As Economy Rebounds, So Do GHG Emissions

The United States is further off-pace for achieving emissions reduction goals set by its recommitment to the Paris Accord and President Biden’s National Climate Task Force after a highly emissive 2021. A new study estimating national emissions levels shows a reversal from sharp declines in greenhouse gas (GHG) emissions in 2020 due to the COVID-19 pandemic, with 2021 estimates eclipsing the previous year’s figures and outpacing the rebound in the overall economy. In early 2021, President Biden announced new GHG reduction goals for the United States of a 50 to 52 percent reduction from 2005 levels by 2030, while also recommitting to the Paris Accord’s target of achieving a net-zero emission economy by 2050. The plan called for emissions reductions in nearly every sector of the economy, with the bulk of reductions in electricity generation, transportation, and industry. GHG emissions fell sharply in 2020, as national pandemic response kept people at home, reduced transportation demand, and caused economic activity to slow. There was a 14.7 percent reduction in travel-related emissions, a 10.3 percent reduction in power sector emissions, and a 7 percent decline in industrial activity emissions in 2020. US GDP fell 3.36 percent as well, according to the World Bank.

That trend reversed in 2021 as pandemic recovery drove demand economy-wide. Though official numbers have not been produced yet, the Rhodium Group’s study cites Goldman Sachs' 2021 GDP U.S. gross domestic product (GDP) estimates of 5.7 percent growth, more than rebounding from the previous year’s 3.4 percent decline. Unfortunately, GHG emissions followed suit, even outpacing GDP. According to the Rhodium Group’s analysis, economy-wide GHG emissions rose 6.2 percent in 2021. Transportation and electricity generation experienced the sharpest rebound in emissions: transportation saw a 10 percent rise with power generation emissions growing 6.6 percent. Industrial-related emissions grew 3.6 percent. An unforeseen contributing factor to the rise in emissions stems from the resurgence of coal-fired power in 2021. Use of coal for power generation climbed 17 percent from 2020 levels in 2021; the first uptick in coal-fired generation since 2014, according to the Rhodium Group. This follows global trends in coal use, which jumped by 9 percent in 2021. High natural gas prices, low gas supplies, and rising power demand in 2021 led to the use of abundant, inexpensive, but high-emission coal domestically and internationally. Though coal held 23 percent of the national fuel mix, natural gas, which has much lower GHG emissions, still remained the dominant fuel source in 2021, with 37 percent of total power being gas-fired. Renewables also grew, reaching a record one-fifth of the energy mix. With respect to emissions goals, 2021 did not prove to be a step forward in reduction efforts. The U.S. was 17.4 percent below 2005 levels, the benchmark year by which emissions reduction targets are calculated. Though still below 2005 levels, emissions levels grew by 4.8 percent in 2021 compared to the previous year, moving the nation further away from the reductions necessary to meet both the President’s and the Paris Accord targets. Estimates for 2022 indicate a small rise in electricity demand, and a decline in GHG emissions, but much uncertainty, particularly with coronavirus variants, exists and could greatly change actual outcomes.