or resource intensive than the industry standard”. SEEA-CF 2012 presents a more broad interpretation “… more ‘environmentally friendly’ or ‘cleaner’ and whose use is therefore beneficial for environmental protection or resource management ”. How do we define “significantly less” or “energy-efficient”? A given turbine may be considered to be significantly improved compared to “the standard” based on one criteria but not another Current goods classifications do not distinguish between a more or less efficient or environmentally-friendly good, nor do they define the industry standard How will respondents interpret the terms we use, e.g. “efficient turbine”, or “efficient engine”? October 2017

Adapted goods identification, approach 1 We determine the scope with a consumption threshold (e.g.: any engine that uses between 0-8 L of gasoline per 100 km is in scope) Let’s take a 5L/100Km engine. As technology evolves Year 1 it is “energy-efficient” Year 5, may not be energy-efficient anymore, as the industry standard will have improved, but would still be in-scope And so on… Issue The account would no longer be a true representation of Clean Tech; this engine will stay on the list of adapted goods unless the threshold is changed How often do we change the thresholds? How does changing the threshold impact our time series? Is this method statistically sound? October 2017

Adapted goods identification, approach 2 We define the scope based on how it compares to the standard model (e.g.: engine that is at least 25% more efficient than the standard engine in its class) As technology evolves Year 1 it is “energy-efficient” Year 5 still “energy-efficient”, as it compares to the standard engine that follows the best technology available And so on… Issue: What is the “standard engine”? Who defines it? Do survey respondents know if their engine is in the top 25%? Is this approach more or less statistically sound than approach 1? October 2017

Adapted goods identification, approach 3 Where possible, use a pre-established, widely used eco- labelling system to identify in-scope adapted goods (e.g.: EnergyStar program) Uses combined approach, as the industry experts set the standard, and the label marks the top x% Advantages: Driven by industry experts Understood by survey respondents EnergyStar updates are scheduled and happen more often for quicker developing technologies and/or technologies with adoption rates exceeding a threshold. Issues: Is this method statistically sound? October 2017

Study outcomes In order to limit the adapted goods included in the CTSA to those that are significantly less energy or resource intensive, we recommended: To exclude small-ticket items like recycled paper, biodegradable cleaning products and energy-efficient home appliances To define a list of energy-efficient products that fit the ‘‘significantly improved” goods description of adapted goods using, wherever possible, a widely accepted pre- established program/eco-labelling to determine the threshold of what is in and out of scope (the list) in a given year When not available, we will have to develop on approach 1 or 2 October 2017

Discussion questions Do you have any suggestions on our proposed use of a “widely accepted pre-established program” such as EnergyStar to determine threshold of what is in and out of scope in a given year? Is your NSO / Organisation able to determine what the ‘industry standard’ is for goods, and able to define adapted goods, specifically the identification of the “significantly improved” adapted goods?

Discussion questions How should we deal with a change of technology; should we update the list ourselves, should we rely on an eco-labelling, should we look at the intensives (or other government program)? Since it is impossible to do this work without subjective decisions being taken and the influence of objectives, how can we, as a statistical agency, ensure that we are measuring things as objectively as possible and also how will be improve the process in the future?

Thank you Cindy Lecavalier Unit Head – Senior Analyst, Environment, Energy and Transportation Statistics Statistics Canada / Government of Canada cindy.lecavalier@canada.ca / Tel: 1-613-883-1490 October 2017