16 October 2024
In my last two blogs, I have focused on key issues to which the two Presidential candidates have paid insufficient attention: the bloated government budget deficit and surging public sector debt, as well as international trade policy and rising US foreign indebtedness. In both cases, I gave the narrow edge to Vice President Harris, despite her plan’s lack of detail and overall shortcomings. Former President Trump’s strategy would lead to higher government debt and inflation than this rival’s.
Meanwhile, despite the death and destruction caused by hurricanes Helene and Milton, the impact of climate change has received little attention. On one level, this is understandable, as much of the US electorate is disengaged or not focused on the topic. Indeed, the issue does not rank amongst the top 5 concerns of American voters.
This is unfortunate, as climate change may prove to be the most consequential development during the next decade and beyond. What progress has the United States made in realising its commitment to achieving Net Zero Green House Gas emissions (GHG) by 2050? What more needs to be done, and which candidate is more likely to deliver the changes required to secure America’s energy security and to provide global leadership on this potentially existential issue? The divergence in approach between the two candidates on this topic is significant. The edge clearly goes to VP Kamala Harris.
Progress, Yes. But, Still Lagging Behind Europe
Since peaking in 2008, US Green House Gas (GHG) emissions have declined 15%. However, the USA remains the world’s second largest polluter, and the largest emitter of carbon dioxide amongst major economies on a per capita basis (Chart above).
The European Union’s performance provides an example of future possibilities for the USA. EU CO2 emissions per person are 60% below the US level, and France and the United Kingdom emit 70% less per individual. Likewise, overall EU emissions declined 2.2% annually during the past decade, nearly twice the pace of America’s improvement.
In assessing the likelihhod of further progress after the upcoming election, the Chart above depicts the steady GHG reductions since the peak. However, the decline is not uninterrupted. During the Obama administration, emissions declined 11%. Similarly, under President Biden, GHGs have declined 5% since the Covid pandemic. On the other hand, pollution levels increased 2% during the first three years of the Trump term.
How Emissions Declined: What America’s Capable of
Identifying the drivers behind the recent decline in US GHGs provides possible insights into the pathway for America’s future energy transition. First of all, the Chart above debunks the pessimistic view that cutting emissions comes only at the expense of economic growth. Indeed, US per capita GDP advanced roughly 20%, while CO2 declined 18% since 2005. If implemented well, the path to Net Zero should add high-paying manufacturing jobs and expand GDP compared to the status quo.
In addition, the efficiency with which America uses energy has improved 25% since 2005 — that is, less energy is used per unit of GDP produced (Chart above). Fuel-efficient technological change will be an important ingredient in future emissions cuts. Another key driver has been the decline in the carbon intensity of energy usage — 15% less carbon is released per unit of US energy consumed. This has resulted almost entirely from the partial transition from coal to natural gas in electricity generation (Chart below). The ongoing transition to renewable energy sources will be vital to a successful transition to Net Zero (next section).
Energy Transition: Taking Stock
An assessment of the sector breakdown of GHG emissions helps identify the challenges ahead. Historically, the electric power sector was the largest US emitter (Chart above). As indicated, however, the sector’s transition to natural gas has led to a 36% decline in GHGs since 2007. Indeed, the power sector accounts for nearly 80% of the overall reduction in US emissions in during this period.
Nevertheless, the US power generation sector confronts enormous challenges. First of all, demand for electricity is projected to increase 30% in the next decade; requiring a huge expansion of the grid. Meanwhile, President Biden has pledged carbon-free power generation by 2035. However, despite increased usage of renewables in recent years, America’s reliance on this energy source ranks amongst the in developed economies (Chart above).
Indeed, the European Union generates twice as much electricity from renewables compared to the USA — Germany and the UK get nearly half their power from this source. France and the UK have eliminated the use of coal, while the USA relies on this highly-toxic source for 16% of electricity. America remains reliant on fossil fuels for 80% of its overall energy consumption.
The transportation sector now is responsible for the largest share of US GHGs. And, worryingly, emissions in this critical area have been rising during the past decade. IMHO, the United States will struggle to achieve its climate goals without widespread adoption of Electric Vehicles (EV) powered by renewable energy. And, despite rapid growth in recent years, EV sales lag well behind Europe (who still have lots of work to do). Expansion of the electricity grid and deployment of charging infrastucture will be crucial.
The US industrial sector is the second largest emitter of GHGs. To be sure, more efficient energy usage have cut emissions by 15% since 1990. However, progress has stalled in the past decade. Meanwhile, CO2 levels continue to rise (not fall) in the commercial and residential sector — collectively accounting for 15% of US emissions. A revolution in the HVAC segment of the building industry is needed.
Meanwhile, technological improvements in the oil & gas industry have reduced especially toxic methane emissions by over 20% since 1980. Again, progress has stalled in the past decade, especially during the Trump administration. Agricultural emissions (10% of the total, and largely methane) have remained stubbornly high. President Biden has signed up to the Global Methane Pledge; aiming to cut emissions by 30% by 2030.
Election 2024: Differences are Stark
The two candidates have distinctly different approaches to energy security and climate action. Donald Trump appears set to resume his earlier encouragement of oil and gas production, which surged during his Administration (Chart above). He ended America’s participation in the Paris Climate Agreement. As we have seen, this strategy led to an increase in GHG emissions during his time in office (pre-Covid). Ironically, VP Harris has been criticised for her lack of support for the fossil fuel industry, despite oil and gas production reaching record highs in recent years — as if that’s desirable. Granted, her U-turn on fracking has dented her credibility on climate strategy.
To be sure, a full assessment of the Biden Administration’s climate achievements are beyond the scope of this blog (I recommend the Rhodium Group’s work). However, he resumed America’s commitment to the Paris Accord. He strengthened the US emission reduction target to 50-52% by 2030 (compared to Obama’s 27% cut by 2025). American emissions have resumed the earlier declining trend.
The passage of the of the Inflation Reduction Act in 2022 is a major achievement, and affirmed America’s commitment to reducing emissions. Already, clean energy investments are surging, up 3 times since Donald Trump left office (Chart above). These measures allow America to exert global leadership on this key topic. Indeed, the EU and UK governments are scrambling to replicate Biden’s accomplishments. This is understandable. As just one example, the US is now beginning to correct its slow start in EVs. Indeed, the next Chart illustrates America has overtaken Europe in battery production capacity after the IRA.
To be sure, there are still huge challenges ahead. Indeed, the Rhodium Group projects the USA will fail to reach its emissions reduction target of 52% by 2030 — they forecast cuts between 32-43% (Chart below). This shortfall would put the Net Zero by 2050 goal at risk. VP Kamala Harris is likely to continue President Biden’s climate strategy; leaving me more confident of continued GHG reductions under her stewardship.
