U.S. Carbon Dioxide Emission Trends and the Role of the Clean Power Plan

Summary

Recent international negotiations and domestic policy developments have generated interest in current and projected U.S. greenhouse gas (GHG) emission levels. GHG emissions are generated throughout the United States from millions of discrete sources. Of the GHG source categories, carbon dioxide (CO2) emissions from fossil fuel combustion account for the largest percentage (76%) of total U.S. GHG emissions. The electric power sector contributes the largest percentage (36%) of CO2 emissions from fossil fuel combustion.

In the context of international climate change negotiations, President Obama announced, on separate occasions, U.S. GHG emission reduction goals for both 2020 and 2025: 17% below 2005 levels by 2020 and 26% to 28% below 2005 levels by 2025. In 2014, U.S. GHG levels were 7.5% below 2005 levels. Whether the United States achieves its goals would likely depend, to some degree, on CO2 emissions from power plants.

The Environmental Protection Agency (EPA) promulgated standards for CO2 emissions from existing electric power plants on August 3, 2015. The rule, known as the Clean Power Plan (CPP), is the subject of ongoing litigation involving a number of entities. On February 9, 2016, the Supreme Court stayed the rule for the duration of the litigation.

Multiple factors generally impact CO2 emission levels from the electric power sector. Some factors are listed below in no particular order:

Economic growth/recession,

Relative prices of energy sources for electricity—particularly natural gas—and renewable energy sources,

Electricity generation portfolio (i.e., the ratio of electricity generation from coal, natural gas, and renewable energy sources),

National and/or state policy developments (e.g., CPP implementation), and

Demand-side efficiency improvements (e.g., commercial and residential electricity use).

Recent changes in the electric power sector may be informative. Between 1975 and 2010, electricity generation and CO2 emissions from the electric power sector generally increased. While electricity generation remained relatively flat after 2010, CO2 emissions from the electric power sector decreased. Electricity generation in 2015 was essentially equivalent to generation in 2005, whereas the CO2 emissions in 2015 were 19% below 2005 levels.

Recent changes in the U.S. electricity generation portfolio played a key role in the CO2 emission decrease. The electricity portfolio affects CO2 emission levels because different sources of electricity generation produce different rates of CO2 emissions per unit of electricity (zero in the case of some renewables). For example, between 2005 and 2015:

coal’s contribution to total electricity generation decreased from 50% to 33%,

natural gas’s contribution to total electricity generation increased from 19% to 33%, and

renewable energy’s contribution to total electricity generation increased from 2% to 7%.

If implemented, the CPP would likely play a role in shaping the electricity generation portfolio. Modeling results indicate that the CPP would have a significant impact on future CO2 emission levels from electricity generation. Under the models’ baseline scenarios, power sector CO2 emissions in 2030 would decrease by 10% to 17% compared to 2005 levels. Under the models’ CPP implementation scenarios, power sector CO2 emissions in 2030 would decrease by 26% to 40% compared to 2005 levels.

If the CPP is not implemented, questions remain as to whether existing policies and trends in electricity generation would continue to lower CO2 emissions. In December 2015, Congress extended and modified the production tax credit and the investment tax credit for specific renewable energy technologies (e.g., wind and solar). This development will likely impact the electricity generation portfolio (compared to baseline), but at least one analysis suggests that the extensions would not be a substitute for CPP implementation.

Accurately forecasting future CO2 emission levels is a complex and challenging endeavor. A comparison of actual CO2 emissions (from energy use) between 1990 and 2014 with selected emission projections illustrates this difficulty. In general, actual emissions have remained well below projections. The more recent projections, which do not include CPP implementation, indicate that CO2 emissions will remain relatively flat over the next decade.