There’s good news in the world of electric utilities, but the story isn’t getting out. Greenhouse gas (GHG) emissions from U.S. electricity generation are falling … fast. If I were an executive at an electric utility, I’d be making some noise about how utilities are cleaning up power and reducing America’s impact on climate change. That’s a better story to see on the front page than one about rate increases or outages.
It’s also an opportunity to change the dialogue about the role of utilities in our society. There doesn’t need to be a trade-off between economic growth and environmental protection. They go hand in hand, and utilities are showing the way.
According to the U.S. Department of Energy (DOE), compared to 2005, the power sector’s GHG emissions (PDF) fell 10.4 percent through 2011 (Figure 1), even as gross domestic product grew by 5.4 percent. The DOE projects that the trend will continue (PDF), with emissions from electricity production falling to 17 percent below 2005 levels by 2016.
This is a remarkable turn of events that few saw coming, even a few years ago. In 2005, the DOE was projecting that electric-sector emissions would grow more than 20 percent between then and 2016. Electricity isn’t the only place that U.S. emissions are falling, as Dan Lashof at the Natural Resources Defense Council notes in his July 2012 Issue Brief (PDF).
Several factors are responsible for this surprising decline in emissions. One is the dramatic shift away from coal to natural gas. The boom in shale gas and resulting low gas prices, coupled with stricter regulations on emissions from coal plants, are causing utilities to switch to gas-fired power production at a breathtaking pace. Until a few years ago, coal fueled more than half of U.S. power generation. For the first time in history, in April of this year, America made as much electricity from natural gas as from coal (Figure 2), and the share from natural gas is expected to grow in coming years. Generating power with natural gas in combined-cycle turbines produces about 60 percent less carbon dioxide (CO2) per kilowatt-hour (kWh) than coal-fired generation.
Another driver of the falling carbon intensity of the U.S. power mix is the 45 percent growth of generation from renewable energy from 2005 to 2011. In 2005, the U.S. generated 357 billion kWh of electricity from renewable energy sources, representing almost 9 percent of net U.S. generation that year. In 2011, we produced 520 billion kWh from renewable sources, representing more than 12 percent of net generation. Data from the first three months of 2012 (PDF) show renewable energy’s share growing even more, to over 13 percent of U.S. generation.
In addition to the power mix getting cleaner, growth in demand has flattened considerably. Some of this is due to the recession and milder winters. Structural changes in the economy toward more service- and information-based activities have had a big effect—as has energy efficiency. All of these factors have depressed demand growth, but they haven’t reversed it. Total U.S. electricity consumption rose just over 1 percent from 2005 to 2011 (PDF), even as GHG emissions fell more than 10 percent. In other words, emissions have fallen as electricity consumption has increased.
Even before this summer’s crippling heat, drought, and wildfires, public opinion was rebounding that climate change is a serious threat that needs to be addressed. The moment is ripe for utilities to start telling the story of what they’re doing to reduce GHG emissions. Of course, each utility should tailor the message to its own circumstances—some systems are reducing emissions faster than others.
And companies need to be careful not to greenwash. For example, there’s still a lot of concern and uncertainty about the release of methane (a very potent GHG) from increased extraction and consumption of natural gas. It’s possible that methane leakage is growing enough to outweigh some or all of the gains from CO2 emissions reductions caused by the shift away from coal generation. We need far more data to understand this issue. None of this should prompt us to declare victory. Global emissions of GHGs continue to rise at an alarming rate.
But we have to start by setting an example for the rest of the world. And the bottom line is that U.S. electricity is getting cleaner, fast. Utilities may not have planned it this way—and their executives may be consumed with other concerns—but this is a positive message that would reflect well on the industry and give others hope that we can reduce emissions substantially while growing our economy. In these difficult times, it’s nice to have some good news to share.