Energy & Technology
Agricultural Emissions in the United States
The agricultural sector affects the climate system in four distinct, but interrelated, ways outlined below and explored further in the subsequent sections of this overview.
- Greenhouse gas emissions associated with agriculture - Agriculture is directly responsible for 7 percent of total U.S. greenhouse gas emissions, largely from soil management (fertilizer use) and livestock; the agricultural sector is also an end user for electricity and transportation fuels.
- Agriculture and carbon storage - Agriculture affects the global carbon cycle because agricultural practices and land use alter the amount of carbon stored in plant matter and soil, and consequently, the amount of carbon dioxide (CO2) in the atmosphere.
- Energy and product substitution from agriculture - Biomass from the agricultural sector can be used to displace fossil fuels for energy purposes and to make a variety of bio-based products.
- Agriculture and the climate system: beyond greenhouse gases - Agriculture also interacts with the climate system in an important way that is not related to greenhouse gas emissions or storage by changing the amount of heat absorbed or reflected by the earth’s surface.
Although this overview does not aim to address the wide range of observed and projected impacts of climate change on agriculture, it is important to note that agriculture will be affected in a variety of ways as temperatures rise and precipitation patterns change (see Climate Change 101: Science and Impacts). The impacts of climate change on agriculture will vary by crop, across regions, and through time. Since the linkages between climate and agriculture are dynamic, the impacts of the climate on agriculture will in turn alter the way agriculture affects the climate.
Greenhouse Gas Emissions Associated with Agriculture in the United States
Direct greenhouse gas emissions from the U.S. agricultural sector account for 7 percent of total U.S. emissions (see Figure 1). Direct emissions from the U.S. agricultural sector account for 7 percent of total U.S. emissions (see Figure 1). Direct emissions from agriculture include methane (CH4) and nitrous oxide (N2O) emissions from a relatively small number of sources (see Figure 2). Distributing emissions from electricity and transportation among end-use sectors modestly increases the amount of greenhouse gas emissions attributable to the agricultural sector to roughly 7 percent of total U.S.
Figure 1: U.S. Greenhouse Gas Emissions by Economic Sector (2010)
Source: Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010, Table ES-7, 2012. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Direct greenhouse gas emissions from agriculture include methane (CH4) and nitrous oxide (N2O) emissions from a relatively small number of sources (see Figure 2). Distributing emissions from electricity and transportation among end-use sectors modestly increases the amount of greenhouse gas emissions attributable to the agricultural sector to roughly 7 percent of total U.S. emissions.
Agricultural soil management, including the application of nitrogen-based fertilizers, accounts for more than 40 percent of all agricultural emissions. Enteric fermentation, a normal digestive process in animals that produces methane, is the second largest source (nearly 30 percent) of agricultural emissions; beef and dairy cattle account for nearly 95 percent of emissions from enteric fermentation. Livestock manure management accounts for an additional 14 percent of emissions. Other emissions sources, including rice cultivation and the field burning of agricultural residues, account for 6 percent of non-energy related direct greenhouse gas emissions from agriculture.
Energy use is the fourth largest source of emissions, accounting for 10 percent of total agricultural emissions (see Figure 2). Both direct energy use in support of farming activities, such as the electricity used to power irrigation pumps and the liquid fuels for vehicles used in the fields, and indirect energy use, which includes the emissions from the production of commercial fertilizers and other energy-intensive farm inputs, produce emissions.
Figure 2: Emissions from Agriculture by Source (2010)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010, Table 2-12, 2012. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Agriculture and Carbon Storage
Plants, including agricultural crops, play an integral role in the global carbon cycle. The carbon cycle consists of four major stocks of carbon: the atmosphere, the oceans, the terrestrial biosphere (vegetation and soils), and sediments and rocks. Carbon moves from one stock to another at different rates through a variety of pathways. Plants, for example, convert atmospheric CO2 into a usable form of chemical energy, sugar, through photosynthesis. As the plants use the sugar’s energy, some of the carbon is released back into the atmosphere as CO2, and the rest of the carbon is used by the plant to grow new biomass. The carbon embodied by terrestrial plants can then replenish the carbon in soil, for example, through the decomposition of fallen leaves.
The agricultural sector affects carbon storage in two main ways:
- Land use conversion: Converting land from one use to another can result in significant changes to the amount of stored carbon; forests and wetlands generally store more carbon than grasslands, which in turn tend to store more carbon than croplands.
- Land management practices: A variety of land management practices help maintain and increase the amount of stored carbon on agricultural lands. These practices include agroforestry, improved cropping systems, improved nutrient and water management, conservation tillage, water management, and maintenance of perennial crops.
The U.S. Department of Agriculture classifies 62 percent of land in the contiguous 48 states as agricultural and 52 percent of land in all 50 states (see Figure 3).
Figure 3: Land Use in the Contiguous 48 States (2011)
Source: USDA Economic Research Service. Major Land Uses in the Continguous United States, 2007 (2011) http://www.ers.usda.gov/data-products/major-land-uses.aspx#25988 Note: Special use is defined as rural transportation, rural parks and wildlife, defense and industrial, plus miscellaneous farm and other special uses. Other land is unclassified uses such as marshes, swamps, bare rock, deserts, tundra and other uses not estimated, classified, or inventoried.
The U.S. Environmental Protection Agency (EPA) has estimated the annual carbon fluxes associated with land use, land-use change, and forestry for the contiguous 48 states. Land-use practices and land-use change can result in either a net release of carbon stored in the plants and soil (making the system a carbon source) or a net uptake of carbon by the plants and soil (making the system a carbon sink).
For agricultural lands, specifically croplands and grasslands, the annual carbon flux values include changes to the amount of carbon stored in soils due to land management and changes in land use, as well as the CO2 emissions resulting from the application of lime and urea fertilizer. Collectively, agricultural lands in the United States act as a small carbon sink, storing more carbon than they release (see Figure 4). For comparison, forests act as a much larger carbon sink in the United States, storing about 20 times more carbon than the total carbon sink provided by all agricultural lands.
Figure 4: Changes in Carbon Storage of Agricultural Land in 2010
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2009, Table 7-1, 2011. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Based on the emissions measured by the EPA, agricultural land use and land-use change act as a small net sink for greenhouse gas emissions. However, when greenhouse gas emissions (Figure 2) and carbon storage (Figure 4) are totaled, the sector is a net source of greenhouse gas emissions on a CO2-equivalent basis.
Energy and Product Substitution from Agriculture
The agricultural sector is one source of biomass for bio-based products and energy. Bio-based products include a broad range of commercial and industrial items, excluding food and feed, that range from plastics to bedding made completely or in large part from agricultural and forestry products. Agricultural biomass, which can include waste materials or dedicated energy crops, can also be used to produce electricity, heat, and liquid fuels, broadly referred to as bioenergy.
Substituting biomass for fossil fuels in energy production has the potential to reduce greenhouse gas emissions. The combustion of fossil fuels adds to the atmosphere CO2 that has been stored in deep rock formations for millions of years. The combustion of biomass returns the atmospheric CO2 taken up through photosynthesis and converted into new plant material, making bio-based fuels theoretically carbon neutral. However, the full climate impact of bioenergy requires a broader assessment that accounts for the life-cycle emissions associated with the biomass, including land management practices, land use change, conversion processes and associated energy use, and transportation.
In 2011, biomass (including biofuels, biomass from wood and municipal solid waste from biogenic sources, landfill gas, sludge waste, agricultural byproducts and other biomass) provided 4.5 percent of total energy consumed in the United States, or nearly half of all renewable energy (see Figure 5). For more information on biofuels, see Climate TechBook: Biofuels Overview.
Figure 5: U.S. Energy Consumption by Energy Source with Biomass Breakdown, 2011
Source: Energy Information Administration (EIA), Annual Energy Review, Energy Consumption by Energy Sector, (Topic 2.1b – f), Renewable Energy (Topic 10.1). September 2012. http://www.eia.gov/totalenergy/data/annual/index.cfm
Agriculture and the Climate System: Beyond Greenhouse Gases
The interface between terrestrial ecosystems and the climate system encompasses a wide range of complex interactions that includes, but is not limited to, greenhouse gas emissions and carbon storage. Agriculture also affects the amount of solar energy that the land surface absorbs or reflects. The fraction of solar energy reflected by a surface is known as the albedo; bright surfaces like ice and snow that reflect a lot of solar energy have a high albedo, while dark surfaces, like the ocean, have a low albedo and tend to absorb greater amounts of solar energy.
Albedo is important to the climate system because absorbed sunlight warms the surface and is released back into the atmosphere as heat. Darker vegetation and exposed soils tend to absorb more sunlight and, therefore, release more heat into the atmosphere, producing a local warming effect. This warming can play an important role in the overall climate system.
Agricultural land, which includes cropland, managed grassland, and permanent crops, occupies about 40-50 percent of the world’s total land surface. In 2005, non-energy direct greenhouse gas emissions from agriculture accounted for 10-12 percent of total global greenhouse gas emissions from human-made sources. Agriculture accounts for 60 percent of global N2O emissions and 50 percent of CH4 emissions. A combination of population growth and changing diets has led to increased emissions of these gases from the agricultural sector since at least 1990. This increase can be attributed to the increased use of nitrogen-based fertilizers and the increased number of livestock being raised, especially cattle.
Population growth, changing diets, and changing standards of living will continue to affect the amount and type of food demanded. Recent years have also seen greater interest in and demand for dedicated energy crops. These trends have several possible implications on greenhouse gas emissions:
- Increasing land use change to increase the amount of cropland available for food or energy crops will affect carbon storage. The effect of land use change on carbon change will depend on a variety of factors, including previous land use, land management practices, and type of crops grown. An expansion of croplands could result in an overall loss of plant and soil carbon.
- Increasing crop yields will likely require more inputs, such as water and fertilizer, for a given a unit of land. Increasing agricultural inputs will result in higher emissions per unit of agricultural output because more energy will be required to produce the inputs and direct emissions from fertilizer use will increase.
- Rising demand for meat and dairy products will increase methane emissions from enteric fermentation and manure production. The Intergovernmental Panel on Climate Change (IPCC) projects that methane emissions from livestock could increase 60 percent by 2030, depending on whether greenhouse gas-mitigating feeding practices and manure management are used. Larger livestock populations could also result in land use change to create grazing lands.
Growing interest in the lifecycle carbon emissions of food may also change patterns of food production and consumption. Lifecycle emissions arise from agricultural inputs (including water and fertilizer), equipment for cultivating and harvesting crops, and transportation to consumers. Possible outcomes of using lifecycle analysis include more localized production—producing food close to its point of consumption—and using organic farming methods that minimize fertilizer use. Particularly in today’s globalized food market, accounting for life cycle emissions will be crucial in reducing greenhouse gas emissions associated with agriculture and livestock.
Agriculture Sector Mitigation Opportunities
The agricultural sector can contribute to climate change mitigation in a variety of ways. Mitigation efforts can reduce the direct greenhouse gas emissions from agriculture, increase carbon storage, substitute bio-based products and feedstocks for fossil fuels, and reduce the amount of heat absorbed by the earth’s surface. Some of these mitigation opportunities provide relatively straightforward solutions, but others face a variety of challenges, including the accurate measurement of greenhouse gas fluxes.
Mitigation opportunities can be identified from each of the four types of interactions that agriculture has with the climate system. A wide range of options exist, but with different levels of technical feasibility, cost-effectiveness, and measurement certainty. A number of the mitigation options for the agricultural sector, including soil management practices, also bring a variety of co-benefits, such as improved water quality and reduced erosion. To date, a number of policies thought to have climate benefits have been pursued in order to achieve one or more of these co-benefits.
Reduce greenhouse gas emissions
- Reduce greenhouse gas emissions from energy use: Energy-related greenhouse gas emissions from the agricultural sector can be reduced in a number of ways, including the use of more fuel-efficient machinery and the installation of on-site renewable energy systems for electricity.
- More efficient fertilizer use: Increasing the efficiency of nitrogen use reduces the need for additional fertilizer inputs. This can be achieved by fertilizing during the most appropriate period for plant uptake, fertilizing below the soil surface, and balancing nitrogen fertilizers with other nutrients that can stimulate more efficient uptake. These measures can reduce N2O emissions.
- Improved manure management: When manure is held in an oxygen-poor (anaerobic) environment—such as a holding tank—for an extended period of time, bacteria decompose this material and release methane as a byproduct. Reducing the moisture content and the amount of storage time are two options for reducing methane emissions from manure.
- Improved animal feed management : Facilitating the digestive process for livestock—such as using easy-to-digest feed—can reduce methane emissions from enteric fermentation.
- Improved rice cultivation practices: When rice paddies are flooded, the oxygen-poor (anaerobic) environment allows certain bacteria to create methane through a process called methanogenesis. Periodically draining rice paddies can inhibit this process by aerating the soil.
