AmericasCarbonCliff 1

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Am meric casCarb C onC Cliff:

Disse ectingthe edecline inUScar rbonemis ssions Shrin nkThatFootprint F LindsayWilso on March2013

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ExecutiveSummary
EnergyrelatedcarbonemissionsintheUnitedStatesdeclinedby 12%between2005and2012,suggestingthatAmericamaybeon tracktomeetitsemissionsreductiontargetof17%by2020. In2012energyrelatedcarbonemissionsperAmericanwereat thelowestlevelinalmost50years.Notsince1963haveper capitaemissionsbeenaslow. Whilethisdeclinehasbeenwidelynotedinthepress,adetailed analysisofwhatisbehindthisdipinemissionshasbeenlacking. Themostcommonexplanationofferedisthattheswitchfrom coaltogasinthepowersectorhasbeenthekeydriveroffalling emissions.Whilethishascertainlyplayedamajorrole,our analysissuggeststheriseofgasinthepowersectorisonly responsibleforapproximately3540%ofthetotalcut. Infactthepowersectorasawholeisresponsibleforjusthalfof therecentfallinUScarbonemissions.Toseethewholepicture wemustalsoconsidertheemissiondeclinesinthetransport, industrial,residentialandcommercialsectors. UsingrecentdatafromtheEnergyInformationAdministration (EIA)thisreportanalysestherecentfallinemissionsbybothfuel sourceandsector. Thereportshowsthatbothcoalandpetroleumemissionsare downsignificantly,whilenaturalgasemissionsareup. Thefallinemissionscanbeattributedbysectorasfollows: electricity(50%),transport(26%),industry(14%),residential(8%) andcommercial(2%).

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Contents
ExecutiveSummary.................................................3 Contents..................................................................4 1:AmericasCarbonCliff .........................................5 2.CarbonEmissionsbyFuelSource.......................7 3.SectorEmissionsOverview.................................9 4.ElectricityEmissions..........................................11 5.TransportEmissions..........................................13 6.IndustrialEmissions..........................................16 7.ResidentialEmissions........................................18 8.CommercialEmissions......................................20 Discussion..............................................................21 Conclusion.............................................................22

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1:AmericasCarbonCliff
Inthesevenyearssince2005energyrelatedcarbonemissionsin theUnitedStateshavefallenby12%(Figure1.1).Thisdeclinehas broughttheUSbacktoanemissionslevelnotseensince1994, puttingitoncoursetoachievingitstargetofa17%cuton2005 levelsby2020. Energyrelatedcarbonemissionsareresponsibleformorearound 80%ofAmericastotalgreenhousegasemissions.Becausethey arereportedinamuchmoretimelyfashionthannonenergy emissionstheycanbeusedasausefulbarometerofprogressfor USemissionsasawhole. UsingdatafromtheEnergyInformationAdministrationslatest MonthlyEnergyReviewwecanshowthescaleofthedeclinein carbonemissioninrecentyears.

Thedatashowsthatbetween2005and2012energyrelated carbonemissionsdroppedby694MtCO2,or12%.Alargeshare ofthisdeclineoccurredin2008and2009inthewakeoftheUS recession.

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Lookingfurtherbackintimewecanseethatthis12%declinein emissionsisevengreaterthanoccurredfrom1979to1983, followingthesecondoilshock. Ifwelookatthesesameemissionsinpercapitaterms,thedecline looksevenmoreimpressive(Figure1.2).

Between2005and2012Americanpercapitaenergyrelated carbonemissionsfell3.4ttolessthan17tCO2/capita.Thisfallof 17%wassignificantlygreaterthanintheearlyeighties. Energyrelatedcarbonemissionspercapitaarenowattheir lowestlevelinalmost50years.Thelastyearinwhichpercapita emissionswereaslowasin2012was1963. Althoughat17tCO2/capitaUSenergyemissionsremainveryhigh byaninternationalstandard,therapidfallinemissionsinrecent yearsisawelcomedevelopment. Despitethefactthatmostdiscussionofthisdeclinecenterson theshiftfromcoaltogasinthepowersectorthedropisalsothe resultofrisingoilpricesandtherecession,muchasitwasfrom 1979to1983.

