Brookings Institution: Natural Gas Driving Decoupling of Economic Growth and GHG Emissions

It wasn’t long ago that the notion of carbon reductions and economic growth coexisting was considered nothing short of a wild fantasy.

But then fracking came along. And now, a new Brookings Institution report further confirms the once “theoretical” pipe dream of decoupling economic growth from growth in carbon emissions has become a reality thanks to increased use of natural gas.

The report finds that between 2000 and 2015, the U.S. expanded its gross domestic product (GDP) 30 percent while cutting its carbon emissions 10 percent, as the following chart from the report illustrates.

brookings-decoupling

Authors Mark Muro and Devashree Saha makes no bones about what the report reveals deserves most credit for this unprecedented trend,

“Emissions decoupling has clearly become more frequent amid the ongoing large-scale switch from coal to natural gas — driven by the hydraulic fracturing (“fracking”) boom.”

The Brookings Institution report finds the U.S. has achieved carbon reduction and economic growth three times in the past six years, “making it the largest country that has had multiple years in which economic growth has been decoupled from growth in carbon emissions.”

The state-level numbers from the report are even more profound — and can all be traced, on some level, to increased natural gas use,

“… it is clear that many states have made progress in delinking emissions from growth through the replacement of coal-burning power plants with natural gas-fired plants or, in some cases, renewables.”

The report finds 33 states have “delinked” their economic growth and carbon emissions, “showing that economic growth does not inevitably require emissions growth.”

Of the top 10 states (including the District of Columbia) in terms of CO2 reductions since 2000, all 10 have seen their GDP grow by at least nine percent. Not surprisingly, eight of those states get at least 40 percent of their electricity from natural gas and are among the top 16 states in terms of natural gas-fired electrical generation in the U.S.

Those are just a few examples why this report, titled “Growth, Carbon, and Trump: State progress and drift on economic growth and emissions ‘decoupling’,” echoes the recent sentiments of a Breakthrough Institution report by surmising market forces (i.e., continued availability and affordability of natural gas) will continue to be far more relevant to reducing GHG emissions than the perceived implications of the recent election.

The report also emphasizes that state-level policies have driven this trend far more than federal policies,

“… the trends depicted here suggest that while federal policy reversals could be traumatic, progress on decarbonizing the nation’s economy will likely continue regardless of Donald Trump, driven by technology advances, market dynamics, and state policy.”

“In fact, it’s safe to say that the largest share of America’s past progress on cleaning up the economy in recent decades has owed to state and local efforts.”

Northeastern and southern states leading way — thanks to shift to natural gas

The most notable progress has been made in the in northeast and south — thanks specifically to natural gas — according to the report,

“Northeastern and many Southern states, for example, have achieved some of the most impressive feats of decoupling, and their achievement owes to mostly favorable changes in the states’ fuel mixes, such as through the substitution of natural gas for coal in power plants.”

The report finds that northeastern states have collectively seen a 15 percent decline in CO2 emissions while seeing a 19 percent rise in GDP, with the report noting that “heavily influencing these trends have been changes in the region’s energy system,” more specifically,

“The Northeastern states, for instance, have been generating more electricity from natural gas and importing more hydroelectric power from Canada. Since 2000, the region has witnessed a dramatic shift away from petroleum and coal-fired generation to natural gas-fired output.”

Ironically, Massachusetts and New York — two states that have banned fracking — have seen their carbon emissions decline 22 and 20 percent, respectively, since 2000 thanks in large part to natural gas at the same time their GDPs have grown 21 percent and 24 percent, respectively. A whopping 60 percent of Massachusetts’ electrical generation is fueled by natural gas, jumping from just 28 percent in 2000. New York gets 40 percent of its electricity from gas (see every state’s share here).

It’s a similar story in Connecticut, where natural gas’ share of electrical generation has jumped from 12 percent to 44 percent since 2000. Not coincidentally, Connecticut has cut its carbon emissions 18 percent while watching its GDP climb 11 percent. Rhode Island gets 95 percent of its electricity from natural gas, allowing it to cut CO2 emissions 9.4 percent while increasing GDP 16.7 percent, according to the report.

The report notes that southern states such as Alabama, Florida, Virginia and Georgia have “all shifted significant power generation to natural gas” allowing southern states to collectively reduce CO2 emissions seven percent while growing their economies 30 percent,

“Most notably, significant coal-based power generation has been replaced by cleaner natural gas plants, as the share of net electricity generation from natural gas in the South increased from less than 20 percent in 2000 to 35 percent in 2014.”

 Georgia has led the way, as it has slashed emissions 17 percent while growing GDP 15 percent, thanks in large part to the fact that it gets 33 percent of its power from natural gas.

Renewables not making much of an impact in ‘green’ west

Interestingly, the report notes that CO2 emissions have been reduced at a much slower pace in the western states, as the following map from the report illustrates.

brookings-co2-map

The states highlighted in blue have reduced CO2 emissions, while the orange-tinted states have seen emissions rise. The report notes that many of the latter states — the bulk of which are west of the Mississippi River — have focused on conversion to renewables and that, “Wind and solar generation have yet to register as broad an impact on decoupling as might be expected — even in the green West.”

