EIA: Several factors will force continued decline in U.S. energy CO2 emissions

Published on March 17, 2023 by Kim Riley

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By 2030, increased electrification, higher equipment efficiency, and the deployment of renewables in the electric sector will drive down America’s energy-related CO2 emissions 25 percent to 38 percent below 2005 figures, the U.S. Energy Information Administration (EIA) projects.

According to EIA’s Annual Energy Outlook 2023 (AEO2023), which explores long-term energy trends in the United States, the administration predicts that by the end of the projection period in 2050, U.S. energy-related carbon emissions in 2050 declined by 17 percent compared to EIA’s projections in its 2022 outlook. Factors including the enacted Inflation Reduction Act (IRA) of 2022, technology cost updates, energy system performance, and macroeconomic outlook changes, among others, will cause the decline, the report says.

The AEO2023, released on March 16, predicts “a significant shift toward lower future emissions” compared to last year’s annual report, and notes that emissions reductions are limited by long-term growth in U.S. transportation and industrial sector activity.

“With policy changes over the last year and continued technology innovation, we expect to see significant shifts in energy production and use over the next 30 years,” EIA Administrator Joe DeCarolis said in a statement. “The resulting projections for energy-related CO2 emissions are most sensitive to our assumptions regarding economic growth and the cost of zero-carbon generation technology.”

In the report, EIA also projects that renewable generating capacity will grow in all regions of the U.S. in all AEO2023 cases supported by growth in installed battery capacity. 

“EIA sees stable growth in U.S. electric power demand through 2050 in all AEO2023 cases because of increasing electrification and ongoing economic growth,” according to EIA. “Investment in renewable sources such as wind and solar, and the operating cost advantage of those sources, increases the share of zero-carbon electricity generation in EIA’s projections. EIA projects growth in installed battery capacity in all cases to support growth in renewables.”

Additionally, technological advancements and electrification are projected to decrease demand-side energy intensity, says EIA.

“Not only is the U.S. electric power sector’s composition changing, but we see increased electrification in the end-use sectors,” according to the report’s executive summary. 

Specifically, EIA expects an increase in the deployment of heat pumps, electric vehicles (EVs), and electric arc furnaces in the iron and steel industry. And in the transportation sector, for example, light-duty vehicle fuel efficiency will improve due to rising Corporate Average Fuel Economy standards and increased EV sales, according to AEO2023.

At the same time, high international demand will lead to continued growth in U.S. production, and combined with relatively little growth in domestic consumption, will allow the U.S. to remain a net exporter of petroleum products and natural gas through 2050 in all AEO2023 cases, the report says. 

“Despite no significant change in the domestic consumption of petroleum and other liquids through 2040 across most AEO2023 cases, we expect U.S. production to remain at historically high volumes,” according to the report. “Domestic natural gas consumption also remains relatively stable, despite a shift in electricity generation towards renewables.”

However, EIA expects that the production of natural gas continues to grow in response to international demand for liquefied natural gas.

Along with the 2023 annual outlook, the EIA released a report examining the impacts of the Inflation Reduction Act. If it’s implemented, energy-related CO2 emissions would fall 33% below the 2005 level by 2030. If not, the emissions would decline by 26% below the 2005 level by 2030.

The AEO2023 is available here.