Increase vegetation and soil carbon stocks
- Land-use changes to increase soil carbon: Reforestation and afforestation initiatives can increase the amount of biomass in a given area of land, thereby sequestering carbon in plant material.
- Land management practices that increase soil carbon: A variety of land management practices can be implemented to increase soil carbon. These include the use of high-residue crops, such as sorghum, that produce a large amount of plant matter left in the field after harvest; the reduction or elimination of fallow periods between crops; the efficient use of manures, nitrogen fertilizers, and irrigation; and the use of low- or no-till practices. Importantly, local conditions will determine the best practices for a given location, and all of these practices do not increase carbon storage in all locations.
Substitute biomass feedstocks and products for fossil fuels
The use of bio-based products as fuels and product substitutes has the potential to reduce fossil fuel combustion and associated greenhouse gas emissions. However, careful life-cycle analysis is necessary to ensure that the substitution yields a net reduction of greenhouse gas emissions.
Non-greenhouse gas related climate interactions
Less attention has been given to mitigation options that do not affect greenhouse gas emissions, but a 2009 study did suggest that crops could be bred or genetically engineered to be more reflective to help reduce warming by reflecting more solar energy from the land surface.
Uncertainty and Mitigation Potential
Key aspects of the agricultural sector’s climate interactions involve complex biological processes. These processes continue to be studied by scientists to fill gaps in our understanding of how these processes work and to reduce the uncertainty associated with current data on greenhouse gas fluxes from agricultural systems. Although the agricultural sector is sometimes identified as having a potentially large role in mitigating climate change, especially by increasing carbon storage in developing countries, further scientific advances will be necessary for the agricultural sector to achieve its full mitigation potential.
Estimates of agriculture’s mitigation potential in the United States vary for different practices. For example, emissions of N2O could be reduced by 30 to 40 percent with improved fertilization practices. Methane (CH4) emissions could be reduced by 20 to 40 percent by improving livestock and methane management. Croplands could store up to 83 MMT of carbon per year, equivalent to about 1 percent of total U.S. greenhouse gas emissions, through widespread adoption of best management practices.
Our work at C2ES covers a wide variety of agriculture-related topics, including climate policy and how it interacts with the sector, low-carbon technology status and outlook, and agricultural practice innovation. We track and inform policymaking at the state, federal, and regional levels, collaborate on papers and briefs, blog about current issues, and educate policymakers and others with up-to-date online resources about important developments in the sector and those relevant to the sector.
Tracking policy - We track policy progress at the state, federal, and international level. Our state maps provide information about which states have implemented policies that promote the use of bio-based products and feedstocks as substitutes for fossil fuels. We also track and analyze policy at the national level, including what is happening in Congressand the Executive Branch.
Climate Compass Blog - Our blog includes posts about current issues related to agriculture, and you can view relevant posts here.
Climate Techbook - The agriculture section of the Climate Techbook provides an overview of the sector as well as briefs describing technologies and practices related to agriculture and GHG emissions. Below is a list of the Techbook factsheets that pertain to agriculture.
|Anaerobic Digesters||Cellulosic Ethanol|
Intergovernmental Panel on Climate Change (IPCC)
- Climate Change 2007: Mitigation, Contribution of Working Group III to the Fourth Assessment Report, 2007
- Climate Change 2007: Impacts, Adaptation, and Vulnerability, Contribution of Working Group II to the Fourth Assessment Report, 2007
U.S. Global Change Research Program
U.S. Climate Change Science Program
- The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in the United States, 2008
U.S. Department of Agriculture
U.S Environmental Protection Agency (EPA)
Related Business Environmental Leadership Council (BELC) Companies
|DTE Energy||PG&E Corporation|
 For more information, see Intergovernmental Panel on Climate Change (IPCC). “Food, fibre and forest products.” In Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report. Cambridge: Cambridge University Press, 2007. http://www.ipcc.ch/pdf/assessment-report/ar4/wg2/ar4-wg2-chapter5.pdf
 To calculate this value, two datasets are used. Emissions from energy use come from: U.S. Department of Agriculture (USDA), U.S. Agriculture and Forestry Greenhouse Gas Inventory: 1990-2008, 2011. http://www.usda.gov/oce/climate_change/AFGGInventory1990_2008.htm. Emissions from non-energy use come from: Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2009, 2011. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
 EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2007, 2009. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
 One million metric ton is equal to one teragram. For reference, one million metric ton of CO2e is equal to 280,000 new cars each being driven 12,500 miles or 90 minutes of U.S. energy consumption or 1 day of U.S. energy emissions from lighting buildings, see U.S. Department of Energy (DOE). 2008 Buildings Energy Data Book. Prepared for U.S. Department of Energy Office of Energy Efficiency and Renewable Energy by D&R International, Ltd. Silver Spring, MD, 2008. http://buildingsdatabook.eren.doe.gov/.
 Chapin, F. S., P.A. Matson, H. A. Mooney. Principles of Terrestrial Ecosystem Ecology. New York: Springer Science + Business Media, Inc. 2002.
 Richards, K. R., R. N. Sampson, and S. Brown. Agricultural & Forestlands: U.S. Carbon Policy Strategies. Prepared for the Pew Center on Global Climate Change, 2006. /global-warming-in-depth/all_reports/ag_forestlands
 EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2009, 2011. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
 The emissions of a gas, by weight, multiplied by its "global warming potential." Global warming potential is a system of multipliers devised to enable warming effects of different gases to be compared. The cumulative warming effect, over a specified time period, of an emission of a mass unit of CO2 is assigned the value of 1. Effects of emissions of a mass unit of non-CO2 greenhouse gases are estimated as multiples. For example, over the next 100 years, a gram of methane (CH4) in the atmosphere is currently estimated as having 23 times the warming effect as a gram of carbon dioxide; methane's 100-year GWP is thus 23. Estimates of GWP vary depending on the time-scale considered (e.g., 20-, 50-, or 100-year GWP) because the effects of some greenhouse gases are more persistent than others.
 Department of Agriculture. Final Rule. “Designation of Biobased Items for Federal Procurement,” Federal Register 71, no. 51 (16 March 2006): 13686. http://www.epa.gov/EPAFR-CONTENTS/2006/March/Day-16/contents.htm
 DOE, Energy Efficiency and Renewable Energy. “Biomass FAQs.” http://www1.eere.energy.gov/biomass/printable_versions/biomass_basics_fa.... Updated 16 January 2009.
 Paustian, K., J. M. Antle, J. Sheehan, and E. A. Paul. Agriculture’s Role in Greenhouse Gas Mitigation. Prepared for the Pew Center on Global Climate Change, 2006. /global-warming-in-depth/all_reports/agriculture_s_role_mitigation
 Chapin et al. 2002.
 Intergovernmental Panel on Climate Change (IPCC). “Agriculture.” In Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report. Cambridge University Press: Cambridge, 2007. http://www.ipcc.ch/ipccreports/ar4-wg3.htm.
 IPCC 2007.
 IPCC 2007.
 Ridgwell, A., J. S. Singarayer, A. M. Hetherington, and P. J. Valdes. “Tackling Regional Climate Change by Leaf Albedo Bio-Geoengineering” Current Biology 19 (2). (2009).
 IPCC 2007.
 Paustian et al. 2006.
Residential and Commercial Emissions in the United States
Greenhouse gas emissions data can be reported either by economic sector, which includes electric power generation as a separate sector, or by end-use sector, which distributes the emissions from electricity generation across the economic sectors where the electricity is used. The residential and commercial sectors are large consumers of electricity, so it is appropriate to address both emissions from direct sources and electricity end-use for these sectors.
Direct emissions from the residential and commercial sectors respectively account for 5.6 and 5.4 percent of total greenhouse gas emissions in the United States (see Figure 1).
Figure 1: U.S. Greenhouse Gas Emissions by Economic Sector (2010)
Source: Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010, Table ES-7, 2012. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Ninety-three percent of the residential sector’s direct greenhouse gas emissions come from the combustion of fossil fuels, primarily for heating and cooking. Less than 7 percent of direct emissions come from the substitution of ozone depleting substances and other minor sources. In the commercial sector, nearly 60 percent of direct emissions come from on-site fossil fuel combustion. Other sources of direct commercial emissions include landfills, wastewater treatment, the substitution of ozone depleting substances, and other minor sources (see Figure 2).
Figure 2: Direct Emissions of Greenhouse Gases in the U.S. Commercial Sector (2010)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010, Table 2-12, 2012. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
U.S. electricity sales are split among the residential, commercial, and industrial sectors, with the residential and commercial sectors accounting for 39 and 35 percent of sales, respectively.(see Figure 3).
Figure 3: Retail Sales of Electricity to Ultimate Customers, Total by End-Use Sector(2010)
Source: U.S. Energy Information Administration (EIA), Electric Power Monthly, Table 5.1, September 2012. http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_01
When emissions from electricity generation are attributed to end-use sectors, the residential and commercial sectors are responsible for 18 and 17 percent of total U.S. emissions, respectively (see Figure 4). Electricity-related geenhouse gas emissions account for 70 percent of total residential emissions and 67 percent of total commercial emissions.
Figure 4: Direct and Electricity-Related Greenhouse Gas Emissions by End-Use Sector (2010)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010, Table 2-14, 2012. http://epa.gov/climatechange/emissions/usinventoryreport.html
Buildings: Key Drivers of Residential and Commercial Emissions
Emissions from the residential and commercial sectors, including both direct emissions and end-use electricity consumption, can largely be traced to energy use in buildings. Diverse factors determine how much energy buildings consume; these include the size of the building, the design and materials used, and the kinds of lighting and appliances installed.
Building Trends for Greenhouse Gas Emissions, Size, and Energy Use Intensity
Total greenhouse gas emissions, including both direct and end-use emissions, from residential and commercial buildings in the United States accounted for about 40 percent of total U.S. carbon dioxide (CO2) emissions and 7 percent of global CO2 emissions in 2010. Greenhouse gas emissions attributable to buildings have been steadily increasing; in recent decades, emissions from the on-site combustion of fossil fuels have remained relatively steady while electricity consumption has increased (see Figure 5).
Figure 5: CO2 Emissions for U.S. Residential and Commercial Buildings
Source: DOE, 2011 Buildings Energy Data Book, Section 1.4.1, March 2012. http://buildingsdatabook.eren.doe.gov/.
Greenhouse gas emissions from buildings have increased as building size has increased. In the residential sector, the number of homes and the size of these homes have been increasing over time. As homes grow larger, more energy is generally needed for heating, cooling, and lighting. Over time, homes also have added more appliances and consumer electronics.
Even as residential energy use has increased overall, the amount of energy used per square foot of residential buildings, a measure of energy intensity, has decreased, due to the increased efficiency of consumer appliances and recent regional building trends, such as improved residential building energy codes. (see Figure 6) Energy intensity indicators are used to compare energy use in buildings through time. These indicators are used to examine energy-use trends in the different types of buildings in the residential and commercial sectors. They show how the amount of energy used per unit of output or activity has changed over time. Using less energy per unit of output reduces energy intensity; using more energy per unit increases the energy intensity. A weather factor is used to take into account the impacts of annual weather variation on energy consumption.
Figure 6: Residential Energy Use, Energy Use Intensity, and Energy Use Factors
Source: DOE, Energy Efficiency and Renewable Energy (EERE), “Trend Data: Residential Buildings Sector,” updated 14 May 2008. Note: The indicators on this chart are based on an Energy Use Index that is calibrated to 1985 levels.
In the commercial sector, both energy use and energy intensity have generally increased in recent decades. The general rise in energy intensity since 1985 has shown, however, a modest decline in recent years (see Figure 7). Commercial buildings have shown steady growth in size in recent years, as reflected by the increase in average floor space through time.
Figure 7: Commercial Energy Use, Energy Use Intensity, and Energy Use Factors
Source: DOE, EERE, “Trend Data: Commercial Buildings Sector,” updated 14 May 2008. Note: The indicators on this chart are based on an Energy Use Index that is calibrated to 1985 levels.
Energy End Use in Buildings
In the residential sector, space heating and cooling accounts for 43 percent of total primary energy use. Therefore, total energy demand from this sector is fairly sensitive to weather and varies considerably by region in a single year and over time in a given location. Other significant end uses of energy in the residential sector include water heating, lighting, refrigeration, electronics, wet cleaning and cooking (see Figure 8).
Figure 8: Residential Buildings Primary Energy End Use Splits (2010)
Source: DOE, 2011 Buildings Energy Data Book, Section 2.1.5, March 2012. http://buildingsdatabook.eren.doe.gov/.
In the commercial sector, space heating, ventilation and space cooling accounts for 43 percent of total primary energy use and lighting accounts for one-fifth. Refrigeration, water heating, electronics, computers, and cooking also use significant quantities of energy in the commercial sector (see Figure 9). The commercial sector encompasses a variety of different building types, including schools, restaurants, hotels, office buildings, banks, and stadiums. Different building types have very different energy needs and energy intensities.
