The Incredible Shrinking Carbon Pollution Forecast
Posted February 1, 2012
How about a little good news for a change?
Something strange happened after the failure of comprehensive climate and energy legislation in 2010. Projections of future carbon emissions went down.
Part of that is due to the Great Recession of course, but that is far from the whole story. In fact, a number of market, technology, and policy factors have combined to fundamentally change the official forecast of what will happen to carbon pollution rates in the absence of new policies.
Back in 2005 the Energy Information Administration (EIA), a semi-independent statistical branch of the Department of Energy, was projecting that energy-related carbon dioxide emissions would increase steadily for the foreseeable future (see chart). More SUVs driven more miles and more electricity made by burning coal was all the EIA could see. Overall, EIA projected a 37% increase in CO2 emissions between 2005 and 2025. This year EIA is projecting that emissions in 2025 will be 6% below what they were in 2005. Looking out to the end of the current forecast horizon in 2035 emissions are still projected to be 3% below 2005 levels.
And these forecasts are almost certain to be revised downward in the next few months. So far this year EIA has only issued its “Annual Energy Outlook Early Release,” which includes only a “Reference Case” forecast. By convention, EIA’s Reference Case only accounts for policies that have been enacted in final form. That means that even though the Obama administration has proposed aggressive new efficiency standards for automobiles which are almost certain to go into effect because the auto industry supports them, EIA does not include these standards in its forecast. Accounting for these standards will reduce emissions by another 2-3% in 2025 and about 6-7% in 2035. EIA has also not yet incorporated the effect of the power plant Mercury and Air Toxics Standards, which were finalized just before Christmas. Those standards are likely to reduce power plant emissions by at least a couple of percent as some generators choose to replace aging coal plants with cleaner sources rather than invest in the pollution controls needed to keep the old plants running. In combination with growing local opposition to coal burners and effective state energy efficiency policies not fully captured by EIA, the impact of the mercury standard and other recent air pollution rules could be much greater. And EPA is overdue to issue carbon pollution standards for power plants, which will push emissions still lower (EIA can’t be faulted for not including these carbon standards as EPA has not yet released any information about what they will do).
So what is going on? Fully decomposing the dramatic change in the carbon pollution forecast is more than I can attempt here, but let’s consider three major drivers: fuel markets, technology, and policy.
Fuel markets. Oil prices are up and natural gas prices are down (which are related trends because a significant amount of natural gas production is now being driven by the search for more valuable natural gas liquids, which follow oil prices). Somewhat counter-intuitively both of those factors actually decrease emissions.
- Most oil is used in transportation, and higher prices reduce the number of miles people travel and encourage them to select more efficient vehicles.
- Meanwhile, an increasing share of natural gas is used to generate electricity, where low prices encourage power producers to switch from coal to gas, reducing CO2 emissions (while increasing methane emissions). Low gas prices can also encourage greater electricity consumption and less investment in renewables, which tends to drive up emissions, but due to strong efficiency and renewable policies the coal-to-gas switching effect dominates, at least in EIA’s latest forecast.
Technology. The cost of building coal plants is up, while the cost of wind and solar are coming down. Moreover, advances in energy efficiency technology, such as L.E.D. lighting and super windows, keep replenishing the low hanging efficiency fruit.
Policy. While comprehensive energy and climate legislation failed in Congress, the Obama administration has forged ahead using its existing authority to set strong efficiency standards for automobiles and appliances, and strong clean air standards which will reduce mercury, sulfur, nitrogen and carbon emissions from power plants. Meanwhile the states are continuing to lead, with renewable energy standards in 29 states and increasingly effective energy efficiency programs spreading out from the coasts. In addition, California has finalized its global warming pollution cap and the Northeast is in the process of tightening up its cap on carbon pollution from power plants.
There is plenty of bad news about global warming, but the 40% reduction in the business-as-usual forecast we have seen in the last few years makes the 80% or more reduction in actual emissions we need by 2050 look a whole lot more feasible.
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