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2.CarbonEmissionsbyFuelSource
EnergyrelatedcarbonemissionsintheUScanbeseparatedinto theirrespectivefuelsources.Byseparatingemissionsintothose frompetroleum,coalandnaturalwecanimproveour understandingoftherecentemissionsdecline. UsingfiguresfromtheEIArecentMonthlyEnergyReviewwecan breakcarbonemissionsupbyfuelsource(Figure2.1).

Whenseparatedbyfuelsourceweseethatpetroleumisthe largestsourceofemissionsintheUS,butthatcoalhasbeen responsibleforthegreatestdeclineinemissionssince2005. Between2005and2012petroleumemissionsintheUSfell363 Mt,coalemissionsdropped515Mtandnaturalgasemissions grewby183Mt(Figure2.2).

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Lookingatthesefiguresitisimportanttorememberthatthe changeinbothcoalandnaturalgasemissionswasdominatedby thepowersector,whilethecutinpetroleumemissionsoccurred largelyintheothersectors. Thedistributionofemissionsbetweenpetroleum,coaland naturalgashaschangedsignificantlysince2005(Figure2.3).

Coalemissionsshareoftotalemissionshasdeclinedfrom36%to 31%inthelastsevenyears,naturalgassharehasrisenfrom20% to26%andpetroleumisdownfrom44%to43%oftotalenergy relatedcarbonemissions.

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3.SectorEmissionsOverview
Althoughseparatingemissionsbyfuelsourcehelpstohighlight therelativeimportanceofcoal,naturalgasandpetroleum emissions,itdoesntgiveusthefullpicture. Byfurtherdissectingemissionsintothesectorinwhichtheyoccur wecanfurtherimproveourunderstandingofrecentemissions declines(Figure3.1).

Bygroupingelectricityemissionsintheirownsector,ratherthan intheirendusesector,weareabletoidentifywhichsectorsare responsiblefordecliningUScarbonemissions. Emissionsreductionsinthepowersectorfrom2005to2012 totaled351MtCO2.Thetransportsectorwasnextmost importantwith181MtCO2,followedbyindustrywith95MtCO2 andtheresidentialsectorwith56MtCO2. Despitebeingthedominantsourceofemissionscuts,declining electricityemissionsaccountforonlyhalfoftherecentemissions declineinAmerica(Figure3.2).

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Whenwelookattheemissiondeclinesinisolationwecansee thatthepowersectorwasresponsiblefor50%ofcuts,transport 26%,industry14%,residences8%andthecommercialsector2%. Becausetotalelectricitygenerationwasalmostexactlythesame in2012asitwasin2005,weknowthatthedeclineinelectricity emissionscamefromthemuchdiscussedchangesinthefuelmix. Thedeclinesintransport,industrialandresidentialsector emissionsaremorecomplicated.Ineachcasedeclining petroleumemissionsplayasignificantrole. Bytakingacloserlookatemissionsineachsectorwecangaina morethoroughunderstandingofwhatisdrivingthechangein emissions.

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4.ElectricityEmissions
Emissionsfromelectricitygenerationhavefallensharplyinrecent years,largelyasaresultoftheswitchfromcoaltogas,butalso duetothegrowthofwindandthedeclininguseoffueloil(Figure 4.1).

Emissionsfromcoalinthepowersectorhavedeclined456Mt since2005,naturalgasemissionsareup176Mtandpetroleum emissionsaredown72Mt(Figure4.2).

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Althoughthesefigureshelpustounderstandwhathashappened topowersectoremissionstheydonottellthefullstory.Forthe fullpicturewealsoneedtoconsiderthebroaderfuelmix includingnuclear,hydroandrenewables(Figure4.3).

