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Reversing a long downward trend, U.S. CO2 emissions rose in 2018: report

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The U.S. has reversed its gains in cutting its CO2 emissions, even as it continues to reduce its reliance on coal.

A report by the research organization The Rhodium Group indicates that even though a significant number of coal-fired power plants closed last year, U.S. power consumption “increased meaningfully” in 2018, offsetting the CO2 gains from the shutdowns.

In prior years, when coal-fired plants were being closed, power generation was largely flat, Rhodium said. But with the increase in power consumption last year due to the strong economy, and the fact that despite the enormous government-backed push on renewables, most formerly coal-generated electricity continued to be replaced by natural gas. “Between January and October, U.S. power companies added a greater share of natural gas capacity than the share of retired coal capacity, and twice as much natural gas went online as combined wind and solar capacity additions (including distributed solar) during that period,” the report said. “Natural gas-fired generation increased by 166 million kilowatt hours [kWh] during the first 10 months of the year. That’s three times the decline in coal generation and four times the combined growth of wind and solar.”

Rhodium reached its conclusions on CO2 emissions by looking at the consumption figures for various consumers of energy and their concurrent CO2 generation. The U.S. had been on something of a roll in recent years, as the shale boom and the concurrent rise in natural gas production pushed out coal as a fuel source. The U.S. could boast that alone among major industrial economies, it was reducing its CO2 emissions. But according to the Rhodium report, it can no longer make that claim.

Rhodium said the CO2 emission cuts were 2.7 percent in 2015, 1.7 percent in 2016 and 0.8 percent in 2017. The estimated increase in 2018 of CO2 emissions was 3.4 percent.

The transport sector increased its emissions last year and did so in 2017 as well. The power sector increased its emissions by 34 million metric tons (mmt) after cutting them by 78 mmt the year before. But transport was up 18 mmt after being up 16 mmt in 2017. Industry, fueled by a strong economy, increased emissions by 55 mmt in 2018 after a 13 mmt gain in 2017, and buildings were up 54 mmt in 2018 after a 7 mmt gain the year before.

“Robust growth in demand for both trucking and air travel increased demand for diesel and jet fuel by 3.1 percent and 3.0 percent, respectively,” the report said. “This highlights the challenges in decarbonizing the transportation sector beyond light-duty vehicles.” Light-duty vehicles have more efficiency improvements and electrification possibilities, but even this sector, the report said, is “not nearly a big enough one to meet medium- and long-term U.S. emissions targets.”

The U.S. is somewhat unusual among nations in that its transportation sector is now the biggest  CO2 emitter. Most other countries’ biggest source of CO2 emissions is the power sector.

While transport and power are the two biggest emitters, the Rhodium study pointed out that the biggest growth in U.S. emissions last year came from buildings and industry. “We estimate that direct emissions from residential and commercial buildings (from sources such as fuel oil, diesel and natural gas combusted on site for heating and cooking) increased by 10 percent in 2018 to their highest level since 2004,” the report said, though noting that a cold winter in much of the U.S. was also a factor in the building category.

The growth in the industrial sector shows how that slice of the economy has not received much  attention regarding its CO2 emissions. “At the state and federal level few good strategies have been implemented to begin decoupling production from emissions,” the report said. “Absent a significant change in policy or a major technological breakthrough we expect the industrial sector to become an increasingly large share of U.S. greenhouse gas (GHG) emission in the years ahead (including non-CO2 gases),” the report said. “We expect it to overtake power as the second leading source of emissions in California by 2020 and to become the leading source of emissions in Texas by 2022.”

Still, even with the increase in 2018, energy-related CO2 emissions are 11.2 percent less than the levels of 2005, though they were 14 percent below 2005 at the end of 2017. The Rhodium Group report cites the reduction targets in the Paris climate agreement as a target, though the U.S. has pulled out of that accord. To meet the Paris targets anyway, the report said, by 2025 the U.S. reduction in CO2 emissions will need to be more than twice as large as what it did between 2005 and 2017, reductions accomplished to a large degree by the substitution of natural gas for coal, a switch that can only be made once.

Hitting that target, according to the report, “is certainly feasible, but will likely require a fairly significant change in policy in the very near future and/or extremely favorable market and technological conditions.”

John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.