Business Insider's Joe Weisenthal highlights some good news to start the week. Projections of US CO2 emissions in 2030 at the lowest they've been in five years, according to the 2013 Annual Energy Outlook, the long-term predictions of the US Energy Information Administration.
This chart, from the EIA, shows the changes:
The administration gives five reasons for the decline in expected CO2 emissions between 2009 and 2013:
- Downward revisions in the economic growth outlook, which dampens energy demand growth;
- Lower transportation sector consumption of conventional fuels based on updated fuel economy standards, increased penetration of alternative fuels, and more modest growth in light-duty vehicle miles traveled;
- Generally higher energy prices, with the notable exception of natural gas, where recent and projected prices reflect the development of shale gas resources;
- Slower growth in electricity demand and increased use of low-carbon fuels for generation;
- Increased use of natural gas
One of the reasons for the failure of the so-called cap & trade program in the US (other than political), has to do with the fact that carbon emissions have declined on their own - without any caps. And why would a company pay for an emissions "allowance" if it can stay under the cap without it. Of course politically it made no sense to force companies to pay at the time when they were emitting materially less carbon on their own. Furthermore, there was no incentive for investors to hold these contracts because each year the long-term projections for carbon emissions in the US have declined.
That analysis is undoubtedly correct; the US cap and trade system was predicated on limiting the growth in emissions, and if they are naturally falling then clearly that limit will be moot.
That said, all it really does is highlight the appalling lack of ambition of the American climate programmes – not that the European cap-and-trade programme is doing much better. This is another argument in favour of carbon taxes versus cap-and-trade programmes; if you get the cap wrong on cap-and-trade, your programme is useless, but no matter what the value of a carbon tax, it will always have some effect.