Monday, May 17, 2010

U.S. & China GHG Emissions: Diverging Trends

Recently, the U.S. Energy Information Agency (EIA) released a report on energy-related carbon dioxide emissions in 2009. Carbon dioxide emissions from energy use make up over 80 percent of our country’s greenhouse gases. The report showed that last year the U.S. had its largest absolute and percentage decline since the EIA started keeping statistics in 1949. Carbon dioxide emissions declined by 7 percent - or 405 million metric tons.

The report cites three factors that led to the reduction in emissions: per capita gross domestic product (GDP which is economic output), energy intensity (the amount of energy consumed relative to total output or GDP) and carbon intensity (the amount of carbon produced per $1,000 of GDP). Although the economic downturn had been expected to lower emissions, the slowdown in economic growth only accounted for about a third of the reduction. The remainder was driven by greater energy efficiencies and less energy-intensive activities in our economy. Energy intensity has declined by an average of 2 percent from 2000 to 2008. Carbon intensity also decreased as the cheap price of natural gas caused many utilities to burn it for electricity generation instead of coal.

The U.S. performance stands in stark contrast to China's performance. The New York Times article below points out that China’s growing demand for power from oil and coal has led to the largest six-month increase in man-made greenhouse gases ever by a single country. Advocates of climate change legislation often cite the growth of renewable energy in China as a sign that they are doing more than the U.S. However, these advocates ignore the explosive growth in the consumption of energy from traditional sources that is dwarfing renewable energy use. Part of the reason for the increase, according to the article, is that China’s economy is shifting from light export industries to heavy industrial production - often heavy industrial production that used to be done in cleaner, better regulated western economies. The increase in energy-intensive industries and increased use of coal is making China’s overall economy less energy efficient, reversing a four-year trend of energy efficiency gains.

The lesson here is that growing energy efficiency and a decrease in carbon intensity is beginning to break the link between economic growth and carbon dioxide emissions in the U.S. Continuing that trend, largely driven by the market, is the way to reduce emissions without harming the economy, as opposed to adopting a large, bureaucratic cap-and-trade program. And these news items are a further reminder that developing countries with major economies are the current and future driver of man-made greenhouse gas emissions. Without action by them, what we do here in the U.S. will have little impact on the global climate, but a large impact on our economy.

“The Carbon Recession,” Wall Street Journal, May 10, 2010.

“China’s Energy Use Threatens Goals on Warming, New York Times, May 7, 2010.

EIA Emissions Report: