A report estimates that U.S. carbon dioxide (CO2) emissions rose by 3.4% in 2018 after three years of decline.

The uptick was the second largest annual gain in more than two decades, and was surpassed only by a 3.6% gain in 2010 as the economy recovered from the economic recession. In 2009, emissions fell by more than 7% as economic activity slowed.

The research report, from New York City-based Rhodium Group, said that while a record number of coal-fired power plants were retired in 2018, natural gas not only beat out renewable energy resources to replace most of this lost generation but also fed most of the growth in electricity demand. As a result, power sector emissions overall rose by 1.9%.

Growing use of EVs did not offset an uptick in demand for diesel and jet fuel. Growing use of EVs did not offset an uptick in demand for diesel and jet fuel. The transportation sector remained the largest source of U.S. emissions for a third year, fueled by demand for diesel and jet fuel, which offset what the report said was a "modest decline" in gasoline consumption.

The buildings and industrial sectors also posted year-on-year emissions gains. Some of this was due to unusually cold weather at the start of 2018, the report said.

Emission goals

Energy-related CO2 emissions ended the year 11.2% below 2005 levels, a benchmark year for many emission-reduction policy initiatives. The research said that’s an uptick compared to 14% below 2005 at the end of 2017.

The U.S. target under the Copenhagen Accord is a 17% reduction in all greenhouse gas (GHG) emissions by the end of 2020. Assuming proportional reductions in other gases, the report said the U.S. will need to reduce energy-related CO2 emissions by 3.3% per year, on average, in 2019 and 2020 to meet the Copenhagen target.

"That is significantly faster than the 1.2% average annual reduction between 2005 and 2017," the report said. It added that the pace of energy CO2 emission reductions "will likely need to be even faster" as the decline in non-CO2 gases has underperformed that of energy-related CO2 in recent years.

To meet the Paris Agreement target of a 26% to 28% reduction from 2005 levels by 2025, the U.S. would need to reduce energy-related CO2 emissions by 2.6% on average over the next seven years, or faster if declines in other gases do not keep pace. The report said that’s more than twice the pace the U.S. achieved between 2005 and 2017 and significantly faster than any seven-year average in U.S. history. The Trump administration announced plans in 2017 to withdraw from the Paris Agreement and its emission targets.

Fossil fuel combustion for power

Emissions of CO2 from fossil fuel combustion in the U.S. peaked in 2007, at just over 6 billion tons, the report said. Between then and the end of 2015, emissions fell by 12.1%. The recession played a role in that decline, but the carbon intensity of U.S. energy supply also dropped, primarily due to a switch in power generation from coal to natural gas, wind and solar.

Xcel Energy's Sherco generating station. Source: Xcel Energy/Tony WebsterXcel Energy's Sherco generating station. Source: Xcel Energy/Tony WebsterSince 2016, the pace of U.S. emissions decline has slowed, from 2.7% in 2015 to 1.7% in 2016 to 0.8% in 2017.

The research team based its findings on emissions data from the Energy Department's Energy Information Administration (EIA) for the first three quarters of the year, weekly EIA petroleum supply data, plus daily power generation and natural gas data from Genscape and Bloomberg.

As of the end of October, 11.2 gigawatts (GW) of coal-fired power generation capacity had closed in the U.S. With another 2.5 GW of capacity scheduled for retirement by the end of December. The report added that 2018 could end up being the biggest coal plant closure year on record.

U.S. power consumption increased meaningfully in 2018. Natural gas not only replaced most of the lost coal generation but also fed most of the load growth. Between January and October, U.S. power companies added a greater share of gas capacity than the share of retired coal capacity, and twice as much gas-fired generation went online as wind and solar capacity additions. Natural gas-fired generation increased by 166 million kWh during the first 10 months of the year. The report said that was three times the decline in coal generation and four times the combined growth of wind and solar.

Combined with daily power generation data from Genscape for November and December, the firm estimated that U.S. power sector emissions rose by 34 million metric tons in 2018. That compared to a decline of 78 million metric tons in 2017 and a 61 million metric ton average annual decline between 2005 and 2016.

Uptick from transportation

The transportation sector remained the largest source of CO2 emissions in the U.S. During the first nine months of 2018, gasoline demand fell by 0.1% as efficiency gains offset an increase in vehicle miles traveled. Growth in demand for both trucking and air travel increased demand for diesel and jet fuel by 3.1% and 3.0%, respectively. Efficiency improvements and electrification are beginning to make a dent, the report said, although not enough to meet medium- and long-term U.S. emissions targets.

Preliminary fourth-quarter data suggests an accelerated decline in gasoline demand, an uptick in diesel demand and moderation in jet fuel demand relative to the first three quarters of the year. All told, the report estimated that transportation emissions grew by 1% in 2018, roughly the same as in 2017.

Unchecked growth in industrial emissions?

Turning to the industrial sector, the firm said that absent a significant change in policy or a major technological breakthrough, the sector is on track to become an increasingly large share of U.S. greenhouse gas emission in the years ahead (including non-CO2 gases). The report authors said they expect the sector to overtake power as the second-leading source of emissions in California by 2020 and to become the leading source of emissions in Texas by 2022.