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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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Global C02 Emissions Rise For The First Time In 3 Years

In a worrying development, global CO2 emissions from energy jumped by 1.4 percent in 2017, the first increase in three years.

The trend indicates that global efforts to reduce emissions are “insufficient,” according to a new report from the International Energy Agency. Total energy-related emissions jumped by 1.4 percent to 32.5 gigatonnes (Gt), the equivalent of 170 million additional cars. The prior three years, energy-related emissions were flat, raising hopes that the curve might bend down.

Still, emissions did not rise everywhere. Notably, the U.S., Mexico, Japan and the UK saw emissions decline. In fact, the U.S. posted the largest single-country decline in emissions in 2017, dropping 25 megatonnes (Mt). It was the third consecutive year of declining emissions, which may surprise some given the Trump administration’s efforts – he withdrew from the Paris Climate Agreement, he has actively promoted coal, oil and gas production, and his EPA has done all it can to roll back Obama-era climate policies.

Despite the trend in federal policy, the transition to cleaner energy is, at this point, driven more so by market forces than by the whims of Washington. Renewable energy outcompetes coal and even natural gas in many places.

Indeed, the IEA noted that in years past, the cut in U.S. CO2 emissions was largely the result of utilities shutting down dirty coal plants and switching over to natural gas. However, in 2017, the 0.5 percent drop in U.S. energy-related emissions was the result of more renewable energy, rather than natural gas. A decline in electricity demand also chipped in. The proportion of electricity coming from renewables jumped to 17 percent in 2017, while nuclear power accounts for 20 percent.

Similar trends played out in the UK and Mexico, where coal also took a hit. In Japan, some nuclear power came back, helping it to displace imported oil, coal and gas.

But strong economic growth (GDP jumped by 3.7 percent) and low prices for oil and gas led to a lot more consumption. Meanwhile, the IEA said that weaker energy efficiency efforts also contributed to the uptick in emissions.

Related: Colombia’s Fracking Dilemma

“Global emissions need to peak soon and decline steeply to 2020; this decline will now need to be even greater given the increase in emissions in 2017,” the IEA said in its report.

One hopeful trend is the semi-decoupling of energy consumption and GDP. For decades, economic growth grew in lockstep with energy consumption. The two started to diverge in the mid-2000s as the global economy continued to expand but sky-high oil prices started to force some efficiency measures. Since then, the global economy has grown much faster than energy consumption.

(Click to enlarge)

China, for instance, still added CO2 emissions in 2017, but at a significantly lower rate than its GDP growth might suggest. The Chinese economy expanded by 7 percent, but CO2 emissions only rose by 1.7 percent. The decoupling is in part due to the ongoing coal-to-gas switch, an effort to clean up urban air pollution. It wasn’t so long ago that news stories talked about China building a new coal plant every week, but China’s coal consumption actually peaked back in 2013.

China still has some new coal plants coming online, but those have been in the works for some time. The Chinese government put strict limits on new coal plant construction beginning in 2016, while forcing older and dirtier ones to shut down. China still has a lot of coal plants on the drawing board, but has effectively shelved plans on a whopping 444 GW of coal-fired capacity, according to a new report from the Sierra Club, Greenpeace and Coalswarm.

On the other hand, so-called “energy intensity” – or the amount of energy consumed per unit of economic output – declined at a slower rate than in the past. In 2017, the energy intensity of the global economy fell by 1.6 percent, a less impressive figure compared to the 2 percent improvement in 2016.

Related: Oil Traders, Supermajors Diverge On Demand Forecasts

China and India were a big reason why global energy consumption jumped by 2.1 percent in 2017, a rate twice as large as the year before. Those two countries accounted for 40 percent of the global increase in energy demand.

The bottom line is that energy consumption is still rising, despite the larger presence of renewable energy and the nascent EV industry. It is no wonder that the oil majors do not see peak oil demand as an imminent problem.

“The significant growth in global energy-related carbon dioxide emissions in 2017 tells us that current efforts to combat climate change are far from sufficient,” said Fatih Birol, IEA executive director. “We are far from being in line with the climate targets set in Paris,” he added.

By Nick Cunningham of Oilprice.com

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