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Energy Risk: The Forgotten Half of America's Carbon Cuts

Lindsay Wilson's picture
Shrink That Footprint
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  • Jun 19, 2013 8:00 pm GMT

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US carbon emissions decline

US carbon emissions are down 12% since 2005.

According to many an editorial the reason is simple.  The fracking boom has driven out coal.

But that isn’t what the data says.  The data says that oil emissions are down more than electricity emissions.  That natural gas is at best responsible for half of emissions cuts.  And that electricity generation tell us only half the story.

If we want to really understand what happened to US emissions we also need to ask why oil emissions have tanked.


America’s Carbon Cliff

Using the charts from our recent report ‘America’s Carbon Cliff: Dissecting the Decline in US Carbon Emissions‘ this post is going to try to explain what happened to US carbon emissions between 2005 and 2012.

We’ll start with a macro overview of what happened at the national level, then take a closer look at the changes in each sector and finish with a discussion of oil consumption.

For a more detailed explanation of each chart check the full report.

Four ways to dissect the decline

Energy related carbon emissions in the US declined about 12% from 2005 to 2012, or roughly 700 Mt CO2.

The decline in total emissions has been widely documented.  In the context of the last fifty years it looks like this:

US Carbon Emissions Decline

The drop in carbon emissions in the last seven years has been even greater than occurred from 1979 to 1983.

The carbon cut is  even more impressive if you look at it per person:

US Per Capita Carbon Emissions

American’s per capita emissions are down 17% since 2005, to their lowest level since 1963.  Although still high by international standards the scale of this drop is unmatched in the last 50 years.

Another way to think about these emissions cuts is in terms of fuels:

Emissions by fuel source

Between 2005 and 2012 coal emissions dropped by 515 Mt, petroleum emissions fell 363 Mt and natural gas emissions grew by 183 Mt.

Although coal’s decline made the biggest contribution to emission cuts the majority of coal was displaced by natural gas.  In  contrast much of the drop in oil emissions was simply due to destroyed demand.

An even more useful way to think about emissions is in terms of sectors:

Change in sector emissions

Between 2005 and 2012 the greatest drop in emissions occurred in the electricity sector.  Despite the endless focus of the media on the electricity sector the declines in transport, industry and residential sectors were also significant.

By looking at each sector in turn we can get a better idea of what really happened to US carbon emissions over the last seven years.

Emissions cuts by sector

In an attempt to better understand the declining emissions in each sector the following charts will focus purely on the changes in emissions that occurred between 2005 and 2012.

The total changes for each of the sectors are as follows:

Sector Attribution of Emissions CutsAs already noted total US emissions fell by almost 700 Mt CO2 in the last seven years.  Almost exactly half of this drop came from the electricity sector (50%), with transport (26%), industry (14%) and residences (8%) also playing a major role.

The decline in electricity emissions has been widely discussed elsewhere, but rarely in terms of emissions sources:


The data shows what everyone knows, a lot of coal generation has been displaced in recent years by natural gas.   A smaller decline of oil based generation has also occurred against a backdrop of rising oil price.   Wind has also played a key role, which can be seen in the fuel mix changes detailed within the report.

Far less well documented declines have occurred in transport emissions:

Change in transport emissions

Using EIA data we can separate the transport emissions declines into different fuel types.  Just over half the decline arose from falling gasoline emissions, although all oil based fuels suffered significant declines.

Separating the respective role of oil prices, the recession and efficiency in these declines is not simple.  In the case of gasoline emissions biofuel production also played a role, together with reduced vehicles miles travelled and improving fuel economy.

The decline in industrial emissions also defies simplistic explanation:

Industry emissionsIndustrial oil emissions are down considerably since 2005, coal emissions are also down while natural gas emissions are up.  Unlike in the electricity sector however the decline in industrial emissions is not just about the fuel mix.

Industrial use of fossil fuels was down 8% between 2005 and 2012.  Electricity use also declined by 5%.  Much of this decline in energy use occurred during the height of the recession in 2008 and 2009.  Since then natural gas emissions have rebounded, coal emissions remain largely flat and oil emissions have continued their decline which began in 2004.

Residential emissions are also down:

Residential Change

The significant decline of both natural gas and oil emissions in the residential sector has been noted by some as a sign of fast improving energy efficiency in buildings.  Sadly, on closer inspection it appears the majority of this decline was due to a warm winter of 2012.

Although residential emissions were down 15% over the period heating degree days were 13% lower in 2012 than 2005, suggesting much of the decline was weather related.

As they make up just 2% of the total emissions cuts we won’t detail the commercial emissions change here, though it is largely analogous to the commercial sector.