Figure 9: Commercial Buildings Primary Energy End Use Splits (2010)
Source: DOE, 2011 Buildings Energy Data Book, Section 3.1.4, March 2012. http://buildingsdatabook.eren.doe.gov/.
For more information on buildings, see Climate TechBook: Buildings Overview.
On a global scale, energy use and greenhouse gas emissions data for the residential and commercial sectors can be difficult to quantify. Globally, the quantity of energy use attributed to buildings, as a proxy for the residential and commercial sectors, varies by country and climate. Energy consumption levels and primary fuel types of buildings in a specific country depend on economic and social indicators, such as national income and level of urbanization. Some key trends observed include:
- In general, developed countries consume more energy per capita than developing countries; developed countries tend to have bigger building sizes for comparable building functions, and they tend to use more appliances and other energy-using equipment than developing countries.
- Urban areas in developed countries use less energy per capita than rural areas; this is because of , district heating in higher-density areas, decreased transportation-related energy consumption, and other factors. However, the opposite effect can be seen in many developing countries where energy useis higher in cities than in rural areas because residents often have higher incomes and greater access to energy services.
- In some countries, grid-connected power remains unavailable or unaffordable for households. In these areas, which include large portions of sub-Saharan Africa, as well as parts of India and China, biomass and coal are often the primary fuels for heating and cooking. This has important implications both for global greenhouse gas emissions and development goals, including:
- Global data on GHG emissions often do not account for emissions from biomass that is collected and burned locally. Household-level combustion of biomass and coal are estimated to account for about 10 percent of global energy use and 13 percent of direct carbon emissions.
- The use of woody biomass, unless sustainably managed, can lead to widespread deforestation. Forests play important roles as local resources and as global carbon sinks.
- Indoor combustion of biomass and coal is a significant health concern; high rates of respiratory illness have been documented in areas that predominantly use biomass or coal for heating and cooking. Reducing GHG emissions through appropriate technology advances, energy efficiency improvements, and the use of alternative fuels will have important health co-benefits.
- Commercial energy intensity in developed countries, the energy use per dollar of income as measured by GDP, is currently almost twice that of developing countries. Commercial buildings’ energy consumption is projected to be the fastest-growing end-use sector for energy in developing countries. Economic growth in developing countries will likely lead to increased global demand for energy, and, without energy efficient products and practices, could lead to substantially higher global energy consumption and GHG emissions.
Residential and Commercial Sector Mitigation Opportunities
Reducing emissions from the residential and commercial sectors can be done in a variety of ways and on a number of scales:
- Addressing landfills
Landfill waste can be reduced (thereby lowering the volume of decomposing material that produces methane, a powerful greenhouse gas) or harnessed as an energy source. Methane-capture systems in landfills prevent greenhouse gases from being released into the atmosphere.
- Reducing embodied energy in building materials
Embodied energy refers to the energy used to extract, manufacture, transport, install, and dispose of building materials. Choosing low carbon materials—such as local materials, materials that sequester carbon, and products manufactured at efficient industrial facilities reduces emissions.
- Improving building design and construction
Building designs and construction techniques can maximize the use of natural light and ventilation, which minimizes the need for artificial light and HVAC equipment. Using building shading techniques, installing windows to minimize or maximize solar intake (depending on the region), and properly insulating against unwanted air flow between indoor and outdoor spaces improve energy use. Many other options are available and “green” builders are continually creating innovative ways to maximize efficiency in building spaces.
- Increasing end-use energy efficiency
Using efficient appliances can minimize energy consumption and concomitant GHG emissions from electricity and direct fossil fuel combustion.
- Adopting new energy-use habits
Following conservation guidelines and making personal choices to reduce the use of appliances, artificial lighting, and HVAC equipment (for example, by shutting them off when they are not in use) will reduce energy use. Also, opting for smaller residential and commercial spaces can reduce the energy needed for building construction and operation.
Our work at C2ES focuses on all types of commercial and residential building topics, including policy and low-carbon building technologies. We track state and federal building and efficiency policies, blog about building-related energy issues, and create and maintain a current online resource of building technologies.
Tracking Policy – Our state maps provide useful overviews of state policies supporting energy-related building codes and standards, such as Commercial Building Energy Codes. We also track and analyze policy at the national level, including what is happening in Congress and the Executive Branch.
Research – We produce research, including reports, white papers, and briefs, on climate and clean energy issues.
Climate Compass Blog – On our blog we inlclude posts related to the residential and commercial sectors. See our blog posts.
Climate Techbook – The Residential & Commercial section of the Climate Techbook provides an overview of these sectors and decriptions of technologies related to improving building energy efficiency. Below is a list of all the buildings-related Techbook factsheets.
|Residential & Commercial Overview||Natural Gas|
|Buildings Overview||Residential End-Use Efficiency|
|Building Envelope||Smart Grid|
U.S. Department of Energy (DOE)
U.S. Energy Information Administration
U.S. Environmental Protection Agency (EPA)
Related Business Environmental Leadership Council (BELC) Companies
|Bank of America||HP|
|Duke Energy||Johnson Controls, Inc.|
 Hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs) are used as alternatives to several classes of ozone-depleting substances (ODSs) that are being phased out under the terms of the Montreal Protocol and the Clean Air Act Amendments of 1990. Ozone depleting substances—chlorofluorocarbons (CFCs), halons, carbon tetrachloride, methyl chloroform, and hydrochlorofluorocarbons (HCFCs)—are used in a variety of industrial applications including refrigeration and air conditioning equipment, solvent cleaning, foam production, sterilization, fire extinguishing, and aerosols. Although HFCs and PFCs are not harmful to the stratospheric ozone layer, they are potent greenhouse gases. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010, 2012. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
 Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2009, 2011. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
 U.S. Department of Energy (DOE). 2011 Buildings Energy Data Book. Section 1.4.1. Prepared for the DOE Office of Energy Efficiency and Renewable Energy by D&R International, 2012. http://buildingsdatabook.eren.doe.gov/.
 One million metric ton is equal to one teragram. For reference, one million metric ton of CO2e is equal to 280,000 new cars each being driven 12,500 miles or 90 minutes of U.S. energy consumption or 1 day of U.S. energy emissions from lighting buildings, see DOE, 2010 Buildings Energy Data Book, 2011.
 DOE, Energy Efficiency Trends in Residential and Commercial Buildings, August 2010. http://apps1.eere.energy.gov/buildings/publications/pdfs/corporate/build... U.S. Census Bureau, Housing Vacancies and Homeownership, http://www.census.gov/hhes/www/housing/hvs/historic/index.html.
 DOE 2010
 The weather factor is included to show variations in weather conditions that may have had an impact on energy use in a given year. Data that is weather-adjusted shows how the indicator would have performed under “normal” weather conditions; for example, data in years with extreme weather (such as unusually cool weather that would increase energy consumption for indoor heating) is adjusted to show performance without the influence of weather. As the figure indicates, weather conditions have remained fairly stable while other indicators have risen; this indicates that weather conditions do not have as much of an impact on energy use as other factors.
 International Energy Agency (IEA). World Energy Outlook, 2010 Edition. Paris: IEA, 2010. http://www.worldenergyoutlook.org/2010.asp.UNEP, Urban Density and Transport-related Energy Consumption, http://maps.grida.no/go/graphic/urban-density-and-transport-related-energy-consumption.
 Smith, K. R. and E. Haigler. “Co-Benefits of Climate Mitigation and Health Protection in Energy Systems: Scoping Methods.” Annual Review of Public Health 29 (2008): 11-25.
Electricity Emissions in the United States
The electricity sector is responsible for about one-third of all U.S. greenhouse gas emissions (see Figure 1) and 38 percent of total carbon dioxide (CO2) emissions.
Figure 1: U.S. Greenhouse Gas Emissions by Sector (2012)
Source: U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table ES-7, 2014. http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.html.
A snapshot of the fuels used in the United States for electricity shows that coal-fueled generation provides a little more than 39 percent of all electricity, down from nearly 50 percent in 2006. Filling this gap, natural gas now provides more than a quarter of all electricity, and renewables, including wind and large hydroelectric power, provide about 13 percent. Nuclear power continues to provide around one-fifth of net generation (see Figure 2).
Figure 2: U.S. Net Electricity Generation by Energy Source (2013)
Source: Energy Information Administration (EIA), Monthly Energy Review, May 2014, Table 7.2a, 2014. http://www.eia.gov/totalenergy/data/monthly/#electricity.
The greenhouse gas emissions associated with different sources of electricity vary significantly, depending on the carbon content of the fuel being used. Carbon dioxide makes up almost 99 percent of the greenhouse gas emissions from electricity generation, and carbon dioxide emissions from coal combustion account for almost 80 percent of total electricity generation-related emissions. The combustion of natural gas and petroleum account for most of the remaining carbon dioxide emissions (see Figure 3). Electricity generation-related greenhouse gas emissions have decreased more than 16 percent since 2007.
Figure 3: Electricity Generation-Related GHG Emissions (2012)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table 2-13, 2014. http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.html.
Key Generation Technologies in Use
Coal-fueled electricity is generated almost exclusively by pulverized coal (PC) power plants. These plants crush coal into a fine powder and then burn it in a boiler to heat water and produce steam. The steam is then used to spin one or more turbines to generate electricity. Natural gas, oil or biomass can be used as a fuel in conjunction with steam turbine technology. Similarly, in a nuclear reactor, fission is used to heat water, which directly or indirectly produces steam to drive a turbine and generate electricity. Large coal and nuclear steam units on the order of 500 – 1000 MW or greater are typically used to provide baseload  generation, meaning that they supply electricity nearly continuously.
Figure 4: Steam Turbine
Combustion (or single-cycle) turbines are another widespread power generation technology. In a combustion turbine, compressed air and burning fuel (diesel, natural gas, propane, kerosene, biogas, etc) are ignited in a combustion chamber. The resulting high temperature, high velocity gas flow is directed at turbine blades that spin the turbine and common shaft, which drives the air compressor and the electric power generator. Combustion turbine plants are typically operated to meet peak  load demand, as they are able to be switched on relatively quickly. Newer turbines are able to be switched on and off frequently, so they can provide a firm backup to intermittent wind and solar on the power grid if needed. The typical size is 100 – 400 MW.
Figure 5: Combustion Turbine
Source: Duke Energy. http://www.duke-energy.com/about-energy/generating-electricity/oil-gas-f....
A basic combined cycle power plant combines a single gas (combustion) turbine and a single steam unit all in one, although there are other possible configurations. As combustion turbines became more advanced in the 1950s, they began to operate at ever higher temperatures, which created a significant amount of exhaust heat. In a combined-cycle power plant, this waste heat is captured and used to boil water for a steam turbine generator, thereby creating additional generation capacity. Historically, they have been used as intermediate  power plants, generally supporting higher electricity use during daytime hours. However, newer natural gas combined cycle plants are now providing baseload support.
Figure 6: Combined-Cycle Turbine
Source: Global-Greenhouse-Warming.com. http://www.global-greenhouse-warming.com/gas-vs-coal.html.
The industrial sector accounts for 26 percent of U.S. electricity sales, with the residential and commercial sector evenly sharing the remainder. (see Figure 7).
Figure 7: Retail Sales of Electricity to Ultimate Customers, Total by End Use Sector (2013)
Source: EIA, Electric Power Monthly, Table 5.1, May 29, 2014. http://www.eia.doe.gov/cneaf/electricity/epm/table5_1.html.
The primary end uses of electricity vary by sector. In the residential sector, space heating, water heating, space cooling and lighting together account for more than half of household electricity use (see Figure 8). In the commercial sector, lighting is the largest electricity end use (see Figure 9). In the manufacturing sector, half of all electricity use is for powering electric motors (see Figure 10).
Figure 8: Residential Electricity Consumption by End Use (2010)
Source: DOE, Buildings Energy Data Book, Table 2.1.5, March 2012. http://buildingsdatabook.eren.doe.gov/ChapterIntro2.aspx.
Figure 9: Commercial Electricity Consumption by End Use (2010)
Source: DOE, Buildings Energy Data Book, Table 3.1.5, March 2012. http://buildingsdatabook.eren.doe.gov/ChapterIntro3.aspx.
Figure 10: Manufacturing Electricity Consumption by End Use (2006)
Source: EIA, Manufacturing Energy Consumption Survey (MECS), Table 5.2, 2006. http://www.eia.doe.gov/emeu/mecs/.
Since 1949, U.S. electricity generation has grown dramatically, with an average annual growth rate of 4.2 percent (see Figure 11). Since 2000, however, U.S. electricity generation has grown at an average rate of less than 1 percent. During this time, generation from natural gas has increased at an average annual rate of 4.9 percent, and non-hydro renewable generation has increased at an average annual growth rate of 9.2 percent. Coal generation has decreased at an average annual rate of 1.6 percent, and in 2013 fell below the level generated in 1990.
