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How Much Is Efficiency Helping America Slash Its Carbon Emissions?

Energy wonks collectively gasped when the Energy Information Administration closed its doors briefly during the recent government shutdown. 

But the agency opened back up with a bang this week, issuing a promising new report that showed continued declines in America’s carbon intensity. According to EIA’s analysis, the U.S. cut carbon dioxide (CO2) emissions by 3.8 percent last year — a decline that came even as population and economic productivity increased.

We’ve known for a while that 2012 CO2 emissions fell last year. But there has been much debate over what caused the drop. Many people attributed the decline to increased electricity production from natural gas, which crowded out coal. However, some argued that economy-wide efficiencies, a warmer winter, and an increase of renewables accounted for 75 percent of the drop. 

It appears the EIA analysis backs up some of those theories.

Natural gas did indeed play an important role in the emissions change, helping lower power-sector CO2 by 3.5 percent. And while wind energy did increase steadily, it was offset by a decline in hydro production.

The big story is improvement in America’s energy intensity. While gross domestic product (GDP) grew by 2.8 percent in 2012, energy use per dollar of GDP fell by 5.1 percent. That change in energy intensity was a key driver, as the following chart indicates.

So what is driving this change in energy intensity? It would be nice to say efficiency was the sole reason, but the picture is much more complicated.

Industrial output declined by 2.7 percent in 2012 compared to 2007, when CO2 emissions were at their peak. And manufacturing output was 5 percent below 2007 levels. This illustrates the difficulties in assessing the true change in America’s efficiency. Many of the products that were once produced in the U.S. are now being made in developing countries, shifting CO2 output overseas. 

Weather was also a big factor last year. Because the U.S. experienced a warm winter in most regions, heating-related energy consumption was down substantially. Cooling-related consumption also saw a slight drop. This resulted in a 481 billion BTU decline in heating and cooling energy use.

Efficiency did clearly influence the change, however. EIA reported that vehicle miles traveled were down by 3.3 percent — an ongoing trend that many believe proves America has reached “peak car.” This complemented a 16 percent increase in fuel efficiency within the automobile fleet since 2007 and accounted for the second-largest decline in U.S. energy consumption.

Efficiencies in the electricity sector are also improving. The residential sector cut electricity consumption by 3.4 percent last year, and line losses on the transmission and distribution system fell by 4.8 percent.

These are encouraging signs, and they add to the growing body of evidence showing that economy-wide efficiencies are starting to change America’s energy landscape. But it will take a few more years of data to know whether these changes are a post-recession dip or simply influenced by an anomalous set of conditions in 2012. Some aren’t convinced the decline will last as natural gas prices rise and coal makes a modest comeback in the generation mix.

In any case, this final chart is enough to make anyone concerned about carbon emissions feel a little bit positive about where the U.S. is headed.

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com, follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

Stephen Lacey's picture

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Recent Comments

Robert Hargraves's picture
Robert Hargraves on October 25, 2013

Stephen, this energy-efficiency effect is good news. Some of the gain is the reduction in the value of the dollar. What would that last graph look like in inflation-adjusted, constant dollars? I’ve been estimating about 1% per year, but would love an authoritative source.

David Hone's picture
David Hone on October 26, 2013

Stephen,

Energy efficiency is a powerful driver of economic growth and prosperity, but it really isn’t an effective approach for reducing CO2 emissions. A variety of direct and indirect rebounds are almost ceratin to ensure it doesn’t. After all, energy efficiency has been THE STORY of 200 years of industrial development and look what has happened.

In the case of the US at the moment, I suspect that the real cause of reductions (outside the natural gas switch) is continuing high oil prices. It is only now that car buyers are really reacting to this (the recession stopped them buying back in 2008-2010) and they are buying smaller, less energy hungry cars.

David

David Hone's picture
David Hone on October 26, 2013

Stephen,

Energy efficiency is a powerful driver of economic growth and prosperity, but it really isn’t an effective approach for reducing CO2 emissions. A variety of direct and indirect rebounds are almost ceratin to ensure it doesn’t. After all, energy efficiency has been THE STORY of 200 years of industrial development and look what has happened.

In the case of the US at the moment, I suspect that the real cause of reductions (outside the natural gas switch) is continuing high oil prices. It is only now that car buyers are really reacting to this (the recession stopped them buying back in 2008-2010) and they are buying smaller, less energy hungry cars.

David

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