Were US Energy Policies Effective in Reducing 2013 Fossil Fuels Consumption?
Total U.S. 2013 domestically produced energy supplies grew very significantly. Energy sources, including wind & solar power and crude oil, grew at historic rates and some sources grew more slowly or declined. Refer to a recent TEC Post: U.S. 2013 Domestic Energy Supplies Growth Scorecard - Part 1. Reducing or replacing fossil fuels consumption has been a Government priority since the 1970’s energy crises. Federal policies were initially developed to reduce U.S. reliance on petroleum fuels and increase energy security, and more recently, to reduce U.S. carbon emissions from fossil fuels consumption to possibly help mitigate future climate change. How effective have past and recent Government energy policies and regulatory actions been in reducing U.S. fossil fuels consumption and associated carbon emissions during 2013?
President’s 2013 State of the Union Address (SOTUA) – In the 2013 SOTUA, President Obama stated implementing the ‘sequester’ (Federal spending cuts) would be devastating by slowing the economic recovery and energy development. He stated the U.S. was finally poised to produce more oil, and double car efficiencies and the amount of domestic renewable energy production. He referenced that U.S. carbon emissions have fallen and (the U.S.) must do more to combat climate change. He further stated if Congress won’t act, I will, with executive actions to speed the transition to more sustainable (renewable) energy sources. Following the 2013 SOTUA the President’s Cabinet began taking actions to further encourage renewables and increased energy efficiency, and increase the environmental restrictions on domestic coal consumption. So since 2012, how well did the President’s Administration do in predicting and facilitating the 2013 SOTUA claims and goals?
Overall U.S. 2013 Economy and Energy Performance – Despite the claims that the ‘sequester’ would be devastating to the economy and energy development, annual GDP growth increased from 2.0% (2012) to 2.7% (2013). U.S. unemployment declined from 7.9% to 6.7% and the U.S. trade deficit also dropped by 26% 2012-13. All these improvements indicated good progress in recovering from the 2007-09 recession.
Energy production also grew at very strong levels in 2013. Renewable energy, led by wind & solar, grew at near historic rates. Growth of U.S. domestic crude oil production exceeded imports for the first time in 20 years, and, domestic natural gas continued to build on historic high production levels since 2010.
The Federal Government continued to implemented past and develop some new clean energy and environmental policies/regulations 2012-13 that were intended to expand the production of renewable energy supplies, increase energy efficiency, and reduce coal consumption and the need for other fossil fuels. How effective were active-new recent clean energy and environmental policies in reducing fossil fuels consumption and carbon emissions in 2013?
2013 Expanded Renewables Production-Consumption and Increased Efficiency Policies – Renewable power generation capacity has been strongly supported by many Government policies including the Federal renewable energy ‘Production Tax Credit’ (PTC) and States’ ‘Renewable Portfolio Standards’ (RPS). As a result of these and other past-current Government policies, wind & solar power generation grew at historic levels of 20% & 37% respectively in 2013. Other renewable power such as geothermal also grew at a significant 5% level during 2013.
Energy efficiency was strongly supported by a number of Government policies and tax credits during 2013. Federal ‘Consumer Energy Efficiency’ (CEE) policy covered major appliance upgrades, insulation, and Residential solar PV, small wind turbines and geothermal heat systems. The Federal ‘Corporate Average Fuel Efficiency’ (CAFE) standards continued to increase light duty vehicle fuel efficiencies. Electric vehicles also continued to be supported by tax credits.
Renewable fuel policies continued to replace significant petroleum motor fuels in 2013. The Federal ‘Renewable Fuel Standard’ (RFS2) expanded the production and blending of biofuels into petroleum motors by 5% 2012-13. Total increased biofuels blending displaced about 3% (constant heat content basis) of equivalent petroleum motor fuels.
