Evaluating energy efficiency strategies with natural resource rents and energy technologies in Canada

As defined by the International Energy Agency, fossil fuel R&D technologies include innovations that increase energy efficiency by improving fossil fuel combustion cycles, improve the use of natural gas with gas-to-liquid technologies, reduce emissions from coal combustion with Integrated Gasification Combined Cycle, and promote CO2 reduction with carbon capture and storage technologies. Similarly, renewable energy (RE) R&D technologies can increase energy efficiency by enhancing the production of solar, wind and similar resources. In this context, this study investigates the complex interplay between natural resources (minerals and forest rents), energy technologies (renewable and fossil fuels), and energy efficiency in Canada. The study employs advanced time series techniques incorporating Fourier approximations to capture structural shifts in the data from 1990 to 2021. The empirical results indicate that a 1 % rise in forest and mineral rents is associated with a 0.06 % and 0.03 % augment in energy intensity, respectively. This shows that the economic benefits arising from resource extraction can come at the cost of higher energy consumption per unit of output. Moreover, a %1 rise in RE R&D technologies improves energy efficiency by 0.06 and a %1 upsurge in fossil fuel R&D improves energy efficiency by 0.08 %. These findings underline the importance of energy R&D related technological innovation for energy efficiency and show that technology-driven improvements can outweigh reliance on natural resource rents.