GHG emissions decline in 2023, led by 8 percent drop in power sector

Greenhouse gas (GHG) emissions in the United States dropped 1.9 percent in 2023 compared to 2022, driven by a drop in emissions for the power sector, according to new research from the Rhodium Group.

It marks the first time since the 2020 pandemic that GHG emissions dropped and the economy grew, by 2.4 percent, to be exact. U.S. emissions are now 17.2 percent below 2005 levels and 6 percent below 2019 levels. The 1.9 percent decline is the largest since 2019, not counting the pandemic-influenced drop in 2020.

One of the biggest reasons for the GHG emissions decline last year was an 8 percent drop in emissions in the power sector. The major reason for that is the decline in the use of coal power plants, along with the rise in the use of both natural gas and renewable generators. Coal has continued its long-term decline and only accounts for 17 percent of generation in 2023 – a record low. In fact, the Rhodium Group estimated that the nuclear fleet generated more power than the coal fleet in 2023 and this is only the second time in U.S. history that that has occurred.

Natural gas generation grew more than twice as fast as renewable generation did in 2023. The solar sector was on track for another record year of installations while new utility-scale battery installations were already ahead of 2022 levels through just the first three quarters of 2023. However, installations of wind turbines were on track for perhaps just half of last year’s level and just a third of installation levels in 2021.

Another major factor was a 4 percent decline in emissions from residential and commercial buildings. In the buildings sector, a milder-than-average winter reduced fuel demand and led to lower overall emissions.

However, GHG emissions rose in the transportation sector by 1.6 percent over 2022 levels. The increase mostly stemmed from a continued rebound in jet fuel consumption after the pandemic, as travel has increased. Also, through September 2023, road traffic volumes were up 2.2 percent over 2022 levels, contributing to an increase in gasoline consumption.

The industrial sector also saw emissions rise, climbing 1.2 percent in 2023. The report found that the U.S. is on track for record dry gas production in 2023, and crude oil production looks to rival, if not exceed, 2019 record levels. Further, leaking, venting, and flaring of methane and CO2 during production and transportation of these fuels drove the bulk of industrial sector emissions increases in 2023.

However, the group points out that this should be reduced by the EPA’s newly finalized oil and gas methane rules. The EPA estimates that the rules will reduce GHGs from the oil and gas sector by nearly 40 percent of today’s levels in the late 2020s. The report added that meaningful decarbonization in other parts of the industrial sector, like iron and steelmaking, cement manufacturing, and chemical production, is still needed.

Looking ahead, Rhodium Group, along with other analysts, project that the Inflation Reduction Act and the Infrastructure Investment and Jobs Act will drive large reductions in GHG emissions over time. However, it will take years for the full impacts of those pieces of legislation to be seen in emissions outcomes.

While the 2023 reduction is a step in the right direction, the report added that to meet the 2030 climate target under the Paris Agreement, the U.S. needs to average a 6.9 percent emissions reduction every year from 2024 through 2030. That is more than triple the 1.9 percent drop in 2023.