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Good News, Bad News: 4 Trends in US Energy Use

In 2018, the United States set a new record for energy consumption: 101 quadrillion British thermal units (Btu) of energy. Of this total, 81 quadrillion Btu (or 80%) were from fossil fuels: petroleum, natural gas and coal.

What does this growing consumption mean for climate change, and is it still possible for the United States to get on a path to reduce emissions at the pace needed?

We reviewed the U.S. Energy Information Administration’s (EIA) June 2019 Monthly Energy Review publication to unpack the energy consumption data. Our analysis reveals a glass half-full and half-empty. The good news is that clean energy sources such as solar and wind are rising and helping to slow the growth of carbon emissions. The bad news is that the shift away from fossil fuels isn’t happening quickly enough.

Here are four key takeaways from EIA’s energy consumption data:

1. Coal is being phased out in the United States.

Coal consumption stood at 687 million short tons (MMst) in 2018, the lowest level since the beginning of the 1980s. Coal consumption peaked in 2005 and has declined 42% since then. EIA forecasts coals consumption to fall to 567 MMst in 2020.

All signs point to a bleak outlook for coal. This is despite the Trump administration’s periodic efforts to revive a collapsing industry by pushing initiatives to keep failing coal plants open and relaxing pollution rules for coal-fired power generation.

The U.S. electricity sector consumes more than 90% of the country’s coal. However, the increasing availability of cheap natural gas and renewable energy, coupled with flat electricity demand, has led to a steady decline in the share of U.S. electricity generated from coal—from 51.7% in 2000 to 27.4% in 2018. The transition from coal to natural gas and renewables has led to a significant drop in carbon emissions from the power sector over the last decade, a plus for the environment.

A recovery in U.S. domestic coal demand appears to be highly unlikely. Recent research shows that the United States has reached the coal cost crossover point, where 74% of the nation’s coal plants are “at risk.” Building new wind and solar power capacity locally, within 35 miles of each coal plant, is less expensive than the combined fuel, maintenance, and other going-forward costs of running those plants. By 2025, 86% of the existing coal generation fleet will be at risk.

2. Fossil fuel consumption is being led by oil, principally in the transportation sector, highlighting the challenge ahead for decarbonization.

In 2018, U.S. petroleum consumption increased to 20.5 million barrels per day (or 37 quadrillion Btu), its highest level since 2007. Petroleum has been the largest source of energy consumption in the country since surpassing coal in 1950. Petroleum products include transportation fuels, fuel oils for heating and electricity generation, and feedstocks for making chemicals, plastics and synthetic materials.

The biggest increase in oil demand came from the industrial sector: a 6% growth in 2018, compared to a 1% growth for the transportation sector. This is likely related to increased manufacturing and petrochemical production.

The transportation sector, however, continues to account for the majority of oil demand. Since 2000, the transportation sector share of total petroleum consumed has ranged between 66% and 71%. The transportation sector—which includes cars, trucks, planes, trains and shipping—has also emerged as the largest source of carbon emissions in the United States. In 2017, it replaced the electric power sector as the top source of CO2 emissions.

For the world to stay well below a 2 degree C (3.6 degrees F) increase in average temperature, the transport sector needs to be decarbonized rapidly. However, reducing carbon emissions in the transportation sector has emerged as a huge challenge. Even with improvements in average new vehicle fuel economy and the growth in electric cars, the vast majority of motor vehicles on the road rely on fossil fuels. In 2018, motor gasoline accounted for about 63% of total petroleum consumed by the U.S. transportation sector and 44% of total petroleum consumed across all sectors. Demand for motor gasoline has increased since 2000, raising significant concerns about the pace of transition to cleaner fuels and vehicles.

Two other products comprise big chunks of total petroleum consumed by the transportation sector: distillate fuel oil, which includes diesel fuels used in trucks and jet fuel used in the aviation sector. An increase in trucking and air travel demand led to an increased demand for distillate fuel oil and jet fuel in 2018—by 5% and 1.7%, respectively. Since 2000, the demand for distillate fuel oil has jumped 29% while jet fuel demand has decreased by less than 1%. All this highlights the challenge of decarbonizing in the “hard to abate” freight and aviation sectors.

Even as the data points to the need to decarbonize the transportation sector, the Trump administration has been trying to backtrack on regulations that would set tougher emissions standards for cars and trucks. Recently four of the world’s largest automakers reached an agreement with California to establish a standard of about 51 miles per gallon by 2026. This deal is a hopeful step in pursing climate action in the transportation sector.

3. Natural gas consumption is rising steadily in the electric power sector.

U.S. natural gas consumption also set a new record in 2018: 82.1 billion cubic feet per day. Demand for natural gas increased across all sectors, primarily driven by weather-related heating and cooling needs. Natural gas consumption increased in the residential, commercial and industrial sectors by 13%, 10%, and 7% respectively, compared to 2017. However, the electric power sector saw the biggest increase: 15% over 2017.

The spike reflects an ominous trend. As more and more natural gas-fired power plants have come online, natural gas consumption by the electric power sector has increased by a whopping 82% since 2005. Compared to that, natural gas demand in industrial, commercial and residential sectors saw relatively smaller increases (at 32%, 17%, and 4%, respectively).

The transition from coal to gas has been responsible for significant emissions reductions in the U.S. power sector over the past few years. But there are growing concerns that too much reliance on natural gas breaks the carbon budget and undermines efforts to transition the country away from fossil fuels (see herehere and here). Carbon emissions from U.S. power plants rose 0.6% in 2018 following three straight years of decreases, as utilities switched to natural gas to meet record electricity demand.

4. Renewable energy consumption is growing, but still constitutes a small portion of the U.S energy mix.

The renewable share of energy consumption in the United States was 11.4% in 2018, reaching a record high of 11.5 quadrillion Btu. Compared to that, renewables’ share stood at 6% in 2005. Solar and wind showed the largest growth, driven largely by capacity additions.

That’s tremendous progress, but renewables (especially wind and solar) are still a small share of the overall energy mix. EIA’s Annual Energy Outlook (AEO) 2019 outlines the challenge ahead. It forecasts a fossil fuel-dependent future (78% of total energy consumption) for the United States even in 2050. Renewables will account for an increasing share of electricity generation through 2050, but electricity is just one piece of the pie. AEO 2019 projects wind and solar to supply 7% of total primary energy needs in 2050—up from 3% today—despite providing 23% of electric generation in 2050. All renewables (solar, wind, hydroelectric, geothermal and biomass) are expected to meet just 14% of U.S. energy needs, while accounting for 31% of generation by 2050.

The potential for renewable energy in other sectors remains largely untapped. Increasing the use of renewable electricity in transportation and for heat in homes and industry, which make up a significant portion of U.S. energy consumption, could go a long way to reducing emissions and meeting long-term climate goals.

A Massive Decarbonization of the U.S. Economy

Fossil fuels—petroleum, natural gas and coal—continue to dominate energy U.S. consumption. Renewable energy is growing, but too slowly to meet climate goals in the United States and globally. Meanwhile, climate scientists warn that we are running out of time to reduce greenhouse gas emissions. The world has just 11 years to cut emissions by 45%, and must achieve carbon neutrality by 2050 to prevent temperatures from rising more than 1.5 degrees C (2.7 degrees C). This necessitates immediate action and an economy-wide decarbonization program on an unprecedented scale.

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