A new (Dec. 2016) paper by the Carbon Tax Center reports and explains the good news of the U.S. electric power sector’s rapid decarbonization over the past decade.
Our paper, “The Good News,” quantifies the sector’s sizeable reductions in carbon emissions since 2005 and clarifies what accounts for it. It shows that while substitution of fracked gas for dirtier coal contributed significantly to reducing emissions, a greater role was played by what we call clean electricity: an upsurge in electricity production from renewables (wind turbines and solar photovoltaic cells), and electricity savings that caused electricity usage to flatten even as economic output increased.
We estimate that by the end of 2016 the U.S. electricity sector will have reduced its CO2 emissions by 27 percent since 2005, thus achieving more than four-fifths of the 2030 carbon-reduction goal of a 32 percent cut set by the Obama Administration’s Clean Power Plan. As best we can estimate, 58 percent of the electricity sector’s carbon reduction since 2005 is due to clean electricity, and 42 percent due to substitution for coal by natural gas. This finding belies the prevailing narrative crediting fracked gas for most of the reduction in coal burning and the resulting lowering of carbon emissions.
The electricity sector’s reduction in carbon emissions is good news not only because of its magnitude but because it effectively “banks” emission reductions against a slowing of progress looming under the incoming Trump administration. The leading role played by clean electricity is good news because it comes without the climate-damaging methane emissions associated with natural gas extraction and transportation, and because it signifies the emergence of a new energy economy built on inherently clean energy production and usage technologies that can scale rapidly, economically and gracefully.
Quantifying the CO2 avoided because U.S. electricity usage has stayed flat since 2005 instead of growing almost in tandem with economic output, as in the past, is the key new feature of our analysis. It led to the surprising and heartening finding that “clean electricity” (power savings + renewables) are replacing more coal and pushing out more CO2 than is fracked gas.
“The Good News” explores in some detail the reasons that economic output since 2005 has decoupled from electricity usage. One is the emergence of a robust business sector that is finding, financing and delivering money-saving efficiency improvements in commercial buildings and multifamily housing, thus obviating the need for property owners and managers to take on a complex new specialty. Another is the widening penetration of digital technologies in everything from energy management, where they monitor and control key parameters, to product design, most notably in LED’s but also in thermostats and appliances, and in manufacturing generally.
This progress has been accomplished without a price on carbon pollution. Notwithstanding the 2016 elections, we believe that a robust and briskly rising carbon tax remains the most powerful policy tool for rapidly driving down emissions in the power sector and, especially, the rest of the economy. Such a tax would accelerate the ongoing decarbonization of electricity supply by increasing the returns from substituting zero-carbon electricity sources for fossil fuel generation. The tax would further reduce emissions by dampening electricity usage through the charge it adds to electric rates.
While this trend is heartening, far more is needed for the United States to meet its economy-wide carbon-reduction pledge under the Paris climate agreement, especially in light of the rise in emissions in the transportation sector spurred by cheap petroleum fuels. “The Good News” points to the need for and potential of robust carbon taxes to offset that rise and stimulate emission reductions.
We have estimated that the carbon tax levels mandated under the McDermott carbon tax bill depicted in the line graph above would have reduced economy-wide CO2 emissions from fossil fuel combustion — not just from electricity but from motor vehicles, air travel, industry, etc. — by one-third within a decade. While the political hurdles have been set higher by the 2016 election, the need for a robust carbon tax remains at least as strong as ever.
Visitors to this page are encouraged to download The Good News. Readers with a particular interest in energy efficiency should also read our blog post for the Sallan Foundation, Almost Unnoticed, Flat Electricity Demand Is Crushing U.S. Carbon Emissions. Please report back your impressions and circulate our findings. Thanks.