Coalsshareoftotalgenerationfell12%inthelast7years.In contrastnaturalgaswasupby12%.Therenewablesshareof totalgenerationwasup3%andpetroleumwasdown2%while bothhydroandnuclearwereflat. AccordingtotheEIAShortTermEnergyOutlooktotalgeneration was4,055TWhin2005and4,043TWhin2012,decliningjust 0.3%overtheperiod. Becausetotalgenerationwassteadybetween2005and2012we knowdecliningelectricityemissionsarelargelytheresultof naturalgasandwinddisplacingcoalandpetroleum. Naturalgaswasresponsibleforroughly6585%oftheemissions cuts,whilewindwasgoodfor1535%.Thetruevalueis dependentonwhetherwinddisplacedcoalandoil,orwhetheris displacedgas.Thisquestionisbeyondthescopeofthisreport, buthasbeenextensivelydiscussedelsewhere.

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5.TransportEmissions
Between2005and2012transportemissionsdeclinedby181Mt CO2andaccountedfor26%ofthetotaldeclineinenergyrelated carbonemissions. Toprovidefurtherunderstandingastohowtransportemissions havedeclineditisusefultoseparatetransportemissionsbyfuel type(Figure5.1).

Gasolineemissionsarethelargestsourceoftransportemissions, accountingfor60%oftotaltransportemissions.Distillateused fortrucksandjetfuelarethetwoothermajorsourcesof emissions. Between2005and2012emissionsfromgasoline,distillateandjet fuelalldeclinedsignificantly.Byisolatingtheemissionsdeclines wecangetaclearerpictureofwherereductionsareoccurringin thetransportsector(Figure5.2).

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The96MtCO2declineingasolineemissionsaccountedforaround halfofthefallintransportemissionsoverthelastsevenyears. Distillateemissionsfell42MtCO2andjetfuelemissionsdropped by35MtCO2. Underlyingthedeclineineachtypeofpetroleumproduct emissionshasbeentherisingpriceofoil(Figure5.3).

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TheaverageoilpricepaidbyUSrefineriesrose71%between 2005and2012.Risingoilpricesandtherecessionof20072009 playedasignificantroleinreducingdemandforalltypesof petroleumbasedtransportfuels. Whileeachofthedeclinesindistillate,jetfuelandfueloil emissionscanbeunderstoodlargelyasacombinationofrisingoil pricesandtherecessioneffectdemand,thepictureforgasoline emissionsismorecomplicated. The96MtCO2declineingasolineemissionsistheresultofthree mainfactors:increasedethanolsupply,decliningvehiclemiles travelledandimprovingfueleconomy. Basedonroughcalculationsweestimateabout45Mtofthe declineingasolineemissionsresultedfromtheincreasedsupply ofethanol,20Mtisaresultofthedeclineintotalvehiclemiles travelledand30Mtisduetoimprovementsinfleetfueleconomy duetotherisingfueleconomyofnewvehiclessince2005. Theemissionsdeclineresultingfromethanolmayinfactoverstate thetruereductioninemissions.Muchofthisfigurecouldbe shiftedtootherareasoftheeconomyintheformofbothenergy andnonenergyemissions. Todatethereductioningasolinedemandduetorisingfuelhas beenquitemodest,reflectingthefacttheaveragefueleconomy ofnewcarsonlybegantorisesignificantlyafter2005.The tighteningofCAFEstandardsandhighgaspricesislikelytomake thiseffectmorepronouncedinthecomingdecade,asoldercars graduallymakewayformoreefficientones.

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6.IndustrialEmissions
The95MtCO2declineinindustrialemissionssince2005isin manywaysamixofwhathashappenedinthepowerand transportsectors. Risingoilpriceshavefueledamoveawayfrompetroleumuse, whilefallingpricesasaresultoftheshaleboomhasmadenatural gasevenmorecompetitive(Figure6.1).

Whenweseparateindustrialemissionsbetweennaturalgas,coal andpetroleumemissionswecanseeclearlytheeffectofthe recentrecessiononindustrialemissions. In2008and2009,duringthedepthsoftheUSrecession, emissionsfromeachfueltypefellsignificantlysuggestingabroad basedreductionindemandforenergy. Followingtherecessionemissionsfromnaturalgashave increasedsignificantly,whilethosefromcoalandpetroleumhave stagnated.Thisreflectstherelativecompetivenessofnaturalgas pricesinrecentyears,aswellasthehighpriceofoil.