Figure 11: U.S. Net Electricity Generation by Source (1949-2013)
Source: EIA, Total Energy, Electricity Net Generation, 2014. http://www.eia.gov/totalenergy/data/monthly/index.cfm#electricity.
From 1990 to 2013, U.S. electricity generation-related greenhouse gas emissions grew an average of 0.5 percent per year, with a general decrease in annual emissions over the past several years (see Figure 12). During this time, the proportion of electricity generation-related greenhouse gas emissions from coal combustion, which peaked in 1996 at around 85 percent, has fallen to 77 percent in 2013. The share of emissions from natural gas combustion has grown from around 9 percent in 1990 to just over 21 percent in 2013, and the share of emissions from petroleum has fallen from around 5 percent to a little more than 1 percent over the same period.
From 1990 to 2013, CO2 emissions from electricity generation, electricity generation, and real gross domestic product (GDP) grew at annual average rates of 0.5, 1.3, and 2.5 percent, respectively (see Figure 13). This illustrates that the U.S. economy grew less electricity-intensive per value of output while the electricity generation also became less carbon intensive over this period.
Figure 12: U.S. Electricity Generation-Related Greenhouse Gas Emissions (1990-2012)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table 2-13, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
Figure 13: Relative Growth of Electricity Generation, CO2 Emissions from Electricity Generation, and GDP
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2012, Table 2-13, 2014; EIA, Total Energy, Table 7.2a, 2014. http://www.eia.gov/totalenergy/data/annual/index.cfm#electricity; Bureau of Economic Analysis, Gross Domestic Product, http://www.bea.gov/national/index.htm.
Globally, CO2 is the most abundant anthropogenic greenhouse gas, accounting for 76 percent of total anthropogenic greenhouse gas emissions in 2008; the CO2 emissions from fossil fuel use alone account for 62 percent of total greenhouse gas emissions. ,  Electricity generation is by far the largest single source of CO2 emissions (see Figure 14).
Figure 14: Sources of Global CO2 Emissions (1970-2004, Direct Emissions by Sector Only)
Source: Intergovernmental Panel on Climate Change (IPCC), "Introduction." In Mitigation of Climate Change. Contribution of Working Group III to the Fourth Assessment Report. Cambridge: Cambridge University Press, 2007. Figure 1.2. http://www.ipcc.ch/ipccreports/ar4-wg3.htm
Notes: (1) Including fuel wood at 10% net contribution, large-scale biomass burning averaged data for 1997–2002, including decomposition and peat fires, excluding fossil fuel fires; (2) other domestic surface transport, non-energetic use of fuels, cement production, and venting/flaring of gas from oil production; (3) including aviation and marine transport.
The generation profile of global electricity production is similar to that of the United States, with coal being the largest energy source for electricity production (see Figure 15). Globally, 5.1 percent of electricity is generated by oil, whereas in the United States oil makes up less than 1 percent. Also, hydropower makes up a larger share of global electricity generation, while the United States gets a greater proportion of its electric power from nuclear. The United States contributes more than one-fifth of global carbon dioxide emissions from electricity and heat production; China and the United States are the largest single emitters (see Figure 16).
Figure 15: World Electricity Generation by Fuel (2011)
Source: Energy Information Administration (EIA), International Energy Statistics, 2014.
Notes: Other includes geothermal, solar, wind, combustible renewables & waste, and heat.
Figure 16: CO2 Emissions from Fossil Fuel Combustion for Electricity and Heat (2011)
Source: IEA, CO2 from Fossil Fuel Combustion 2013. Paris: IEA, 2013. http://www.iea.org/Textbase/publications/free_new_Desc.asp?PUBS_ID=1825.
Electricity Sector Mitigation Opportunities
In general terms, greenhouse gas emission reductions from the electric power sector can be achieved through efficiency (i.e., eliminating waste), conservation (i.e., reducing the amount of electricity generated), switching fuel sources (i.e., from coal to lower-emitting natural gas), and by incorporating low- and zero-carbon electricity generation technologies (i.e., reducing the emissions associated with electricity generation), such as renewable energy, carbon capture and storage, and nuclear power.
Many studies have analyzed the most cost-effective mix of emission-reduction options. Some of the most widely cited studies include:
- Electric Power Research Institute (EPRI), “The Full Portfolio,” see http://mydocs.epri.com/docs/CorporateDocuments/AboutEPRI/DiscussionPaper2007.pdf.
- Intergovernmental Panel on Climate Change, “Special Report on Renewable Energy Sources and Climate Change Mitigation,” see http://srren.ipcc-wg3.de.
- International Energy Agency (IEA), “Energy Technologies for a Low-Carbon Future: Insights from Energy Technology Perspective 2008,” see http://www.scribd.com/doc/5534059/IEA-Energy-Technologies-for-a-Low-Carbon-Future.
- Google’s Clean Energy 2030 Plan, see http://knol.google.com/k/-/-/15x31uzlqeo5n/1#.
Over the past 20 years U.S. electricity generation has become less carbon intensive, and the U.S. economy has grown less electricity-intensive. Further mitigating greenhouse gas emissions from electricity generation will require a comprehensive approach, including lower-, low- and zero-carbon electricity generation technologies, incorporating renewable energy, switching to lower-emitting fuels, coal or gas with carbon capture and storage, and nuclear power, as well as energy efficiency and conservation. Several types of policies can be employed to promote these mitigation techniques, including emissions pricing (e.g. carbon tax or cap and trade), electricity portfolio standards (also known as clean energy standards), emission performance standards, financial incentives for clean energy deployment and energy efficiency, and research and development to support innovative technologies.
Our work at C2ES covers all types of electricity-related topics, including policy and regulation, low-carbon technology status and outlook, and technology innovation. We track and inform policymaking at the state, federal, and regional levels, collaborate on research for papers and briefs, blog about current energy issues, and educate policymakers and others with up-to-date online resources about important low-carbon technologies.
Tracking policy - We track policy progress at the state, federal, and international level. Our state maps provide information about which states have implemented policies that promote low-carbon electricity technologies and energy efficiency. We also track and analyze policy at the national level, including what is happening in Congress and the Executive Branch.
Research - We produce research, including reports, white papers, and briefs, on climate and clean energy issues. For example, our 2005 report titled The U.S. Electric Power Sector and Climate Change Mitigation is a comprehensive look at reducing greenhouse gas emissions from the electricity sector.
Climate Compass Blog - Our blog includes posts about current issues related to electricity, and you can view relevant posts here.
Climate Techbook - The Climate Techbook provides briefs describing technologies related to electricity generation and energy efficiency. Below is a list of the Techbook factsheets that pertain to electricity.
International Energy Agency (IEA)
U.S. Department of Energy (DOE)
U.S. Energy Information Administration (EIA)
U.S Environmental Protection Agency (EPA)
Related Business Environmental Leadership Council (BELC) Companies
 Baseload generation describes electric power plants that typically run all day and night, seven days a week.
 Peak generation describes electric power plants that run only during times of the highest demand. For example, high demand can occur in the morning when many consumers are waking up and switching on electric appliances or on hot summer afternoons when many air conditioners are running simultaneously.
 Intermediate generation describes electric power plants that typically run only during daytime hours to support higher use of electrical appliances, computers, lighting and so on.
 International Energy Agency (IEA), CO2 Emissions From Fuel Combustion (2011). Section III, Figure 1, p III.4.
Industrial Emissions in the United States
Greenhouse gas emissions data can be reported either by economic sector, which includes electric power generation as a separate sector, or by end-use sector, which distributes the emissions from electricity generation across the economic sectors where the electricity is used. The industrial sector encompasses a wide range of activities (manufacturing, agriculture, mining and construction), including all facilities and equipment used for producing, processing, or assembling goods. Greenhouse gas emissions are produced from diverse processes, including the combustion of fossil fuels for heat and power, non-energy use of fossil fuels, and numerous industrial processes. The industrial sector is a large consumer of centrally generated electricity (26 percent of total U.S. electricity sales), so it is appropriate to address both emissions from direct sources and electricity end use for this sector. When electric power sector emissions are assigned to the end-use sectors that consume the electricity, the industrial sector accounts for 28 percent of total U.S. greenhouse gas emissions.
Direct emissions from the industrial sector account for 20 percent of total greenhouse gas emissions in the United States (see Figure 1).
Figure 1: U.S. Greenhouse Gas Emissions by Economic Sector (2012)
Source: Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table ES-7, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Emissions from the industrial sector come from fossil fuel combustion from manufacturing facilities (57 percent) and from non-energy use of fuels and industrial processes (43 percent). For example, heating iron ore to produce iron directly releases carbon dioxide (CO2). Similarly, the cement manufacturing process requires heating limestone, which also results in the release of CO2.
In addition to on-site fossil fuel combustion, the main sources of industrial emissions in the United States (Figure 2) include: natural gas systems (13 percent), the non-energy use of fuels (7 percent), coal mining (4 percent), iron and steel production (4 percent), cement production (3 percent), petroleum systems (2 percent), and a variety of other sources (9 percent). Industrial process emissions, which excludes on-site fossil fuel combustion, mobile combustion, natural gas systems and non-energy use of fuels, account for 5 percent of total U.S. greenhouse gas emissions.
Figure 2: Direct Emissions of Greenhouse Gases from the U.S. Industrial Sector (2012)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table 2-12, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Industrial process emissions include numerous greenhouse gases, including several gases with high global warming potentials, like hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Global warming potential (GWP) is a metric used to compare the warming effects of different gases. Over a 100-year time horizon, carbon dioxide (CO2) is assumed to have a GWP of one. In comparison, SF6 has a GWP of 23,900, which means that over 100 years one ton of SF6 will have the same effect as 23,900 tons of CO2 (see Table 1).
The industrial sector is responsible for 25 percent of total non-CO2 emissions, specifically 40 percent of total U.S. methane (CH4), 7 percent of nitrous oxide (N2O), and 19 percent of other (HFCs, PFCs and SF6) emissions.
Table 1: Global Warming Potentials for 100-year Time Horizon
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table ES-1, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
Between 1990 and 2012, total industrial process emissions increased a little less than 6 percent, as emission decreases from some sources have been offset by increases from other sources. Notably, HFCs have increased more than 300 percent during this time period as a result of phasing out ozone depleting substances, such as chlorofluorocarbons (CFCs) (see Figure 3). Also, the economic downturn and slow recovery (2008 – 12) has reduced CO2 emissions from cement production more than 23 percent below their 2006 peak.
Figure 3: Industrial Process Emissions by Greenhouse Gas Type in Million Metric Tons of CO2e
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table 2-6, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
U.S. electricity sales are split among the residential, commercial, and industrial sectors, with the industrial sector accounting for almost 26 percent of sales (see Figure 4).
Figure 4: Retail Sales of Electricity to Ultimate Customers, Total by End-Use Sector (2012)
Source: U.S. Energy Information Administration (EIA), Electric Power Monthly, Table 5.1, September 2014. http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_01
When greenhouse gas emissions from electricity generation are distributed across the end-use sectors, the industrial sector is the second largest source of greenhouse gas emissions, responsible for almost 28 percent of total U.S. emissions (see Figure 5). Emissions from the use of electricity generated off-site (“electricity-related emissions” in the graph below) are also called indirect emissions to distinguish them from the direct emissions released on site.
Figure 5: Direct and Electricity-related Greenhouse Gas Emissions by End-Use Sector (2012)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table 2-14, 2014. http://epa.gov/climatechange/emissions/usinventoryreport.html
Relative to the residential and commercial sectors, a smaller percentage of the industrial sector’s greenhouse gas emissions come from electricity use. The industrial sector relies less on purchased electricity in part because of the on-site production of heat and power, also known as cogeneration or combined heat and power (CHP).
Industrial Emission Sources and Types
The industrial sector encompasses a diverse collection of businesses that have a variety of energy and feedstock needs to create products that range from paper to gasoline to pharmaceuticals. While greenhouse gas emissions from the electricity sector depend largely on the type of fuel used, and emissions from the residential and commercial sectors come largely from buildings, similar generalizations cannot be made about the industrial sector. Examining industrial emissions on an industry-by-industry basis shows that the magnitude of emissions associated with different industries varies significantly (see Figure 6).
Figure 6: Greenhouse gas Emissions for Key Industrial Sub-sectors in Million Metric Tons (MMT) of CO2e (2002)
Source: EPA, Quantifying Greenhouse Gas Emissions from Key Industrial Sectors in the United States, Working Draft, Table 1-3, 2008. http://www.epa.gov/ispd/
Figure 6 also shows the relative importance of different types of emissions to individual industries. For example, five industries (oil and gas, chemicals, iron and steel, mining, and cement) produce the majority of non-combustion-related direct emissions. Similarly, oil and gas, chemicals, construction, forest products, and food and beverages produce large amounts of greenhouse gas emissions from on-site fossil fuel combustion.
