Finally, a positive climate-related note coming out of the fossil fuels industry at a time when its reputation is beyond battered as it takes the bulk of the blame for the world’s carbon emissions; energy-related CO2 emissions are set to decrease through 2030, and fossil fuels emissions will remain flat through 2050--despite economic expansion.
It may not be an environmental utopia, but it might not be a catastrophe, either.
In 2015, Paris-based global energy industry navel-gazer International Energy Agency (IEA) dropped a major bombshell when it revealed that energy-related carbon dioxide (CO2) and greenhouse gas (GHG) emissions had remained unchanged since 2013 despite continued growth by the global economy.
This marked the first time in 40 years when emissions had flatlined at a time of economic expansion, a milestone that flew in the face of established economic wisdom that had long assumed that rising fossil fuel consumption and climate-changing carbon dioxide emissions were inextricably linked.
But a similar trajectory expected here in the United States suggests that the decoupling of emissions and economic growth could become the new norm.
U.S.-based Energy Information Administration’s (EIA) has just released the Annual Energy Outlook 2020 (AEO2020) Reference case. The report--which assumes no new laws and regulations are enacted--has projected that U.S. energy-related carbon dioxide (CO2) emissions will gradually decrease through the early 2030s before increasing slightly to 4.9 billion metric tons by 2050.
If the EIA projections are realized, it would mean that U.S. energy-related CO2 emissions in 2050 will be 4% lower than 2019 levels and prove that efforts to snuff out CO2 emissions do not have to come at the expense of economic growth.
U.S. GDP growth is expected to moderate from 2.3% in 2019 to 1.7% in 2020 through 2023 before increasing slightly to 1.8% from 2024 to 2029. Related: Chevron Ramps Up Oil Production In Venezuela
A gradual transition to clean and renewable energy sources in the U.S. electricity generation mix is mainly to thank for the slowdown in C02 emissions.
Coal Out of Favor
The U.S. electric power sector is expected to experience the largest drop in CO2 emissions thanks in large part to continued coal power plant retirements as well as additions in renewable generation capacity.
However, the notion that coal is facing an imminent death is a bit far-fetched since more economically viable coal power plants are expected to remain in service, hence the flatlining of CO2 emissions beyond 2025.
The transportation sector is also expected to contribute to the CO2 slowdown through the late 2020s, with rising fuel efficiency likely to more than offset the increase in total travel and freight movements.
Unfortunately, continued economic and population growth are expected to force the CO2 trend to reverse course beyond 2030.
Total U.S. energy related CO2 emissions are expected to resume growth after 2031 mainly due to higher consumption of petroleum and natural gas, even though commercial and residential emissions are likely to remain unchanged throughout the projection period.
The good news: the rise in CO2 emissions beyond 2030 is expected to be moderate with CO2 levels in 2050 still clocking in 4% below 2019 levels.
Sensitivity to Economic Growth
The report is careful to acknowledge the role of economic growth in its model, noting that an economy expanding too fast could throw a wrench in our GHG emissions goals. AEO2020 projections make several assumptions regarding multiple variables such as economic growth, oil prices, oil and natural gas resource estimates and renewable energy technology costs.
The report has modeled side cases of extremes in economic growth--with the high case providing a sobering reality.
In the High Economic Growth case, C02 emissions could be 13% higher than the reference case and a good 9% above 2019 levels.
On the flip side, a sluggish economy could be good for the environment with CO2 emissions in the Low Economic Growth case projected to be 11% lower than in the Reference case and 15% lower than 2019 levels.
In 1974, economist William Nordhaus published his landmark paper “Resources as a Constraint on Growth,” where he described the transition from a “cowboy economy” to a “spaceship economy”.
In the cowboy economy, “...we could afford to use our resources profligately,” and “...the environment could be used as a sink without becoming fouled.” But, in the spaceship economy, “...great attention must be paid to the sources of life and to the dumps where our refuse is piled.”
Towards the end of his paper, Nordhaus discussed the possible adverse effects of energy consumption, most notably the greenhouse effect. He estimated that the atmospheric concentration of carbon dioxide would increase by more than forty per cent over the next sixty years.
He was incredibly prescient.
We are now dangerously close on track to Nordhaus’ estimate--four hundred and eighty-seven parts per million CO2 by 2030.
Historically, CO2 and GHG emissions have aligned with the ebb and flow of the economy. However, the EIA report suggests we could be about to buck that trend thanks to the clean energy and ESG drive gaining fresh impetus in recent years. Global CO2 emissions grew “just” 0.6% in 2019 after rising an alarming 3.4% in 2018 mainly due to China’s renewed green energy drive.
If the EIA projections become the baseline for the rest of the globe, we might just sigh a collective sigh of relief after our close shave with a full-blown global catastrophe.
By Alex Kimani for Oilprice.com
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