The ‘third oil crisis’

In the widespread analysis of the recent decline in US emissions both the fracking revolution and great recession have rightfully received much attention.  But the complete story is more subtle, and defies simplification.

A closer look at the data shows that natural gas was actually responsible for less than half of the total emissions cut in the US since 2005.  Most of these cuts have occurred in the power sector, as well as some in industry.

The importance of the recession depends on how it is analysed.  Analysis against ‘business as usual’ trends ascribes more than half of the emissions decline to the great recession.  This description however should not be applied to the 12% cut from 2005 levels as it reflects a larger hypothetical cut.  Moreover, the US economy was considerably larger in 2012 than in 2005.

The warm winter in 2012, increased ethanol production and efficiency in vehicles, building and industry all deserve a mention, but the elephant in the room is oil prices.

In any other period in the last 50 years an oil price spike like we have witnessed since 2003 would dominate energy discussion:

The third oil crisis

The red line depicting oil prices in this chart alone makes a good claim for the existence of a ‘third oil crisis’.

Between 1978 and 1983 US oil consumption declined by 19%, due to a combination of the ‘second oil crisis’, and the early eighties recession.

In the subsequent recessions of 1990 and 2001, oil consumption was down 4% and 1% respectively.  But in both these recessions oil prices remained relatively low.

From 2005  to 2012 US oil consumption declined by more than 11%.  Oil consumption plateaued  in 2004, well before the recession started in late 2007.   And although this recent recession was  a very big one oil prices should not be overlooked.

Between 2003 and 2008 the price of oil tripled.  While the recession clearly played a key role in the crash of oil consumption during 2008 and 2009, the failure of oil demand to rebound since then shows very clearly that oil prices matter.

The huge drop in oil emissions is testament to that, and a reminder that it isn’t all about fracking.


For a more detailed discussion please see the full report.


Lindsay Wilson's picture
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Michael Berndtson's picture
Michael Berndtson on Jun 19, 2013

Excellent work!

Since the change period seems to be 2005 versus 2012. I looked into the difference in coal exports for those two years:

2005: 49.9 annualized million short tons

2012: 126 annualizedmillion short tons

Period differential (2005 v. 2012: 76.1 (say 76) million short tons goes elsewhere and assume it gets burned mostly for electricity, but some may be anthracite for steel. Whatever!

A short ton when burned produces about 2.86 tons of carbon dioxide or not, but that’s a ballpark.

So: 76 MT (2.86 TCO2/Tcoal) = 217 tons of carbon differential is now going into the atmosphere from somewhere other than the US.

If the total emissions cut differential for the US is 696 MT of CO2 – the exported CO2 emissions increase is 217 MT – or 31.2 percent – so we’ve actually increased CO2 emissions (31.2 – 12%) by 20 percent by coal exporting alone.

Is this correct? Anybody?

If so we probably shouldn’t be patting ourselves on the back too hard. Assuming fossil fuels salesmen care about global warming.

Note: all figures pulled from EIA’s website. What was done with them to demonstrate my point, cannot necessarily be assured as accurate – since I plugged and chugged on my old HP 15C and tried to read data tables without my cheaters on.

Geoffrey Styles's picture
Geoffrey Styles on Jun 19, 2013


Nifty charts, there, and some good insights on the under-reported importance of reduced oil consumption for emissions.  If you wanted to deepen this analysis, you might consider a “step-chart” format starting with 2005, ending with 2012, and showing the step changes in between that got us there. For example, EIA stats on generation show that natgas generation added 3.5x more MWh than “other renewables” (wind, solar, geothermal, etc but not hydro) in that interval.

It’s also worth thinking about the economic interactions behind these shifts.  The displacement of coal by gas was largely positive: cheaper gas drove out coal and reduced electricity prices.  That’s good for everyone but coal suppliers. However, much of the oil reduction in that interval wasn’t the result of displacement by efficiency gains (coming into the fleet gradually) or  biofuels (themselves pretty fossil-intensive) or by renewable electricity (little oil used for power and most of that for backup and remote applications) but by demand destruction, as you note.  That means that we’ve lost the economic activity associated with that consumption, which was likely worth much more, e.g. unemployed workers not commuting. All of this has implications for the sustainability of different segments of improvement as the economy recovers.

Rick Engebretson's picture
Rick Engebretson on Jun 19, 2013

It’s hard to offer specific perceptions when vague macro-economics has a theory for everything.

First, I’m glad the nasty 1980ish situation is included for younger readers. It spawned the internet, electrical efficiency, fuel efficiencies, and building insulation.

Second, around the 2005 crash there were fewer giant, noisy, 4 wheel drive pick-ups (with “support our troops” stickers) driving individual construction workers; more car-pooling in smaller sedans. And a sharp decline in snow-mobiles and jet ski boating.