Certain industries are termed energy-intensive because they require large energy inputs per unit of output or activity. The largest energy-consuming industries in the United States are bulk chemicals, oil and gas, steel, paper, and food products; these five industries account for 60 percent of industrial energy use, but only 22 percent of the value of the products. Other energy-intensive industries include glass, cement, and aluminum. In general, energy-intensive industries are growing more slowly in the United States than industries with lower energy intensities.
Total industrial emissions in the United States have gradually declined over the past decade in both absolute and relative terms (see Figure 7). From 1990 to 2012 U.S. industrial output increased by 55 percent, while CO2 emissions from industrial processes decreased by a little more than 23 percent. Several factors have contributed to this reduction, including development of new methods (less carbon intensive), fuel switching, increased efficiency, and changes to the U.S. economy from a more manufacturing-based to a more service-based economy and from more energy-intensive industries to less energy-intensive industries. Over time, the proportion of industrial greenhouse gas emissions from electricity use has increased, while the proportion of greenhouse gases from direct emissions has decreased.
Figure 7: Greenhouse Gas Emissions by End-Use Sector (2012)
Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table 2-14, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
The industrial sector is the largest end-user of energy in the United States. Since 1973, total energy consumption has increased across all end-use sectors except the industrial sector (see Figure 8). This is due to three primary factors: a shift away from manufacturing and towards a more service-oriented economy; a move towards less energy-intensive manufacturing, and energy efficiency in the industrial sector.
Figure 8. Total Energy Consumption by End-Use Sector 1973 – 2013
Source: U.S. Energy Information Administration (EIA), Monthly Energy Review, September 2014. http://www.eia.gov/totalenergy/data/monthly/pdf/sec2_3.pdf
At the global level, the industrial sector is a key energy consumer and greenhouse gas producer. Manufacturing industries account for more than one-third of total energy consumption and 37 percent of CO2 emissions from energy use. At the global level, data on non-CO2 gases and non-combustion CO2 emissions have higher levels of uncertainty. A small number of industries account for a large percentage of global industrial emissions. In 2007, five industries (chemicals and petrochemicals, iron and steel, non-metallic minerals, pulp and paper, and non-ferrous metals) accounted for 50 percent of total industrial energy use.
Trends in global industrial energy use and emissions include:
- Overall industrial energy use increased between 1971 and 2004, with demand growing especially rapidly in emerging economies.
- Energy efficiency in energy-intensive manufacturing industries has increased, with Japan and Korea generally achieving the highest levels of energy efficiency.
- Cost-effective greenhouse gas mitigation opportunities exist for the industrial sector but are currently under-utilized in both developed and developing countries. The adoption of best practice commercial technologies by manufacturing industries could reduce industrial sector CO2 emissions by 19-32 percent annually by, for example, improving the efficiency of motor systems.
- Since 1970, several energy-intensive industries have seen significant growth. For example, production of steel increased 84 percent; paper, 180 percent; ammonia, 200 percent; aluminum 223 percent; and cement, 271 percent.
- Developed economies usually have a more energy-efficient industrial sector, and a larger fraction of their output comes from non-energy-intensive sectors than is the case for developing economies. On average, industrial energy intensity, which is the industrial sector’s energy consumption per dollar of economic output, is double in developing countries. Energy-intensive manufacturing industries are growing in many developing countries. Industrial energy use frequently accounts for a larger portion of total energy consumption in these countries; for example, an estimated 75 percent of delivered energy in China was used by the industrial sector in 2007.
- In 2007 the industrial sector comprised 51 percent of global energy use, and is projected to grow at an annual rate of 1.3 percent.
Industrial Sector Mitigation Opportunities
There is a diverse portfolio of options for mitigating greenhouse gas emissions from the industrial sector, including energy efficiency, fuel switching, combined heat and power, renewable energy sources, and the more efficient use and recycling of materials. The diverse opportunities for reducing emissions from the industrial sector can be broken down into three broad categories:
Some mitigation options can be used across many different industries, for example energy efficiency improvements for cross-cutting technologies, such as electric motor systems, can yield benefits across diverse sub-sectors. Other sector-wide mitigation options include the use of fuel switching, combined heat and power, renewable energy sources, more efficient electricity use, more efficient use of materials and materials recycling, and carbon capture and storage.
Certain mitigation opportunities come from improvements to specific processes and are not applicable across the entire sector. For energy-intensive industries, process improvements can reduce energy demand and, therefore, greenhouse gas emissions and energy costs. Other improvements can reduce emissions of non-CO2 gases with high global warming potentials.
Case studies can help illuminate the effectiveness of these process-specific options. For example, Alcoa’s aluminum smelters collectively reduced their emissions of perfluorocarbons (PFCs) from anode effects, which occur when a particular step in the smelting process is interrupted, by more than 1.1 million tons in 2008.
A variety of mitigation opportunities can be achieved through improvements to standard operating procedures. These options can include making optimal use of currently available technologies, such as improving insulation and reducing air leaks in furnaces.
A variety of public and private efforts have been developed to help reduce industrial greenhouse gas emissions, energy use, or energy intensity. Some of these programs include:
- Climate Leaders – U.S. Environmental Protection Agency (EPA)
- Partnership between industry and government to develop comprehensive climate change strategies. http://www.epa.gov/stateply/
- Climate VISION – Interagency program, including U.S. Department of Energy (DOE), U.S. EPA, U.S. Department of Transportation, and U.S. Department of Agriculture
- Voluntary program to reduce U.S. greenhouse gas emissions intensity. http://climatevision.gov/
- ENERGY STAR® for Industry – U.S. EPA
- Program to improve corporate energy management. http://www.energystar.gov/index.cfm?c=industry.bus_industry
- Save Energy Now – U.S. DOE, Industrial Technologies Program
- Program to achieve the goal of reducing industrial energy intensity 25 percent by 2017, per the Energy Policy Act of 2005. http://www1.eere.energy.gov/industry/saveenergynow/
- Voluntary Programs to Reduce High Global Warming Potential Gases – U.S. EPA
- A variety of programs to reduce gases with high global warming potentials, including perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), and sulfur hexafluoride (SF6). http://www.epa.gov/highgwp/voluntary.html
At C2ES we work on several issues related to climate change and the industrial sector, including emissions reduction policy, energy efficiency, and adaptation. We track and inform policymakers about pragmatic policy options at the state, federal, and international level, collaborate on white papers and reports, blog about current issues impacting the industrial sector, and keep up-to-date online resources on innovative technologies.
Tracking Policy - We keep track of state, federal, and international policy that will impact the industrial sector. Our state maps have information about which states have adopted various GHG mitigation policies. We also track and analyze federal policy, including what is happening in Congress and the Executive Branch.
Research - At C2ES, we produce research, including reports, white papers, and briefs, on issues related to climate change and industry. C2ES's Corporate Energy Efficiency Project is a multi-year research and communications effort to identify and highlight the most effective methods used by companies, including many industrial firms, to reduce their energy consumption and lower their related GHG emissions. Other examples of relevant C2ES work include The Competitiveness Impacts of Climate Change Mitigation Policies and Adaption to Climate Change: A Business Approach.
Climate Compass Blog - Our blog includes entries about current perspectives on GHG emissions from Industry, and can be viewed here.
Climate Techbook - The industrial section of the Climate Techbook includes an overview of GHG emissions from the industrial sector as well as technologies that can be used to reduce those emissions. Below is a list of the Techbook factsheets that pertain to the industrial sector.
|Industrial Overview||Carbon Capture and Storage (CCS)|
|Anaerobic Digesters||Cogeneration / Combined Heat and Power (CHP)|
|Building Envelope||High Global Warming Potential Gas Abatement|
|Buildings Overview||Natural Gas|
Alliance to Save Energy
- Review of GHG Policies, Programs, Initiatives, and Energy Efficiency Opportunities for U.S. Industry
American Council for an Energy-Efficient Economy
Intergovernmental Panel on Climate Change (IPCC)
U.S. Department of Energy (DOE)
U.S. Energy Information Administration (EIA)
- Energy-Related Carbon Dioxide Emissions in U.S. Manufacturing, 2006
- Industry Analysis Briefs
- Manufacturing Energy Consumption Survey (MECS)
U.S. Environmental Protection Agency (EPA)
- ENERGY STAR - Inustries in Focus
- 2011 US Greenhouse Gas Emissions Inventory
- Quantifying Greenhouse Gas Emissions from Key Industrial Sectors in the United States Working Draft
- Sector Performance Report, 2008
Related Business Environmental Leadership Council (BELC) Companies
|DTE Energy||Rio Tinto|
|Duke Energy||Royal Dutch / Shell|
 U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012. 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
 One million metric ton is equal to one teragram. For reference, one million metric ton of CO2e is equal to 280,000 new cars each being driven 12,500 miles or 90 minutes of U.S. energy consumption or 1 day of U.S. energy emissions from lighting buildings, see U.S. Department of Energy (DOE), 2009 Buildings Energy Data Book. Prepared for U.S. Department of Energy Office of Energy Efficiency and Renewable Energy by D&R International, Ltd. Silver Spring, MD. 2009. http://buildingsdatabook.eren.doe.gov
 Global warming potential is a system of multipliers devised to enable warming effects of different gases to be compared. The cumulative warming effect, over a specified time period, of an emission of a mass unit of CO2 is assigned the value of 1. Effects of emissions of a mass unit of non-CO2 greenhouse gases are estimated as multiples. For example, over the next 100 years, a gram of methane (CH4) in the atmosphere is currently estimated as having 23 times the warming effect as a gram of carbon dioxide; methane's 100-year GWP is thus 23. Estimates of GWP vary depending on the time-scale considered (e.g., 20-, 50-, or 100-year GWP) because the effects of some GHGs are more persistent than others.
 U.S. EPA, 2014
 U.S. EPA, 2014
 U.S. EPA, 2014
 Carbon dioxide equivalent (CO2e) is a unit used to measure the emissions of a gas, by weight, multiplied by its global warming potential.
 U.S. EPA, 2014
 Department of Energy. Industrial Total Energy Consumption. April 14, 2008. http://www1.eere.energy.gov/ba/pba/intensityindicators/total_industrial....
 Intergovernmental Panel on Climate Change (IPCC), “Industry.” In Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report. Cambridge: Cambridge University Press, 2007. http://www.ipcc.ch/ipccreports/ar4-wg3.htm
 IPCC, 2007.
 EIA, International Energy Outlook 2010. July 2010. http://www.eia.doe.gov/oiaf/ieo/pdf/0484(2010).pdf
 IPCC, 2007.
 EIA, July 2010.
 IPCC, 2007.
 Alcoa, “Alcoa Smelters Meet Challenge to Reduce Greenhouse Gas Emissions by One Million Tons Annually,” http://www.alcoa.com/global/en/about_alcoa/sustainability/case_studies/2009/case_ghg_million_ton.asp. Accessed 6 May 2009.
More than one-quarter of total U.S. greenhouse gas emissions come from the transportation sector (see Figure 1), making transportation the second largest source of greenhouse gas emissions in the United States after the electric power sector.
Figure 1: U.S. Greenhouse Gas Emissions by Sector (2012)
Source: U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, Table ES-7, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
The transportation sector consists of passenger vehicles (a category including both passenger cars and light-duty trucks), medium- and heavy-duty trucks, buses, and rail, marine, and air transport. Of the various transportation modes, passenger vehicles consume the most energy (see Figure 2). Greenhouse gas emissions mirror energy use by each mode, because all modes use petroleum fuels with similar carbon contents and thus greenhouse gas emissions.
Figure 2: Transportation Energy Use by Mode (2012).
Source: U.S. Department of Energy. Transportation Energy Data Book, Table 2.5, 2014. http://cta.ornl.gov/data/chapter2.shtml
The vast majority of transportation emissions (95 percent) are composed of carbon dioxide (CO2), which is released during fossil fuel combustion. An additional one percent of total transportation GHG emissions come from methane (CH4) and nitrous oxides (N2O), emissions also associated with fossil fuel combustion. The leakage of hydrofluorocarbons (HFCs) from vehicle air conditioning systems is responsible for the remaining four percent of transportation GHG emissions. Transportation sources also emit hydrocarbons (which are ozone precursors), carbon monoxide (CO), and aerosols. These substances are not counted as greenhouse gases in transportation emissions inventories but are believed to have an indirect effect on global warming, although their impact has not been quantified with certainty.
Factors Affecting Transportation Emissions
Transportation energy use and emissions are determined by four interrelated but distinct factors: the type of fuels or energy sources, the vehicles, the distance traveled, and the overall system infrastructure.
- Fuel Types and Energy Sources
The transportation sector is the largest consumer of petroleum-based fuels in the United States. Importantly, transportation accounts for about 70 percent of U.S. oil consumption, which greatly affects U.S. energy security.