This further illustrates why the Brookings Institution agrees that natural gas deserves most of the credit for the CO2 reductions of the last 10 years,

“… It is impossible to overestimate the importance of decisions (both market-oriented and otherwise) about electricity sourcing in the states’ decarbonization. Overall, the Energy Information Administration concludes that changes in the national mix of electricity production — especially the shift toward cleaner-burning natural gas — accounted for more than two-thirds of the country’s and state’s emissions reductions between 2005 and 2015. And that link is extremely visible here.”

Not surprisingly, six of the 10 states in terms of GDP growth listed in the report happen to be prominent shale states North Dakota (128 percent GDP increase), Texas (50.5 percent increase), Utah (45.2 percent), Oklahoma (43 percent), Wyoming (40.3 percent) and Montana (38.2 percent). However, each of these states has seen its CO2 emissions rise since 2000. Not coincidentally, none of them get a majority of their electrical generation from natural gas, although conversion to natural gas is becoming much more prevalent in Texas and Oklahoma.

Natural gas should be ‘top priority’ in meeting Paris goals

Though the report lauds the fact that progress is being made on the carbon reduction front — and is being made at the same time as the economy grows — it emphasizes the U.S. will still need to double its de-carbonization rate from 2.1 percent to 4.3 percent to meet Paris Climate Conference goals.

The report concludes that natural gas should continue to be the pragmatic centerpiece of efforts to meet the latter goal,

“Policy choices at the state level are going to matter even more than in the past. Smart oversight of the utility sector, for example, to ensure the continued rapid switch from coal to gas in power plants should remain a top priority.”

A recent Breakthrough Institution reached a similar conclusion, saying that the U.S. could possibly “outperform” Paris emission targets with pro-gas policies.

And that is just one example of numerous recent reports and data that echo the Brookings Institution’s findings.

Many other reports bolster Brookings’ conclusions

There is no shortage of evidence and data mirroring Brookings’ conclusion that natural gas is spearheading carbon reductions at a time of economic growth.

The latest U.S. Environmental Protection Agency (EPA) Greenhouse Gas Inventory shows CO2 emissions are down 11.5 percent since 2005. This is a remarkable achievement in and of itself, but even more stunning is the fact that the U.S. economy has grown 15 percent in the same timespan, according to a recent Global Carbon Project (GCP) report.

That GCP report also noted the U.S. saw its CO2 emissions decline 2.6 percent from 2014 to 2015 despite using more oil and gas last year. The U.S. is also projected to see its carbon emissions decline another 1.7 percent in 2016, according to the GCP report.

The U.S. Energy Information Administration (EIA) reported this summer that energy-related CO2 emissions fell to their lowest levels since 1991 during the first six months of 2016.

The following EID graphic illustrates that U.S. gross domestic product (GDP) and shale gas production have both risen rapidly in recent years at the same time carbon emissions have steadily fallen.

co2-gdp-shale-gas

The latter has occurred because natural gas’ share of total U.S. electrical generation has increased 76 percent since 2005, and the EIA has projected natural gas will be the top fuel source for electricity generation for the first time ever in 2016. Not coincidently, energy-related CO2 emissions have declined 12 percent since 2005.

EIA data also confirms the Brookings report’s observation that renewables area not reducing CO2 emissions as much as many would believe.

EIA reports that between 2006 and 2014, natural gas has prevented 1.25 billion metric tons of carbon dioxide from being emitted from power plants in the United States. By comparison, the use of renewable energy has prevented 789 million metric tons of carbon dioxide, according to the EIA, as the following graphic shows.

This EIA graphic shows how natural gas has outpaced renewables in terms of CO2 reductions.

This EIA graphic shows how natural gas has outpaced renewables in terms of CO2 reductions.

EIA also recently noted the current shift of electrical generation fuels to natural gas has accounted for 68 percent of the total reduction in U.S. energy-related CO2 emissions during last decade. The Breakthrough Institute (BTI) has previously found that natural gas has prevented 17 times more carbon dioxide emissions than wind, solar, and geothermal combined. And a recent report by the Manhattan Institute shows that for every ton of CO2 emission reductions attributable to solar power, 13 tons can be attributed to natural gas.

Conclusion

The Brookings Institution report is just the latest in a long line of evidence showing that — regardless of the political landscape — our carbon emissions will continue to fall as we continue to ramp up our use of natural gas.

And fortunately, the report shows that we can do this while growing our economy, a win-win situation that would have been unthinkable just a few years ago, as the report notes,

“For most of the 20th century, the possibility of preserving growth and erasing emissions remained theoretical and was most commonly presented as an unsatisfactory, divisive face-off between the ‘growth imperative’ and the ‘climate imperative.’”

But now, “… the reality of emissions decoupling across nations and across states confirms that the transition to a modern energy system can occur without sacrificing growth.”

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