In 2011the EPA implemented new ‘Mercury and Air Toxics Standards’ (MATS), which substantially reduces all coal power generation plants’ stack emissions. The MATS effectively requires installing new state-of-art stack scrubbers on most existing coal power plants over a four year period (2012-2015). During 2013 the EPA began developing ‘new power plant stack carbon emission standards that is believed to effectively stop the construction of essentially all new future coal power plants. The combination of these new regulations should have begun significantly reducing the Power Sector’s coal consumption during 2013 as older, less efficient power plants begin shutting down to avoid the often prohibitively high costs of new stack scrubbers and possible future CCS technologies. In addition, the EPA accelerated controlling coal mine ‘water discharges’, which could restrict domestic coal mining-production.
Government Policies and Other Factor’s Impacts on 2013 Fossil Fuels Consumption – In 2013 U.S. energy supplies grew at very large rates. While increased available domestic energy supplies do affect consumption of individual primary energy sources such as wind & solar power, other primary energy sources, i.e. fossil fuels, are significantly affected by many other factors; including Free Markets. Refer to the following Figure 1.
Figure 1 – U.S. 2012-13 Primary Energy Consumption Changes by Source (Scorecard - Part 2)
Data Source: EIA MER ‘Table 1.3 - Primary Energy Consumption by Source’. Petroleum includes Natural Gas Liquids. ‘Other Renew(ables)’ includes Hydropower, Geothermal, and Biomass. Note: 2013 total energy supply by ‘Primary Source’ is projected based on 2013 Jan-Oct data and 2012 10- & 12-month data.
The above EIA data surprisingly indicates that coal consumption actually increased at a greater level than all other primary energy sources (petroleum + natural gas + nuclear + total renewables) combined! And, lower carbon natural gas consumption has possibly declined slightly. What’s going on here? Coal production declined far more than all other primary energy supply sources in 2013, but consumption increased substantially? Possible explanations and regulatory/free market impacts to follow.
Note: the data in Figure 1 are estimates based on the latest EIA MER data, which will be updated in future months. However, based on past EIA data reviews, the likelihood of the above individual primary energy data changing by more than a couple percent +/- is relatively small.
Impacts of 2013 Fossil Fuels Consumption Changes on Carbon Emissions – Increased fossil fuels consumption, particularly coal, will obviously increase U.S. carbon emissions, but is the increase significant? The following Figure 2 shows the increase of carbon emissions associated with the increased fossil fuels consumption shown in Figure 1.
Figure 2 – U.S. 2012-13 Carbon Emission Increases from Fossil Fuels Consumption
Data Source: EIA MER ‘Table 12.1 – Carbon Dioxide Emissions from Energy Consumption by Source’. Note: 2013 carbon emissions by source’ is projected based on 2013 Jan-Oct data and 2012 10- & 12-month data.
The above EIA data shows that total U.S. carbon emissions increased by almost 100 million metric tons per year (MMT/yr.). Based on estimated total carbon emissions of 5,380 MMT/yr., this increase represents almost a 2% increase. Unfortunately, this increase is a significant set-back for the President’s plan to reduce total U.S. greenhouse gas emissions by 17% in 2020; or a 2005-20 equivalent carbon dioxide emission reduction of 1020 MMT/yr.
Changes of 2013 Fossil Fuels Consumption by End-use Sector – To more clearly describe the major factors that affected U.S. energy consumption during 2013 should initially begin with covering the changes of each End-use Sectors’ (Power, Industrial, Transportation, Residential and Commercial) fossil fuels consumption. Refer to the following Figure 3.
Figure 3 – U.S. 2012-13 Fossil Fuels Consumption Changes by End-use Sector
Data Source: EIA MER ‘Tables 2.2 thru 2.6 – Energy Consumption by Sector’. Note; the Industrial, Transportation, Residential and Commercial Sectors’ data include the primary energy used to generate the electric power consumed by each Sector from Power Sector purchases.
The above EIA shows that the majority of increased coal consumption was clearly in the (Electric) Power Sector and the majority of increased petroleum was consumed by the Industrial Sector. Natural gas consumption changes varied between all End-use Sectors.