Figure 3: Petroleum and Other Liquids Production and Consumption, 1970–2013.
Source: U.S. Energy Information Agency (EIA), Monthly Energy Review 2014, Table 3.1, 3.7c, 2014. http://www.eia.gov/totalenergy/data/monthly/index.cfm#petroleum
Nearly all fossil fuel energy consumption in the transportation sector is from petroleum-based fuels (92 percent), with a small amount from renewable sources (5 percent) and natural gas (3 percent). There are several types of petroleum fuels used for transportation. Table 1 lists the major petroleum-based transportation fuels and the volume consumed in the United States in 2013.
Table 1: Estimated U.S. Transportation Sector Petroleum Consumption (2013), Million Gallons.
Distillate Fuel Oil (Diesel)
Residual Fuel Oil
Liquefied Petroleum Gases
Source: U.S. Energy Information Administration (EIA), Monthly Energy Review, Table 3.7c, 2014. http://www.eia.gov/totalenergy/data/monthly/index.cfm#petroleum
Petroleum fuels are supported by an extensive and well-functioning infrastructure and have the benefit of high energy density, low cost, and a demonstrated ability to adapt to a range of operating conditions.
The production and consumption of biofuels has increased significantly since 2005, due to the state and federal renewable fuel standards, which mandate minimum annual consumption levels of ethanol and biodiesel, the two renewable biofuels. Ethanol is an alcohol produced from crops such as corn, vegetable waste, wheat, and others; it is usually combined with gasoline to increase octane levels and more efficient fuel utilization. Biodiesel is produced from natural oils like soybean oil and functions only in diesel engines. In 2013, ethanol (4 percent) and biodiesel (0.7 percent) made up nearly five percent of the total primary energy consumed in the transportation sector.
- Vehicle Efficiency
Over the last 35 years, the fuel economy (miles per gallon, mpg) of new passenger vehicles in the United States has improved significantly, increasing by more than 50 percent. Until very recently, most of the gains occurred in the early years of fuel economy regulation under the Corporate Average Fuel Economy (CAFE) program. Fuel economy improvements were nearly stagnant from the late 1980s to the early 2000s. Over this period, the technical efficiency (amount of energy needed to move a given vehicle mass) of light-duty vehicles improved, although fuel economy (the amount of gasoline consumed per mile traveled) remained unchanged, as consumer preferences shifted to larger, heavier, and more powerful vehicles. Fuel economy standard for light trucks were increased slightly in 2003, and recent federal vehicle standards adopted in 2010 and 2012 are expected to raise average fuel economy as high as 54.5 mpg for model year 2025.
Transportation modes other than passenger vehicles also have efficiency improvement opportunities. For instance, aircraft energy intensity has historically improved at an average rate of 1.2-2.2 percent per year, although aircraft energy intensity steadily plateaued through the 1990s and early 2000s due to both historically low fuel prices and a tripling in the average age of aircraft and engine production lines since 1989. In addition, federal vehicle standards for medium- and heavy-duty vehicles were adopted in 2011, and should improve fuel efficiency significantly.
Figure 4: Corporate Average Fuel Economy (CAFE) Standards vs. Sales-Weighted Fuel Economy Estimates.
Source: NHTSA, Summary of Fuel Economy Performance, 2014.http://www.nhtsa.gov/fuel-economy
- Vehicle Use and Distance Traveled
The third factor that affects transportation emissions is the amount of vehicle use and distance traveled. Transportation demand is influenced by the geographic distribution of people and places, especially the density of development and zoning. Over the past 50 years, on-road vehicle miles traveled (VMT) increased steadily (Figure 5). Because of high fuel costs and slowing economic growth, VMT decreased in 2008. However, in 2006, the absolute number of VMT in the United States peaked, while the distance driven per person and per licensed driver peaked in 2004. The decline of these indicators prior to the 2008 recession were likely the result of non-economic factors such as increased use of public transportation, increases in telecommuting, an aging population (decreases in driving by ederly) and increased urbanization. Economic and non-economic factors contributing to the persistence of the flat absolute number of VMT in the post-recession period continue to be studied.
The absolute growth in distance traveled for modes has been similar. The use of all transportation modes (particularly freight transport and air travel) is still projected to grow rapidly in the future.
Figure 5: Annual On-Road Vehicle Miles Traveled (VMT).
Source: U.S. Department of Energy, Transportation Energy Data Book, Table 3.7, 2014. http://www-cta.ornl.gov/data/chapter3.shtml
- System Efficiency
The overall operation of the transportation system also plays an important role in GHG emissions. For example, congestion results when transportation demand exceeds capacity and poses a challenge for almost all modes of transportation, from on-road and highway transport, air, and rail. Shifting travel to other modes can reduce congestion, as can electronic signaling and other measures to smooth traffic flows. Reducing congestion has the benefit of lowering fuel consumption and GHG emissions by decreasing the time spent idling. For freight (via rail, truck, and ship) and air traffic, system improvements that allow vehicles to take more direct routes from origin to destination can reduce energy use and emissions.
Transportation activity is expected to grow significantly in all countries of the next 25 years. Over the next two decades, vehicle ownership is expected to double worldwide, with most of the increase occurring in non-OECD countries. The U.S. Energy Information Administration projects that non-OECD transportation energy use will increase by an average of 2.8 percent per year from 2010 to 2040, compared to an average decrease of 0.3 percent per year for OECD countries. Figure 6 shows projected worldwide energy consumption in the transportation sector.
Figure 6: Global Projections for Transportation Sector, Liquids Consumption, 2010-2040.
Source: U.S. Energy Information Agency, International Energy Outlook 2014. http://www.eia.gov/forecasts/ieo/more_overview.cfm
Transportation Sector GHG Mitigation Opportunities
Reducing GHG emissions from transportation will require a systematic approach to address the four interdependent yet distinct components of the sector.
- On the fuels side, transitioning to low-carbon energy sources, such as advanced biofuels or electricity produced from renewable sources, can directly reduce the carbon emissions from fuel consumption.
- Significantly more efficient transportation equipment is needed to complement the transition to low-carbon fuel sources. Alternative vehicle designs include flexible fuel vehicles that can run on a mix of biofuels and petroleum-based fuels or are powered by electricity and stored on-board in batteries or by hydrogen fuel cells.
- Vehicle travel demand is affected by a number of factors. Changing land use patterns and increasing alternative travel options, such as biking, walking or rail, can reduce the use of more energy-intensive modes of transportation.
- Increasing the efficiency of the transportation system would require both improving accessibility to and performance of the various modes of transportation and using more efficient ones. Advanced traffic monitoring and signaling can reduce congestion and improve the overall efficiency of the transportation system.
A strategy to reduce GHG emissions from the transportation sector will need to take into account the potential efficiency improvements for each mode of transportation and determine the appropriate reduction strategy for each. Policies that facilitate the adoption of low-carbon technologies and align infrastructure development and land use planning with GHG reduction goals can lead to further GHG reductions in these areas.
Several studies have analyzed the most cost-effective approach to emission reductions in transportation. Some of these studies include:
- Greene, D. and S. Plotkin, Reducing Greenhouse Gas Emissions from U.S. Transportation. Prepared for the Center for Climate and Energy Solutions, 2011.
- Cambridge Systematics, Inc. (2009). Moving Cooler: An Analysis of Transportation Strategies for Reducing Greenhouse Gas Emissions. Washington, D.C.: Urban Land Institute.
- Intergovernmental Panel on Climate Change (IPCC), “Transport and its infrastructure.” In Mitigation of Climate Change, 2007.
- International Energy Agency (IEA), “Transport.” In Energy Technology Perspectives 2008: Scenarios and Strategies to 2050, 2008.
Achieving emission reductions and oil savings from the transportation sector requires a multi-pronged approach that includes improving vehicle efficiency, lowering the carbon content of fuels, reducing vehicle miles traveled, and improving the efficiency of the overall transportation system.
At C2ES, we focus on all aspects of transportation from improving vehicle technology to the benefits of land-use planning. We produce cutting-edge research; track policy progress at the state, federal, and international level; blog on current transportation issues; and create and maintain an online resource of transportation technology.
Cutting-Edge Research - In our 2011 report titled Reducing Greenhouse Emissions from U.S. Transportation, we identify cost-effective solutions that will significantly reduce transportation's impact on our climate while improving our energy security. See all our transportation-related publications.
Convening Stakeholders - We've run a multi-year stakeholder dialogue to help enable a national electric vehicle market in the United States. The PEV Dialogue Initiative is a one-of-a-kind effort aimed at identifying policies and actions by public and private stakeholders to accelerate the deployment of electric vehicles.
Policy Progress - We track action at the state, federal, and international level. Our state maps provide useful overviews of action to promote alternative technologies. We also summarize action in Congress and in the Executive Branch, such as our summaries of the Renewable Fuel Standard and Vehicle Fuel Economy and Emission Standards. Lastly we track action at the international level, such as our comparison of international fuel economy standards.
Climate Compass Blog - On our blog, we provide C2ES's take on the latest news from the transportation sector. See our transportation blog postings.
Climate TechBook - The transportation section of the Climate TechBook introduces different modes of transportation along with policies to help mitigate GHG emissions and save oil. Below is a list of all the transportation-related factsheets within the TechBook.
|Advanced Biohydrocarbons||Freight Transportation|
|Aviation||Hydrogen Fuel Cell Vehicles|
U.S. Department of Transportation (DOT)
- Research and Innovative Technology Administration (RITA)
- National Household Travel Survey (NHTS)
- Federal Highway Office of Planning, Enviornment and Realty (HEP)
U.S. Department of Energy (DOE)
U.S. Environmental Protection Agency (EPA)
Joint Federal Programs
Related Business Environmental Leadership Council (BELC) Companies
|Air Products||Johnson Controls, Inc.|
|Dow Chemical Company||Weyerhaeuser|
 Source: U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, 2014. http://www.epa.gov/climatechange/emissions/usinventoryreport.html
 EIA, Annual Energy Review 2012, Table 2.1e, 2014. http://www.eia.gov/totalenergy/data/annual/index.cfm#consumption
 EIA, Annual Energy Review 2012, Table 10.2b, 2014. http://www.eia.gov/totalenergy/data/annual/index.cfm#renewable
 McCollum, D., Gould, G. and Greene, D., Aviation and Marine Transportation: GHG Mitigation Potential and Challenges. Prepared for the Center for Climate and Energy Solutions, 2009. http://www.c2es.org/technology/report/aviation-and-marine
November 12, 2015
Contact: Marty Niland, email@example.com, 703-516-0600
Fleet operators could save money with natural gas vehicles
WASHINGTON – Public and private fleet operators could save money by switching to natural gas vehicles using the business model that energy service companies (ESCOs) apply to energy efficiency projects, according to a guide released today by the Center for Climate and Energy Solutions (C2ES).
Although switching to natural gas vehicles (NGVs) can lower costs, many fleet managers have not converted their fleets. Strategic Planning to Enable ESCOs to Accelerate NGV Fleet Deployment: A Guide for Businesses and Policymakers helps investors and state and local policymakers make decisions about deploying natural gas vehicles in public and private fleets, which are among the most initially promising areas.
The findings are part of a two-year initiative, in partnership with the National Association of State Energy Officials (NASEO) and with funding from the U.S. Department of Energy’s Clean Cities Program, to develop innovative finance mechanisms aimed at accelerating the deployment of alternative fuel vehicles and fueling infrastructure.
The guide analyzes the cost-saving potential for switching tractor-trailer truck, school bus, and light-duty vehicle fleets. Among the key findings:
- Incorporating natural gas vehicles into fleets can significantly reduce petroleum use and harmful emissions, especially with tractor-trailer fleets.
- The major factors affecting the financial performance of natural gas vehicle fleets are the fleet’s vehicle technology and vehicle usage patterns.
- Natural gas vehicle projects for tractor-trailer fleets result in net cost savings under nearly every fleet size and travel scenario considered in the guide’s analysis.
- Using natural gas to fuel school bus fleets also results in net cost savings for fleets whose vehicles travel about 20,000 miles per year.
- An energy service provider can help with the transition to natural gas by familiarizing fleet managers with new technology, identifying a project’s greatest savings potential, reducing financial risk, and helping maximize financial payoff.
“Switching from diesel to natural gas is a net cost-saver for fleets in many cases. But even the most cost-conscious fleet manager can hesitate to switch to a new technology, especially in a time of low oil prices,” said Nick Nigro, a C2ES senior advisor and lead author of the report. “The fleet market can learn a lot from ESCOs and how they’ve deployed energy efficiency technologies by offering valuable services and training in exchange for a share of the cost savings.”