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Between2005and2012petroleumemissionsfellby83MtCO2, coalemissionsweredownby53MtCO2,andnaturalgas emissionswereupby41MtCO2(Figure6.2).

Thesechangessharemuchincommonwithfuelchoiceinthe powersector,reflectingtherelativecompetitivenessofcheaper naturalgas. Butunlikeinthepowersectorindustrialenergyusehasdeclined significantlysince2005.AccordingtothelatestMonthlyEnergy Review,totalindustrialenergyusefromcoal,petroleumand naturalgaswasdown8%between2005and2012. Giventhatindustrialcarbonemissionsfromthesefuelswere down10%overthesameperiod,itislikelythatreducedenergy demandwasalargerdriverofthedeclinethanfuelswitching. Energydemandisdownduetoamixoftherecessionand efficiencyimprovementsinthefaceofhighoilprices.The remainingreductionsaretheresultoffuelswitchingtonatural gasandsomerenewablesources.

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7.ResidentialEmissions
Despitebeingarelativelysmallsectorintermsofemissions,the residentialsectorcontributed56MtCO2,or8%,ofthetotal emissionsdeclinebetween2005and2012. Thedeclinesinemissionsweresharedbetweennaturalgasand petroleum,ascoalisrarelyusedasaresidentialfuelintheUS anymore(Figure7.1).

Intermsofdeclinesbyfuelitlookslikethis(Figure7.2):

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Althoughitistemptingtosuggestthatthemajorityofthisdecline isaresultofimprovementsintheefficiencyoftheUShousing stockweatherislikelytohaveplayedalargepart(Figure7.3).

Ifwecomparetotalresidentialemissionsontheleftaxiswiththe USaverageheatingdegreedaysontherightaxis,wecanseea closecorrelationbetweenemissionsandweather. Themildwintersof2006and2012resultedinsignificantlylower emissions,ashouseholdsrequiredlessenergytostaywarm. Thegradualseparationofthesetwolinesovertimewouldsuggest aslightimprovementintheweatherizationofthehousingstock.

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8.CommercialEmissions
Commercialemissionsdeclineby13MtCO2between2005and 2012,accountingforjust2%ofthetotalemissionsdecline. Aquicklookatemissionsbyfuelshowsthatalthoughthedeclines weresharedamongdifferentfuels,theweatherislikelytohave hadasimilareffectoncommercialemissionsasithason residentialemissions.(Figure8.1).

Thepathofnaturalgasemissionsissimilartothoseinthe residentialsector,suggestingheatingdemandistheleadingcause ofchangeinthesector(Figure8.2).

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Discussion
Theobviouslimitationofthisstudyisthatitdoesnotaccountfor greenhousegasemissionsbeyondcarbondioxidefromcoal, naturalgasandpetroleum. Otheremissionsincludesomenonenergycarbondioxide, methane,nitrousoxide,HFCs,PFCsandSF6.IntheEPAsdraft inventoryofgreenhousegassesandsinksfrom1990to2011 thereislimitedchangeintotalemissionsfromthesesources. Themostimportantchangeofnote,outsideofenergyrelated carbonemissions,isa50MtCO2edeteriorationinthe performanceofUSsinksfromlanduse,landusechangeand forestry. Inthecontextofthisreport,afewpointsareworthnoting. Poorlycontrolledfrackinghasthepotentialtoincreasefugitive methane.Althoughreportednaturalgassystemmethane declinedbetween2005and2011,furtherresearchisbeing conductedtobetterassessfugitivemethanefromshalegas. Unconventionaloilsupplyincreasespetroleumsupplychain emissions,manyofwhichareexportedtothecountryof production.Assuchtheseemissionsareoftenoverlooked. Asalreadynotedethanolproductionmayresultinshifting significantcarbonburdenawayfromgasolinecombustionto otherareasofthesupplychain. Finally,byfocusingpurelyonproductionemissionsratherthan consumptionbasedemissionsweomitroughly450MtCO2eof netemissionsfromtrade.Tradedemissionsare,however,not accountedforinnationalemissionsinventories,andthusalways excludedfromthistypeofanalysis.