How much carbon Americans “need” to sustain a quality lifestyle is a very different set of charts than how much carbon Americans “want.”

Other crazy behavior (besides energy misuse) I don’t understand include football, rodeo, and tattoos. So clearly, I’m not able to offer useful suggestions.

Lindsay Wilson's picture
Lindsay Wilson on Jun 19, 2013

Hi Geoffrey, glad you enjoyed it.  I’ve read your stuff for quite a while.

The waterfall is a great idea.  I detailed the fuel mix changes in the report for the power sector, I just didn’t bother here because I figure everyone has seen those charts before.  Although there is some debate about what wind displaced, the numbers are easy enough to do.

Seperating the demand destruction from efficiency in oil use is pretty hard going, particularly when you consider the economy was 7% bigger in 2012 than 2005.  It is more like it shuffled the energy use around, industry was obviously hit the worst.

If oil prices remain high I’d imagine much of the rebound in industrial energy use will be with gas when possible.  In transport it might be a mixed bag.   For passenger cars oil demand looks much more likely to stay depressed between CAFE, young people driving less, pump prices.  For diesel and jet fuel it may well bounce with the economy.

Thanks for the feedback, I’ll think about that waterfall chart, Lindsay


John Miller's picture
John Miller on Jun 20, 2013

Lindsey, price is always a factor towards consumption.  When it comes to petroleum, like most commodities, the higher price definitely tends to discourage demand.  However, reduced fossil fuels energy consumption is fairly complex and a function of many other factors in addition to the price of crude oil.  I did a recent similar analysis that clearly showed fuels switching (coal-to-natural gas), followed by CAFE improvements and energy efficiency (including the recession, weather, etc.) accounted for almost 84% of the reduction in total U.S. carbon emissions 2007-2012.  (The reason why I chose 2007 was that carbon emissions peaked in that year, similar to your’ possibly using 2005 for the peak in oil demand.)

When you start doing more detailed analysis of which petroleum fuels declined following 2005, you will find that the largest reduction in petroleum oil consumption is due to ‘residual fuel oil’ followed by motor gasoline and then diesel/distillate fuels.  Surprisingly, despite cheap natural gas, LPG has actually increased since 2005 (may be worth exploring some day).  The Power sector’s fuels switching accounts for 60% of the residual fuel oil reduction, followed by the Transportation (marine fuels) and Industrial sectors.  Fuels switching to natural gas is probably the major contributing factor for the Power sector.  While the reduction in marine fuels is likely strongly tied to the economic recession, the Industrial sector’s residual oil consumption reduction has been due to fuels switching/efficiency improvements going back to well before 2005.


Granted, the price of oil is a major factor, but not the only significant factor that has influenced its consumption since 2005.

Lindsay Wilson's picture
Lindsay Wilson on Jun 20, 2013

Hey John, I loved your piece.  It was the only good quantative analysis I saw back at the time.  I’ve also seen the breakdowns per fuel before, though with all the industrials grouped together.  

If you looked throughout the report you’ll see that I’m not making any contention that price is the only driver, just that it is overlooked.  In fact I didn’t want to repeat much of what you had noted back then.  Although I must say I can’t find anything like the contribution from CAFE you found in the data.  

Interestingly because biofuel combustion emissions are not included in the energy related CO2 gasoline emissions are down more than the usage figures would expecct you to think.  Pressumably a good chunk of this appears elsewhere in the supply chain.

I chose 2005 because the decarb target dates from 2005.  Though if I’m being cynical I’d point out it was only announced in Novemeber 2009, when the US had already cut about 8% of emissions.

Cheers, Lindsay




John Miller's picture
John Miller on Jun 21, 2013

Lindsay, yes ethanol consumption increased from 4 to 13 billion gallons per year 2005-12.  The biofuel displaced about 70% of this volume in gasoline equivalent gallons.  As you are probably aware ethanol production consumed between 90% and 75% fossil fuels energy 2005-12 compared to the heat content of the finished ethanol fuel.  Roughly 15% of fossil fuels consumption is petroleum fuels (farm equipment and corn/ethanol transportation), and the balance is split between natural gas and coal (fertilizer production and electric power consumption during the overall cultivation-production lifecycle).  All of the associated carbon emissions are distributed between the supply chain sections within the Commercial, Industrial, Power and Transportation sectors.


I almost forgot about the decarb target date of 2005.  I believe it was originally created when the Democratically controlled House passed ACESA 2009 that would have created a nationwide cap-n-trade regulation.  The Democratically controlled Senate failed to address the bill.  At the time (2009) total U.S. carbon emissions were at maximum in 2005, but were later updated by the EIA which increased 2007 to the new maximum.

Keep up the good work.

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