“Many of NASEO’s members, the 56 State and Territory Energy Offices, are eager for solutions and strategies supporting the use of domestic and clean transportation fuels,” added David Terry, Executive Director of NASEO. “The Strategic Planning Guide is an important addition to states’ toolboxes in their efforts to reduce reliance on imported oil, improve air quality, and stimulate economic growth.”
Read the report.
Learn more about the initiative.
The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our climate and energy challenges. Learn more at www.c2es.org.
TransCanada’s proposed Keystone XL pipeline has emerged as a symbolic flashpoint in the complex debate over energy, the environment, and the economy. Pipeline advocates argue that the project will create tens of thousands of jobs and – by increasing the flow of Canadian oil into the United States – will lower gasoline prices and strengthen energy security. Pipeline opponents counter that any such benefits will be minimal and far outweighed by the project’s environmental consequences, including an increase in climate-warming greenhouse gas emissions.
While each argument has some merit, the reality is less black-and-white than either suggests:
- If rising demand for oil continues to drive development of the Canadian oil sands, the oil is likely to reach global markets with or without Keystone.
- Increased imports from Canada would reduce U.S. reliance on oil from more volatile regions such as the Mideast. But because oil is a global commodity, prices are largely a function of global supply and demand, and the U.S. would still be vulnerable to price shocks as a result of geopolitical instability and other factors affecting global oil price.
- Most of the greenhouse gas emissions come from the tailpipes of vehicles powered by gasoline produced from the oil sands. But because the process of extracting oil from the oil sands is so energy-intensive, its total carbon footprint is larger than that of most “conventional” oil. More can and should be done to reduce the carbon emissions generated on the production side. But in terms of impact on the climate, the overall level of oil consumption is far more critical than the relative carbon profiles of different supplies.
Whether or not Keystone is built is likely to have only marginal implications for the price of gasoline or the pace of global warming. The most effective response to both challenges is to reduce demand for oil and over time end our reliance on it.
Here is a more detailed look at the issues behind the Keystone debate:
Figure 1. North America Pipelines
Source: Theodora. 2008. http://www.theodora.com/pipelines/north_america_oil_gas_and_products_pipelines.html.
Key: Crude oil pipelines (Green), Natural gas pipelines (Red), and Refined petroleum products (Blue).
Figure 2. Keystone Expansion Map
Source: TransCanada (2011)
What is Keystone? An extensive network of pipelines carries crude oil, natural gas and refined petroleum products across North America (Figure 1). One piece of that network is the 2,150-mile Keystone pipeline system operated by TransCanada (solid orange line in Figure 2), which has the capacity to deliver 730,000 barrels per day (b/d) of Canadian crude oil from Hardisty, Alberta to Wood River and Patoka, Illinois; Steele City, Nebraska; and Cushing, Oklahoma.
Keystone XL (dashed line in Figure 2) is a proposed expansion of the existing Keystone system, and is one of a number of projects being proposed to transport greater volumes of Canadian oil sands crude to world market. It would transport Canadian oil sands crude to the U.S. Gulf Coast for refining or export. The planned expansion consists of a northern and southern segment:
- The approximately 1,200-mile northern segment would travel from Hardisty, Alberta to Steele City, Nebraska via the Canadian Provinces of Alberta and Saskatchewan, and the U.S. states of Montana, South Dakota and Nebraska.
- The 532-mile southern segment, referred to as the Gulf Coast Pipeline and Houston Lateral Project (or Cushing Marketlink or Southern Keystone) would run from Cushing, OK to Port Arthur, TX and Houston, TX.
Keystone is not the only oil pipeline from the Canadian oil sands. The Alberta Clipper, a 1,000 mile crude oil pipeline operated by Enbridge between Hardisty, Alberta and Superior, WI, went into service in 2010 with an initial capacity of 450,000 b/d and will have an ultimate capacity of up to 800,000 b/d.
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Where does the Keystone XL proposal stand? In November 2015, President Obama denied TransCanada a permit to build the pipeline, stating that it would not make a meaningful long-term contribution to the U.S. economy. The move came after TransCanada had requested that the State Department put its application on hold while issues regarding the pipeline's route in the state of Nebraska were resolved.
On January 31, 2014, the U.S. State Department issued its final environmental impact statement on the northern segment of the pipeline. In April 2014, the State Department announced it was delaying its review, citing a Nebraska court challenge over a law allowing the governor to authorize the pipeline’s route. In January 2015, the Nebraska Supreme Court ruled the law was constitutional, clearing the way for the pipeline. The State Department has asked eight federal agencies (Departments of Defense, Justice, Interior, Commerce, Transportation, Energy, Homeland Security, and the Environmental Protection Agency) “to provide their views on the national interest with regard to the Keystone XL Pipeline permit application” by February 2, 2015. There is no explicit timeline for the permit process beyond the February 2 date. At the same time, a newly elected Republican majority in the Senate attempted to approve the pipeline via legislation; however, the measure was vetoed by the President in late February.
TransCanada first applied for a permit in 2008. In November 2011, the State Department delayed a decision pending further environmental review. The delay stemmed from the State of Nebraska's decision to seek an alternative route for the pipeline that would avoid the environmentally sensitive Nebraska Sand Hills. Congress then enacted legislation forcing a quicker decision. In January 2012, citing inadequate time to assess the pipeline’s environmental impact, President Obama denied the permit, but left the door open for an alternative route for the contentious northern portion of the pipeline.
TransCanada submitted a new application proposing alternative routes for the northern portion in April 2012, aiming for an in-service date of 2015. On January 22, 2013, Nebraska Governor Dave Heineman submitted a letter to the State Department announcing his approval of the route reviewed in the Final Evaluation Report of the Keystone Nebraska Reroute by the Nebraska Department of Environmental Quality (NDEQ). On March 1, 2013, the State Department issued a draft Supplemental Environmental Impact Statement (SEIS) on the project.
Construction on the southern portion of the pipeline, which did not cross the US-Canada border and so was not subject to State Department review, began in August 2012 and the renamed Gulf Coast Pipeline went in to service in early 2014. The project will have the initial capacity to transport 700,000 b/d to the Gulf Coast, and can be expanded to transport 830,000 b/d.
Why does TransCanada want to build Keystone XL? The impetus for this pipeline’s construction is to transport a greater volume of Canadian oil sands crude to world markets. Currently, infrastructure for transporting this crude to international ports is inadequate. Increased supply, both from the Canadian oil sands and U.S. oil production in North Dakota (Bakken formation), is currently bottlenecked in Cushing, OK. Additional pipeline capacity, including the reversal of the Seaway pipeline  and the construction of the southern portion of Keystone, is likely to reduce this bottleneck. Oil sands producers are also attempting to secure permits to build the Northern Gateway and TransMountain pipelines, which would provide an outlet to world markets via the coast of British Columbia. Furthermore in August 2013, TransCanada announced its intention to construct the Energy East pipeline to deliver 1.1 million barrels per day of oil sands crude to refineries and ports in Eastern Canada (Quebec and New Brunswick). At the same time, crude shipments by rail are underway and expected to transport more than 500,000 barrels per day by the end of 2014.
The long-term supply impact of adding Keystone XL to the North American crude oil transport system depends on a number of factors, including global supply and demand over time and whether other pipelines are built to carry Canadian oil sands out of Alberta. In the short run, a rise in deliveries of heavy Canadian oil sands crude to U.S. Gulf Coast refineries is likely to fill a supply gap being created by declining imports from traditional heavy crude suppliers, notably Mexico and Venezuela; a gap that would otherwise be filled by increases from other foreign suppliers, notably from the Middle East. Therefore, it is likely in the near-term that Canadian oil sands would be refined and consumed in the United States. In the long term, with changing market conditions, Keystone XL could help facilitate exports of crude or refined product from the Gulf Coast.
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How much does the U.S. rely on oil from Canada? Canada is the largest supplier of U.S. oil imports. In 2011, Canada, Mexico and Saudi Arabia were the top three suppliers of U.S. oil imports. Canada supplied nearly 24 percent of U.S. oil imports, while Mexico and Saudi Arabia each accounted for around 10.5 percent. In 2010, Alberta oil sands supplied 15 percent of U.S. oil imports. In 2011, total oil supplied by Persian Gulf countries (Saudi Arabia, Kuwait and Iraq) averaged 1.8 million b/d, compared to total Canadian imports of 2.7 million b/d.
Total U.S. oil imports peaked in 2005 and 2006 at an average of around 13.7 million b/d. In 2011, U.S. oil imports averaged around 11.36 million b/d. The decline was due in part to a sluggish economic recovery and increasing domestic supply. Imports from OPEC countries are down around 19 percent over the same period (2005 to 2011), and total imports from Canada have increased by 24 percent.
The Energy Information Agency (EIA) predicts that U.S. oil consumption will grow very slowly over the next 25 years, because of policies that that boost the fuel efficiency of cars and increase the use of renewable fuels like ethanol.
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Oil sands are a mix of naturally occurring bitumen, sticky oil and abrasive sand; each sand grain is coated by a layer of water and a layer of heavy oil.  According to the Alberta Energy and Utilities Board, (2007) oil sands deposits total 173 billion barrels of proven reserves. About 26 billion barrels are under active development. Technologies for oil sands production are steadily improving, decreasing greenhouse gas intensity and cost of extraction while increasing the volume of recoverable reserves.
Table 1. Top 20 Countries’ Crude Oil Reserves (Billion Barrels)
United Arab Emirates*
Source: U.S. Energy Information Administration, International Energy Statistics
Currently, about half of the oil sands production is from surfacing mining, and half is extracted in place, or in-situ. Ultimately, about 80 percent of the proven oil sands reserves are expected to be produced in-situ. Surface-mined oil sands production is similar to traditional mineral mining; shovel-excavated sands are transported to processing facilities by very large trucks. Crushed sand fragments are added to swirling water (continuously recycled), and the slurry is agitated and piped to an extraction facility, where the oil can be skimmed from the top of the flow.
Figure 3. Surface Mining and In-Situ Production
Source:Nexen Incorporated 2012. http://www.nexeninc.com/en/Operations/OilSands/Process.aspx
Surface mining is used for shallower reservoirs – those less than 75 meters below the surface; however, 80 percent of the oil sand reserves are deeper and not economically recoverable with surface mining; they require in-situ extraction. There are two main in-situ extraction techniques referred to as steam assisted gravity drainage (SAGD) and cyclic steam stimulation, in which steam, solvents and/or hot air is injected directly into the oil sands in order to get the material to flow into collection pipes. For both processes, extracted bitumen is then upgraded into a lighter (lower viscosity) and sweeter (lower sulfur content) crude oil and later refined into gasoline or diesel fuels.
The Great Canadian Oil Sands (GCOS) project began operations in 1967, with rapid growth occurring over the 1990 – 2006 period. Oil sands production is projected to grow from 1.5 million b/d in 2010 to 3.7 million b/d in 2021. Overall, total Canadian oil production is expected to grow from 2.8 million b/d in 2010 to 4.7 million b/d in 2025.
Source: Canadian Association of Petroleum Producers (2011)
The U.S. Midwest is currently the primary export market for western Canadian crude oil supplies due to its geographic proximity and established pipeline infrastructure. Growing supplies of crude oil from western Canada could find a market on the U.S. Gulf Coast or world markets once they reach Canada’s West Coast, including California and Asia.
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What are the greenhouse gas implications of developing the oil sands? The draft SEIS issued by the State Department in March 2013 concluded that the Albertan oil sands will continue to be developed whether or not the Keystone pipeline is built and, therefore, that allowing the pipeline would not lead to a net increase in global greenhouse gas emissions. However, the International Energy Agency in its World Energy Outlook 2013 concluded that current expansion plans for the oil sands are contingent on the development of major new pipelines.
The production of oil sands crude is more energy-intensive, and therefore more greenhouse gas-intensive, than most conventional crudes. Due to the nature of the deposit, additional processes are required to extract the oil, remove the sand and get the oil to flow in a pipeline. Each of these processes, including the use of power shovels and trucks, operation of intermediate facilities, and so forth, requires energy. In addition, in-situ production (because it requires steam generation) is more energy-intensive than surface mining.
Several analyses of the well-to-wheels life-cycle emissions of transportation fuels produced from various crudes (emissions from both the production and the combustion of the oil) conclude that Canadian oil sands are among the most carbon-intensive. The State Department’s draft SEIS found that oil from the Canadian oil sands is 17 percent more carbon-intensive than the average oil consumed in the United States. (A report from the Congressional Research Service put the figure at 14 percent to 20 percent.) It is estimated that the U.S. greenhouse gas footprint would increase by 3 million to 21 million metric tons per year, or around 0.04 percent to 0.3 percent of the 2010 levels, if Keystone is built.