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Conclusion
Thepurposeofthisreporthasbeentoprovideabetter explanationofwhatcausedthehistoricdeclineinUScarbon emissionsbetween2005and2012. Byanalyzingemissionsbyfuelsourcewithineachsectorwehave shownthisdeclinetookplacethroughouttheUSeconomy,rather thansimplyinthepowersector. The12%fallinenergyrelatedcarbonemissionssince2005has createdconsiderableoptimismthattheUSmayreachitstargetof a17%cutby2020.Suchoptimismiswelcome,butshouldbe temperedbythefactthattheEnergyInformationAdministration isforecastingareboundinemissionsinthecomingyears. Intheearlyreleaseofits2013AnnualEnergyOutlooktheEIAhas forecastthatenergyrelatedcarbonemissionswillrise3%from their2012levelby2020,duelargelytogrowingindustrial emissions(Figure9.1).

TheEIAsrecentforecastisthatenergyrelatedcarbonemissions willrisebacktoabout5,450MtCO2by2020,whereasthe17% targetrequiresemissionstofalltoabout4,980MtCO2.

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Howaccuratethisforecastisremainstobeseen,butitisaclear warningthatmuchofthemomentumofrecentyearscouldeasily beundonewithoutaction,andthatthereremainsa500MtCO2 gapbetweentheEIAsforecastandthe2020target. Giventhatelectricity,transportandindustryaccountfor90%of allenergyrelatedcarbonemissionstheywilldecidemuchof whethertheUSreachesits2020goal. Assuchwewillfinishbyhighlightingatrendineachofthese sectorswebelievewillplaythemajorkeyroleindetermining Americasemissionspathoverthenextdecade.

1:Coalsfutureinpower
Coalmadeupjust37%oftheelectricitygenerationfuelmixin 2012,downfromalmost50%in2005.Ifcoalsshareof generationcontinuedtodeclineto25%by2020afurthercutin emissionsintheorderof300400MtCO2couldbeachieved. Mostforecastshoweverpredictcoalssharetostabilizeataround 40%inthecomingyears.Thekeyfactorsdrivingthefuelmixin comingyearsarelikelytobetherelativepriceofcoalandnatural gas,thefutureoftheproductiontaxcreditforwind,and regulatorypressureoncoalgenerationemissions.

2:Thepriceofoil
Declininggasolineusageincomingyearshasthemostpotentialto deliversignificantemissionscutsinthetransportsector.Ifoil pricesremainhightotalvehiclemilestravelledmaywellremain stagnant,astheyhavesince2006. Ifvehiclemilestravelledfailtoreboundincomingyears,therise intheaveragefueleconomyofnewcarsthatbeganin2005will begintoreducegasolineconsumption.NewCAFEstandards meanariseinfueleconomyislockedinformuchofthenext decade,asnewmoreefficientvehiclesreplaceoldercars.

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Emissionsfromdistillateuse,jetfuelandresidualfueloilwillalso beheavilyinfluencedbyoilpricesandtheextentoftherecovery intheUSeconomy.

3:Industrialenergydemand
ThepathofUSindustrialemissionsinthecomingyearswillbe determinedbyhowenergyintensivetherecoveryinUSindustryis andhowmuchscopeforfuelswitchingremains. Giventhatnaturalgasisalreadythedominantfossilfuelusedin theindustrialsector,andthatitdoesnotsubstituteforallcoal andpetroleumuses,fuelswitchingtogasmayhavelesspotential thanitdoesinthepowersector. Consequently,howenergyintensivethereboundinUSindustrial productionisincomingyearswillhavealargeeffectonindustrial emissions.Highoilpriceswillcontinuetoincentivize improvementsinindustrialenergyefficiencyforpetroleumuses, whilelownaturalgaspricesmayhavethereverseeffect.