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Why Have U.S. Carbon Dioxide Emissions Plummeted?

by Michael Levi
September 25, 2012

U.S. carbon dioxide emissions for January-May are down six percent from 2011 to 2012. Headlines have highlighted the fact that emissions from January-March hit a twenty year low. What explains the shift?

That question has been the subject of intense debate. John Hanger argues that 77 percent of that decline can be attributed to the shift from coal to gas. The folks over at CO2Scorecard, looking at January-March data, put that number at a more modest 21 percent. These are drastically different figures. What number should we believe?

Part of the discrepancy comes from looking at different time periods. January-March emissions were affected more by the warm winter than April-May ones were. That makes sense because January-March is part of the winter. April-May emissions were affected more by rock bottom natural gas prices than January-March ones were. That makes sense because it was April-May when rock bottom (i.e. sub-two-dollars wellhead) natural gas prices prevailed.

Let’s focus on the full January-May span, since it’s now the longest period for which we have 2011 and 2012 data, and do the analysis for ourselves.

First the basics: Carbon dioxide emissions fell from 2,303 metric tons (Mt) in 2011 to 2,158 Mt in 2012, a drop of 145 Mt. (To keep things simple, the January-May time period is implicit in all this.) The basic story is that emissions from coal consumption plummeted by 132 Mt. Falling oil emissions chipped in another 18 Mt. Natural gas emissions were nearly flat; they were actually down 5 Mt. This would seem to suggest that natural gas played little role in falling emissions. Instead, it appears to suggest, reduced demand for coal is what did the trick. This’s roughly the intuition behind the conclusion from CO2Scorecard that natural gas has played a modest role in the U.S. emissions decline.

Hanger contests this by making three basic points. First, he notes, “about 85% (132 of 144 million tons) of the 2012 U.S. Carbon emission decline is a product of falling emissions from coal.” Second, he argues, the decline in emissions from coal are “almost entirely as a result of more gas displacing coal generation this year.  Indeed, coal’s electricity generation market share fell from 42% for all of 2011 to 32% in April and 34% in May.” Third, he observes, “Electricity demand is down 2% in the first 5 months of 2012 compared to 2011 so that is a small reason for declining emissions and probably explains about 10% of the 132 million ton decline of coal emissions.” Hanger puts these together with a few other estimates to come to his conclusion that 77 percent of the emissions decline is due to gas.

I’m skeptical. Hanger seems to have focused too much on the power sector. Only 59 percent of the decline in CO2 emissions from 2011 to 2012 came from the power sector.That said, I’m largely with Hanger in his analysis of what happened there. Coal generation plummeted and was replaced almost entirely with natural gas. Renewable energy generation was down slightly, nuclear was flat, and total electricity consumption fell only 1.8 percent, undermining claims that a warm winter is what pushed carbon dioxide emissions down. If you assume that the entire 1.8 percent decline in demand came at the expense of coal, and spread that evenly over all coal plants, you can estimate that 12 Mt of the emissions reduction came from lower electricity demand. To be certain, that’s probably an underestimate, since the least efficient (i.e. most polluting) plants are the most likely to shut down. Let’s say that 15 Mt of the emissions decline came from reduced electricity demand. That’s the same a Hanger’s number even though we’ve taken a slightly different route to get there. The rest – about 70 Mt – should have come from substitution of natural gas for coal.

What about the other 41 percent – 60 Mt – of the emissions drop?

A sharp decline in residual fuel oil consumption in the transport sector (basically in ships) kicks in 12 Mt. This mostly transpired during 2011. Someone more knowledgeable than me will surely have a decent guess of what explains the shift. It isn’t a shift to natural gas, which was flat in the sector.

But the biggest source of emissions reductions from outside the power sector – fully 42 Mt – comes from a drop in direct residential (31 Mt) and commercial  (11 Mt) natural gas use. You read that right: it is a reduction in natural gas use, not an increase, that explains much of the decline in U.S. carbon dioxide emissions. This is almost entirely a story about reduced heating need, since most of the drop came in the first three months of the year.

So let’s tally things up. Natural gas cut U.S. carbon dioxide emissions by somewhere around 70 Mt between January-May 2011 and January-May 2012. This means that you can chalk up about half of the drop in U.S. emissions to abundant natural gas. Quantitatively, this conclusion lies somewhere between CO2Scorecard and John Hanger. More fundamentally, it’s closer to the CO2Scorecard numbers, which look beyond the power sector too. My numbers for the contribution of natural gas are higher than theirs because I’m looking at a longer time period and because I think that they substantially overestimate how much natural gas has already displaced nuclear and renewables.