This relatively small increase in projected U.S. emissions reflects the fact that the majority of greenhouse gas emissions associated with oil result from its combustion in vehicles. Well-to-pump emissions, also known as non-combustion emissions, account for 20 to 30 percent of total life-cycle emissions, while fuel combustion accounts for 70 to 80 percent of total life-cycle emissions (Figure 5). Combustion emissions do not vary with the origin of the crude oil. Although oil sands-derived crudes are more energy-intensive than the average oil consumed in the United States, there are several types of crudes that are also higher than the U.S. average. Other carbon-intensive crude oils are produced, imported, or refined in the United States, including Venezuelan heavy, California heavy, and Nigerian.
Figure 5. Life-Cycle Greenhouse Gas Emissions
Source: IHS CERA, “Oil Sands, Greenhouse Gases, and U.S. Oil Supply.” (2010)
While the emissions intensity of oil sands are higher than the U.S. average, steps are being taken to mitigate their greenhouse gas intensity. According to the U.S. State Department, oil sands mining projects have reduced greenhouse gas emissions intensity by an average of 29 percent between 1990 and 2008. Additionally, carbon dioxide emissions from oil sands production can be lowered through technological processes such as VAPEX. VAPEX captures carbon emissions from power plants and industrial sources as an injectant for in-situ production while simultaneously sequestering carbon. In 2008, the Alberta government announced a $2 billion fund to support a combination of sequestration projects in power plants and oil sands extraction and upgrading facilities. Two large projects have received funding: Alberta Carbon Trunk Line and Shell Quest. These projects are expected to reduce Alberta’s greenhouse gas emissions by 2.8 million tonnes annually (15.8 million tonnes at full capacity) beginning in 2015.
In the future, the difference in carbon intensity between the Canadian oil sands and other crudes is expected to narrow. Emissions from surface-mining oil sands are expected to remain relatively stable over time, while advances in in-situ production are expected to lower its emissions. At the same time, tertiary recovery of other crudes is expected to become more energy-intensive.
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What other environmental concerns does Keystone XL raise? Additional environmental concerns arise from the siting of the pipeline in the United States and at the source of the oil sands production in Canada.
The proposed path of the northern branch of the Keystone XL would cross the Ogallala Aquifer. This aquifer is a significant source of drinking and irrigation water from South Dakota to Texas. Some groups are concerned that a potential oil spill could result in the fouling of this water source.
In Canada, there are a host of environmental issues, ranging from land disturbance, leveling of the Boreal forest, air pollution, water usage and fouling, interference with migratory animals, and the altering of ecosystems.
Figure 6. Surface Mine and a Tailings (Waste Water) Pond in Fort McMurray, Alberta
Source:Center for Climate and Energy Solutions 2009. http://www.c2es.org/blog/shipleyj/midwest-leading-edge-oil-sands
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What are the long-term solutions? Solutions are available to address issues associated with oil demand, oil sands production, and Keystone XL pipeline construction. Operators have a responsibility to ensure the highest levels of pipeline safety. Ongoing investments and improvements in maintenance and monitoring are imperative, and systems should be in place to minimize accidents over the life of these long-term assets.
Additional steps should be taken to reduce the greenhouse gas emissions that are the direct result of Canadian oil sands production. Techniques like VAPEX and carbon capture and storage, as well as advancements in reducing the energy intensity of in-situ mining, should be promoted and encouraged.
In the long term, the most effective way to reduce the greenhouse gas emissions associated with the oil sands is to dramatically reduce our oil consumption. This can be achieved through technological advances, including development of alternative transportation technologies like plug-in electric vehicles (PEVs) and crude oil substitutions like lower-emitting biofuels for transportation and industry consumers. Crude oil demand can be further reduced through policy initiatives, including increased fuel efficiency Corporate Average Fuel Economy standards, renewable fuel standards, and internalizing the external cost by adding a carbon price to crude oil, such as a carbon tax. The current fuel economy standard for a manufacturer’s light duty fleet is 27.3 mpg. This will increase to approximately 50 mpg by 2025. Our 2011 report titled Reducing Greenhouse Emissions from U.S. Transportation identifies cost-effective solutions that will significantly reduce transportation's impact on our climate.
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 The Seaway pipeline is a 50/50 joint venture between Enterprise Products Partners, the operator, and Enbridge. It runs from Cushing, OK to Freeport, TX, just to the south of Houston. It was initially intended to deliver crude from south to north, but work to complete its reversal was completed in May 2012. Its initial capacity is 150,000 b/d, and this is expected to reach 400,000 b/d by early 2013. This is expected to relieve the glut of oil in Cushing.
 Energy Resources Conservation Board, “Oil Sands.” http://www.ercb.ca/portal/server.pt?open=512&objID=249&PageID=0&cached=t...
 Energy Resources Conservation Board ST98–2011 Alberta's Energy Reserves 2010 and Supply/Demand Outlook 2011–2020 (ERCB, 2011).
The federal Clean Power Plan gives each state the flexibility to use its own ideas on how best to reduce greenhouse gases from the power sector. One proven, cost-effective approach is to use market forces to drive innovation and efficiency.
The options available to states go beyond creating or joining a cap-and-trade program or instituting a carbon tax. Pieces can be put in place, such as common definitions, measurement and verification processes, so that states or companies could be in a position to trade within their state or across borders. Modest programs that allow companies to trade carbon credits could be explored.
In an op-ed published in The Hill, Anthony Earley, CEO of California energy company PG&E, and C2ES President Bob Perciasepe urge states to give these options serious thought.
Read The Hill op-ed.
The latest working group meeting of the Montreal Protocol in Paris produced much useful discussion, but few concrete results due to limited but vocal opposition to an amendment to phase down hydrofluorcarbons (HFCs), a fast-growing, extremely potent family of global warming gases.
Efforts to achieve an amendment at the upcoming Meeting of the Parties in November had gained considerable momentum over the past year. Four proposals for an amendment had been submitted by India, the European Union, the Island States, and North America (Mexico, Canada and the U.S.). Beyond those proposals, the African States also have voiced their clear support for an amendment and recent meetings between President Obama and his counterparts from Brazil, India, and China had produced joint statements in support of action on HFCs under the Montreal Protocol.
Despite support for these proposals from nearly 100 countries, the week-long meeting in Paris this month failed to reach agreement on even starting the negotiating process through the creation of a contact group. After opposing these efforts over several meetings, Saudi Arabia and Kuwait (and other Gulf Cooperation Council countries) voiced their willingness to allow a two-stage process to move forward, but Pakistan stood firm in opposition, blocking any agreement.
In the absence of a mandate to begin negotiations, a number of sessions in Paris focused on a very useful exchange of views on issues raised by the four amendment proposals. India, China and others identified concerns about the costs and availability of alternatives to HFCs (including concerns about obstacles created by patents), the performance of these alternatives in high ambient temperatures, the time required to address flammability concerns of some key alternatives, the importance of energy efficiency, and the need for financing through the Protocol’s Multilateral Fund.
All agreed to hold another working group session prior to the November Meeting of the Parties. But time is fast running out on this year’s efforts to reach agreement on an HFC phasedown amendment.
What can be done to break this stalemate?
In the past, the executive director of the United Nations Environment Programme (UNEP) has sometimes played an active role convening senior representatives from key countries and driving needed compromise. During the early years of the Protocol, UNEP’s Mostafa Tolba was masterful in bringing key countries together to find a workable solution. Through informal, senior-level consultations, Tolba either forged a compromise text acceptable to all, or developed his own proposals that he would offer as a way forward.
While times have certainly changed, it may be that the moment has now arrived for Achim Steiner, UNEP’s current executive director, to actively engage with senior officials from key countries with the goal of advancing efforts at bringing HFCs into the Montreal Protocol.
PREPARED REMARKS BY BOB PERCIASEPE
PRESIDENT, CENTER FOR CLIMATE AND ENERGY SOLUTIONS
INNOVATIVE FINANCE & CLEAN POWER, A SOLUTIONS FORUM
JUNE 25, 2015
Welcome everybody and thank you for being here. I especially want to thank our co-host for today’s event: The George Washington University Law School’s Environment and Energy Program.
My name is Bob Perciasepe and I’m president of the Center for Climate and Energy Solutions, or C2ES.
I think many of you know us, but for those of you who don’t, we’re an independent, nonpartisan, nonprofit group dedicated to bringing diverse interests together to solve our climate and energy challenges.
Today is a perfect example of how we go about doing that. We’re going to be talking a lot about energy efficiency and renewable energy – and how innovative financing can help us increase investment in those areas. I’m pleased to be bringing together top financial experts from Bank of America, JPMorgan Chase, and the Coalition for Green Capital; state leaders from Tennessee and Pennsylvania; and energy leaders from Schneider Electric and Duke Energy. I think this group in itself shows you the mix of people who have to start working harder together to make sure we can make progress on clean energy and energy efficiency.
Finance may or may not have been your favorite class in college, but much of the progress we need to address our climate challenge – more efficiency and more low-carbon energy -- comes down to one question: How do we pay for it? Financing and using markets are ways to accelerate the rate of change.
On the other side of the coin, we’re already paying mounting costs worldwide for climate impacts like increasingly frequent storms and intense heat waves. We’re seeing rising sea levels creating higher risk in coastal areas. We face the prospect of more damage to our infrastructure and more disruptions to our supply and distribution chains, as well as our power and water supplies.
The primary cause of these problems, and you can take this all the way to the Vatican, is us. We’ve been pumping heat-trapping gases into the atmosphere for generations. Last year was the hottest since we started keeping records over 100 years ago.
But we know that there are things we can do. We know what some of the solutions are. We know how to make progress within a generation to change that trajectory. We need cleaner energy, cleaner cars, and more efficient ways to use energy.
Here in the United States, the No. 1 source of carbon emissions is the generation of electricity. EPA is in the process of finalizing a plan that will put a lot of responsibility on states to look at how they can innovate to develop clean power plans to reduce emissions from electric generation. We already have a process underway with light duty vehicles and heavy duty trucks, making them more energy efficient. And we have a lot of opportunity to think about how to do this at the state level for power.
The beauty here is while we continue to think about how to deal with this at the national level, cities and states and businesses are already innovating. They’re already making progress not only in reducing emissions but also in finding ways to accelerate the rate of change and stimulate innovation.
Of course, we want not just clean energy, but also affordable energy. This is a balance we have to have. We’re seeing solar and other renewables drop in price, something that can continue with increased deployment. Efficiency reduces how much energy we use, so that even if there’s a slight uptick in rates, a homeowner’s bill can stay the same.
The objective of having cleaner power and also using less of it provides a real opportunity to find that sweet spot of maintaining that affordability. It’s like what we’re looking at with automobiles. If you use less fuel, the actual cost to own the car is cheaper. The same can be said of energy efficiency in the home, business, and industry.
C2ES found something interesting on affordability when we recently looked at six economic modeling studies of the Clean Power Plan. All of the models project energy efficiency will be the most-used option to implement the plan. The majority of the studies project either cost savings to consumers or total costs of less than $10 billion a year, Per household, that’s about 25 cents a day.
So, how do we get to this future of affordable clean energy and energy efficiency? It takes investment, and that’s what we’re here to explore. How do we catalyze that investment? How do we leverage public funds to get more private dollars? What innovative business models are already working, and how do we scale those up?
It’s not simple. We face some barriers to investment like high upfront costs. If you invest in new windows and solar panels for a high rise, it will take a while to recover those costs in lower energy bills. Another barrier is lack of familiarity. People aren’t sure about new technologies and new financial products, which can make them harder to buy and sell.
Fortunately, there are ways to overcome these barriers. We have a brief overview of some of these options. I’ll mention two: Clean Energy Banks, sometimes called Green Banks; and Energy Savings Performance Contracts.
Clean Energy Banks are generally government-created institutions that can leverage a small amount of public money to increase private investment in clean technologies. Several states have them or something like them – Connecticut, New York, Kentucky, and Hawaii. And others, like Maryland, California, and D.C are thinking about them.
They can provide direct loans, but they also have other tools, such as credit enhancements, letters of credit, and loan loss reserves, that can help lower the risk for private lenders and investors.
So far, Connecticut’s green bank, the nation’s first, has attracted about $9 of private investment for every $1 of public money invested in clean energy projects. The bank oversees more than $100 million in assets.
The second example is an Energy Service Company, or ESCO, whose business model is based on establishing Energy Savings Performance Contracts with customers like cities, hospitals and universities. These contracts let a customer get energy-saving or clean-energy technology at little to no upfront cost. They pay the investment back over time from the money saved through reduced energy bills.
The City of Knoxville, Tennessee, has a 13-year energy performance savings contract that will fund energy efficiency measures at all city buildings, parks and sports facilities. Each year, Knoxville will pay the ESCO a fee based on expected savings from things like better lighting, water conservation, weatherization, and heating and cooling upgrades.
Innovative financial tools are not a panacea, but they are an essential tool to overcoming many of the barriers facing a new technology. They can also engage a broader group of investors, bring more capital to the table, and reduce costs. Those are the conditions that allow new technologies to spread.