Composition Changes: Lower Carbon Intensity

On top of the lower overall consumption of electricity is a shift toward lower carbon intensity of the electricity generated. This shift was strongest in February when dirtier coal consumption for electricity fell 13.4% while demand for cleaner natural gas increased 2.4% and wind climbed significantly as well. The low price of natural gas is driving the shift from coal, as I wrote in February may happen. This could lead to coal’s share of electricity falling below 48% in 2009, a continuation of coal’s share decline of the last ten years described a couple weeks back.

Carbon Emissions Poised to Fall 3+%

When you add up fossil fuel consumption in early 2009, you get a picture of emissions in freefall. Rather than the 2.5% emissions drop I described a few days ago from the April EIA Short Term Energy Outlook, emissions from energy use are currently falling at a 5% rate. Coal use is falling ~8%, natural gas for electricity is down ~4%, and oil demand is more than 4% below 2008 levels.

Since it is possible that weather (a hot summer and cold early winter) and a late 2009 economic recovery may bring emissions levels closer to those in 2008, for now I will say that emissions are poised to fall more than 3% this year. But keep the higher 4-5% range in mind as possible – which would bring US emissions to just ~6.5% above 1990 levels.

Bottom Line: US carbon dioxide emissions are poised to fall dramatically in 2009. The more we deploy efficiency and renewables, the faster we can send emissions down and keep them down as our economic recovery revs up in late 2009/2010. I’ll keep you updated at SETenergy.org as this develops during the months ahead.

The projected slide in US GDP got deeper than their January report, at 2.7% rather than 2%. This translates into lower energy consumption and lower combustion of fossil fuels. US petroleum use is expected to fall ~2.4% (.46 million barrels per day (Mbd)) in 2009, less than half of the 5.8% (1.2 Mbd) drop in 2008 when prices were so high. But consumption declines accelerate for coal and natural gas, dropping ~1.3% for both in 2009 compared to a .5% drop and small growth in 2008, respectively.

Carbon Dioxide Emissions

The latest estimates based on EIA energy consumption data are that US carbon dioxide emissions dropped ~2.8% in 2008. And emissions look poised to fall more than 2% again in 2009. Such a drop would put 2009 emissions at less than 10% above 1990 levels, putting 1990 levels within reach by 2016, if not before. Emissions would need to fall an average of 1.3% per year to accomplish such a goal, made possible in large part by cutting our use of expensive foreign oil.

The path would need to be paved by efficiency upgrades along with solar and wind deployment to provide the new electricity needed in 2010 and beyond to power an economic recovery in America. The current stimulus package appears ready to make such a trajectory reality. Let’s make it happen!

With only one and a half months to go, projections expect oil consumption to fall 5.4%, coal demand to stay the same, and natural gas demand to increases only 1.1% this year (compared to 6.5% last year). Add those totals together and, leaving other emissions constant, we get net carbon dioxide emissions of ~6.11 billion tons of carbon dioxide equivalent, ~2.5% below 2007 and lower than any output so far this century.

Higher fossil fuel prices spurred our country to a more efficient lifestyle that utilized our natural resources of bright sunshine and strong winds. Wind power is forecast to have a record year, growing more than 40% or over 7 GW. This growth will put us over 24 GW, overtaking Germany as the top wind power producer in the world. Even as nationwide gas prices have now fallen below $2.20 per gallon (almost $1 below last year at this time), consumers are driving fewer miles and more efficient vehicles. We were also lucky to get a cooler summer, requiring less coal- and natural gas-fired electricity to cool our buildings than in 2007.

For 2009, the EIA predicts further emission reductions as our nation faces the tough economic reality of a deep recession with 1.4% lower GDP. This estimate, especially a large reduction in industrial production, leads them to project a drop in consumption of all fossil fuels (oil, natural gas, and coal) in 2009. Growth in renewables such as wind and solar will slow, creating both positive and negative impacts. On the positive side, consumers will see lower prices for wind turbines and solar panels as supply catches up with demand. But on the other hand, lower prices may undercut the cost of production, erasing the strong profits of the last several quarters. The passage of a cap-and-trade climate bill in 2009 will be crucial to assure these innovative industries that robust long-term growth prospects await them when the economic recovery takes hold.

The lower emissions of 2008 will make our 2020 goal of 1990 levels easier to achieve. With this update on the projections I reported last month, our nation is able to adjust our energy system at a very manageable 1% per year average rate of emissions reduction through 2020. While we will not have as much cash to finance more expensive projects in 2009, we can use the period to focus on cost-cutting efficiency to get our balance sheets in order toward a renewable energy wave in the 2010s.

Bottom Line: Congratulations, USA! You have shown the world in 2008 that you can deploy efficiency and renewable energy to lower carbon dioxide emissions substantially. But 2009 will test our commitment.

Will we 1) seize the opportunity to lower our energy costs further through efficiency and prepare for a sustainable energy revolution that spurs economic recovery?

Or will we 2) fall into our old 1990s habits of excessive energy consumption growth that contributed to our current economic difficulties?

Sustainable Energy Transition (SET) aims to help individuals and institutions thrive by picking choice #1 to lead a global energy revolution that empowers local communities, creates millions of jobs, and stabilizes our climate to preserve a livable world for ourselves and future generations.