Energy-Related CO2 Expected to Fall Annually Through 2021

(February 7, 2020) — The Energy Information Administration’s (EIA) January Short-Term Energy Outlook forecasts year-over-year decreases in energy-related carbon dioxide (CO2) emissions through 2021. After declining 2.1% in 2019, energy-related emissions are seen retreating by 2% in 2020 and again by 1.5% in 2021 for a third consecutive year of decreases.
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EIA notes these declines come after an increase in 2018 when weather factors caused energy-related CO2 emissions to rise 2.9%. If the forecast holds, energy-related CO2 emissions will have declined in seven of the 10 years from 2012 to 2021. And with the forecast declines, the 2021 level of fewer than five billion metric tons would be the first time emissions have been at that level since 1991.

After a slight pullback in 2019, EIA expects petroleum-related CO2 emissions to be flat in 2020 and fade slightly in 2021. The transportation sector uses more than two-thirds of total U.S. petroleum consumption. Vehicles miles traveled, or VMT, grows nearly 1% annually during the forecast period. In the short term, increases in VMT are largely offset by increases in vehicles efficiency.

Winter temperatures in New England, which were colder than normal in 2019, led to increases in petroleum consumption for heating. New England uses more petroleum as a heating fuel than other parts of the U.S. EIA expects winter temperatures will revert to normal, contributing to a flattening in overall petroleum demand.

Natural gas-related CO2 increased by 4.2% in 2019, and EIA expects that it will rise 1.4% in 2020. However, the agency forecasts a 1.7% decline in natural gas-related CO2 in 2021 because of warmer winter weather and less demand for natural gas for heating.

Changes in the relative prices of coal and natural gas can cause fuel switching in the electric power sector. And small price changes can yield relatively large shifts in generation shares between the two fuels. EIA expects coal-related CO2 will decline by 10.8% in 2020 after falling by 12.7% in 2019 because of low natural gas prices. EIA expects the rate of coal-related CO2 decline to be less in 2021 at 2.7%.

The lessening in CO2 emissions is driven by two factors that continue from recent historical trends. EIA expects that less carbon-intensive and more efficient natural gas-fired generation will replace coal-fired generation, and that generation from renewable energy—especially wind and solar—will increase.

As total generation falls during the forecast period, increases in renewable generation will decrease the share of fossil-fueled generation. EIA estimates that coal and natural gas electric generation combined, which had a 63% share of generation in 2018, fell to 62% in 2019 and will drop to 59% in 2020 and 58% in 2021.

Coal-fired generation alone has fallen from 28% in 2018 to 24% in 2019 and will fall further to 21% in 2020 and 2021. The natural gas-fired generation share rises from 37% in 2019 to 38% in 2020, but it declines to 37% in 2021.
In general, when the share of natural gas increases relative to coal, the carbon intensity of electricity supply decreases. Increasing the share of renewable generation further decreases the carbon intensity.

(SOURCE: The Weekly Propane Newsletter, February 10, 2020. Available by subscription only.)