I want to leave you with one more quick estimate that I find illuminating. The mini-war over how much of the recent decline in U.S. emissions could be attributed to natural gas was sparked by headlines claiming that U.S. emissions had dropped to a twenty year low. A drop due to a warm winter, people correctly pointed out, would be transient, and hence made for a poor comparison. So let’s factor that out: had the winter of 2012 been similar to that of 2011, U.S. emissions would presumably have been between around 65 and 75 Mt higher, or somewhere around 2,225-2,230 Mt. (I’ve given a range because I have no idea whether to associate the drop in demand from ships to the warm winter.) The last time emissions were below that level was 1993 1994. Instead of a twenty year record, we’d have a ten year one. Still, that’s not too shabby. The upshot is that we’d still be close to a twenty year low even without the warm winter.

Post a Comment 8 Comments

  • Posted by Nathan Richardson

    Nice analysis. But I must be missing something in the last paragraph. 1993 was 20 years ago – did you mean to reference a different year?

    [ML: You're absolutely right. Fixed.]

  • Posted by roberto vallejo

    ‘cuse all we consume is manufactured in china or else where.
    if you were to do the calculations based on the carbon produced on the manufacturing of the products we consume the tali would be a lot different.

  • Posted by john hanger

    Michael:

    Thanks for weighing in on this question. I don’t understand your point that I did not consider the non-power sector. I did. Emissions from oil (almost exclusively non-power) are a central part of my analysis. I note that oil emissions were 955 million tons in the first 5 months of 2011 versus 937 million tons in the first five months of 2012–an 18 million ton reduction. I very conservatively and falsely assumed that gas had nothing to do with any of the oil emission reductions so did not score any of the 18 million ton oil reduction to gas. In fact, gas did displace some oil (home and other building heating; some small increase in transportation use of gas). The change in emissions for the first 5 months of 2012 and for the first 5 months of 2011 are coal down 132 million tons; oil down 18 million tons; gas up 6 million tons. A total reduction of 144 million tons. Renewables and nuclear produced less or same in 2012 versus 2011 and so are not responsible for any of the 2012 versus 2011 decline. They did not displace coal. Only increased gas generation market share and decreased demand did so. I scored 110 million tons of the 132 million ton decline in coal to gas, with the remainder to lower demand. You seem to agree essentially with the scoring for lower demand. And again I too conservatively scored none of the oil decline to gas. Even doing that, you are left with 77% of 2012 reduction compared to the same period in 2011 attributable to gas. What am I missing?

    [ML: Hi John - Thanks for posting. I think the difference between our analyses is this. Yours implicitly assumes that there are only three ways that emissions could have fallen: electricity demand reduction, oil use reduction, and coal-to-gas shifting. Everything that the first two can't explain gets assigned to the third. I add a fourth source of emissions reduction: reduced direct demand for natural gas in residential and commercial applications. If you look at the sector-by-sector numbers that ends up equalling about a third of the fall in emissions. I think that accounts for the entire difference between our estimates. Am I making a mistake in doing my accounting this way?]

  • Posted by sustainablejohn

    a warm winter but also a hot summer (although not the hottest?). so low energy consumption in winter may be compensated with high energy consumption in the summer to keep cool? we’ll continue to watch how the numbers tally up.

  • Posted by john hanger

    Both Mike’s and my analysis includes change in demand, regardless of the cause–weather, price, whatever. Lower demand in 2012 for power and oil is one reason why emissions are down in 2012 and 2011–but it is not the main reason.

  • Posted by David B. Benson

    Most of the world’s ocean vessels slowed down. Everybody used to proceed at about 24 knots; everybody has slowed down to a maximum of 22 knots with Maersk’s fleet (I think) now proceeding at less than 20 knots.

    In that range an ocean vessel’s water resistence grows approximately qubically with speed. The result of slower operations is vastly improved fuel economy in trade for longer voyages (so greater crew expense).

    The other improvement has been to actually stop the engine completely in the inceasing number of ports which provide electricity to the vessel from shore.

  • Posted by David B. Benson

    There has also been considerable new construction of Super-panamax and New Panamax container ships. These are much more fuel efficient per container-mile and have caused many older, smaller, ocean vessels to be laid up.

    It might also be that fewer goods are in ocean transport. Anyway, that’s how I read
    http://investmenttools.com/futures/bdi_baltic_dry_index.htm

  • Posted by pradeep

    It would be great if u can compare the coal imports, before attributing the CO2 reductions is due to shift from coal to gas

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