Good News and Bad on Trends in US Emissions

As I meet with global warming officials from other countries, I frequently hear this statement: "American action on global warming is lost for the foreseeable future." This is a good time to evaluate how true or false this statement is since the US Energy Information Administration (EIA) has just released its annual projections -- the Annual Energy Outlook 2011. The general conclusion: emissions will be below 2005 levels for the next 15 years and could be reduced even further if the Administration implemented EPA and other rules in a strong fashion.

But before giving some detail on the results here is a little perspective on the EIA's analytical track record. First, EIA's projections of energy use and emissions have been reduced each time a new analysis is released since their earlier projections had overestimated the growth in emissions (as my colleague highlighted). This isn't because they are bad analysts. It is just hard to predict future energy use in an ever changing world and they don't want to be perceived as radicals (so their analysis tends to be conservative). [Note: the same could also be said of the International Energy Agency.]

Second, EIA projections are based on the "policies on the books". Their "reference case" analysis "generally assumes that current laws and regulations affecting the energy sector remain unchanged throughout the projection." So their reference case doesn't include policies that are under consideration and that might be adopted by the President, Congress, or the states. Nor does this scenario consider new rules that might be implemented under existing law.

Lastly, predicting future changes in technology development and costs is a complicated undertaking so EIA uses assumptions about how technology will change in the future. Remember how you first used your email or the internet? Think you could predict 5, 10, or 20 years later that you could access it from your pocket and tell your friends what you were doing every second from that same device? Similarly, capturing how energy technology will change in the future is difficult. To capture all these dynamics, EIA includes "sensitivity analysis" which looks at the emissions and energy results from changes to these factors -- e.g., new policies being implemented.

With that in mind, let's look at some of the results from the new EIA projections.

Without any new policies, US energy-related CO2 emissions* will be below 2005 levels for the next 15 years. In 2020, US emissions without new policies are projected to be 4% below 2005 levels and won't surpass 2005 levels until 2027, according to EIA's reference scenario (see figure).