CO2 reduction so far mostly accidental

IEA: cheap gas helps energy-related CO2 emissions stay stable for third year. But much of the stability is not down to CO2 reduction policies GTP 24 Mar draft 4 

(originally published in March in GtP)

A switch from coal to gas and renewables has helped keep energy-related carbon dioxide emissions flat in 2016 for the third year in a row, according to the International Energy Agency (IEA), after many years of steep growth. However, most of the improvement did not come as a result of policies designed to cut CO2 emissions. 

Energy sector emissions of 32.1 gigatonnes were unchanged from 2015 and 2014 even though the global economy grew by 3.1% (see chart). This decoupling is important as it shows that a switch to more renewables and gas does not act as a drag on growth. Carbon dioxide emissions fell in the US and China, the world’s two biggest emitters, and were stable in Europe, which offset increases in the rest of the world, the IEA said.

The biggest drop came from the US, where carbon dioxide emissions fell 3%, or 160 million tonnes, while the economy grew by 1.6%. The irony is, that rather than environmental policy, it has been the environmentalists’ nemesis, cheap shale gas, that has enabled the bulk of US falls. The cheap gas displaced coal use, which emits twice the amount of CO2 – no market intervention was necessary. So the cut could be said to be luck, or perhaps down to shale drillers’ inventiveness, initiative and hard work, more than anything else, although renewables also played a part. For the first time, 2016 saw the US produce more electricity from gas than from coal, while emissions were at their lowest level since 1992, when the economy was 80% smaller.

“These three years of flat emissions in a growing global economy signal an emerging trend and that is certainly a cause for optimism, even if it is too soon to say that global emissions have definitely peaked,” said Dr Fatih Birol, the IEA’s executive director. “They are also a sign that market dynamics and technological improvements matter. This is especially true in the United States, where abundant shale gas supplies have become a cheap power source.”

Great strides in China

Emissions in China fell by 1% as coal demand declined despite its economy growing by 6.7%. Again switching from coal to gas played a key role, along with more renewables and nuclear. And again, the success is not related to CO2 reduction policies, but a far more pressing priority: The switch to gas and renewables from coal is driven primarily by government policies combatting air pollution – it is the particulate, NOx and SOx pollution at city level that is driving the switch away from coal, and the CO2 reduction is just a fortunate by-product. Nevertheless, it is happening and likely to continue, helped further by low international gas prices.

“In China, as well as in India, the growth in natural gas is significant, reflecting the impact of air-quality measures to fight pollution as well as energy diversification,” said Dr Birol. “The share of gas in the global energy mix is close to a quarter today but in China it is 6% and in India just 5%, which shows they have a large potential to grow.”

In the EU, emissions were largely stable last year as gas demand rose about 8% and coal demand fell 10%. Renewables also played a role. The UK saw large scale coal-to-gas switching in the power sector, thanks to cheaper gas and a carbon price floor – perhaps the most significant CO2 policy-driven reduction of the year. Germany, once the global leader, has seen emissions rise recently due to higher coal use and lower nuclear.

Uncertain future

The IEA said keeping emissions flat was not enough to prevent global temperatures from increasing by more than two degrees Celsius above pre-industrial levels, and further reductions would be required. But with the biggest falls in both China and the US driven by factors other than CO2 emissions policy (commercial factors related to cheap gas in the US, and city particulate pollution in China), much of the progress so far seems to have been rather fortunate, outside Europe at least.

In China the trend is likely to be maintained, however, with strong central and local motivation for continued action. But in the US it is less clear, especially given new President Trump’s policy to withdraw from the Paris COP21 climate change agreement.

Leave a Reply