Factors that Impacted U.S. 2013 Fossil Fuels Consumption – The following summarizes major factors that impacted End-use Sector fossil fuels consumption:
Coal – Prior to 2013 the largest impact on coal consumption was fuels switching from coal-to-natural gas. Re. a prior TEC Post’s last bar chart. In 2013 this market behavior apparently reversed; fuels switching from natural gas-to-coal. This was due in part to increasing natural gas prices and installations of new stack scrubbers required for MATS compliance before 2015. Fuels switching to cleaner (lower sulfur & metals) coal could also be a significant factor. How much of this increase is due to coal plant owners’ maximizing power generation in the final years of possible operation prior to shutdown in 2015 is yet to be determined.
Natural Gas – Fuels switching to coal is obviously a major factor to reduced Power Sector natural gas consumption. Another factor is the increase in wind + solar power generation. On average these intermediate renewable power sources are only capable of displacing natural gas intermediate-peaking power generation. Somewhat surprising was the relatively large increases in the Residential and Commercial Sector’s natural gas consumption. This was apparently due to in part to fuels switching from No.2 heating oil, LPG and wood to natural gas, and, the more severe winter conditions that recently developed, which contributed to increased natural gas heating fuel demand. The increase in the Industrial Sector’s consumption is primarily due to the economic recovery and increased manufacturing output.
Petroleum – The increased Industrial Sector consumption is also a function of increased manufacturing-production output and the decline in the Residential and Commercial Sectors is due primarily to fuels switching to natural gas. Somewhat surprising, however, is the small, but still significant increase in the Transportation Sector’s petroleum consumption. Increased Transportation petroleum demand is due to increased diesel (+72 thousand barrels per day; KBD), gasoline (+54 KBD) and jet (+15 KBD) consumption 2012-13. While the increased diesel and jet is likely the result of increased Industrial & Commercial Sectors’ economic output and increased truck/rail/marine transport of domestic crude oil production and Canadian imports, the increase in gasoline is more difficult to understand. In light of recent reduced average annual ‘vehicle miles travelled’ (VMT) and increased CAFE standards 2012-13 gasoline consumption was expected to decrease. Further analysis will be needed to determine the primary reasons for this gasoline consumption increase; which must be delayed until additional data is developed by the DOT and DOE later 2014.
Government Policy Impacts on Fossil Fuels Consumption and Needed Improvements – Federal and State PTC, RPS, RFS and other regulations have successfully expanded the production and consumption of many renewables. However, the effectiveness of these regulations in displacing fossil fuels has apparently been inadequate to facilitate continuous reductions in fossil fuels consumption during 2013. Federal CAFE, CEE and other energy efficiency regulations should directly reduce the demand for petroleum heating and motor fuels. Unfortunately the level of these reduced fossil fuels demand improvements have apparently been unable to offset the balance of fossil fuels consumption increases largely associated with GPD growth in 2013.
So, what are the needed improvements to more effectively and continuously reduce future U.S. fossil fuels consumption and associated carbon emissions? Accelerate implementing new carbon emission standards for existing power plants? Restore the expired renewable energy subsidies? Eliminate CAFE compliance loopholes and/or expand efficiency standards for all transportation modes? Increase renewable energy R&D funding? Further support equipment/building energy efficiency improvements? Develop a National renewable power portfolio standard? Open up off-shore (lower carbon) ‘conventional’ oil & gas reserves for new production? Expand nuclear power? Implement fossil fuels consumption/carbon taxes? Or, other missed opportunities, restrictions and incentives?
What changes, improvements or innovations do you strongly believe are needed to most feasibly and cost effectively reduce the need for fossil fuels consumption and do so without inhibiting the U.S.’s current recovery from the 2007-09 economic recession?
Energy Consultant and Professional Engineer. 35 years experience in petroleum & clean energy businesses. Education: Chemical Engineering/Chemistry degrees from U.C. Davis and MBA from Saint Mary's College/U.C. Berkeley. Lifetime student of the natural sciences. Experienced in refining design/operations/maintenance, economics & project development/management, business development, energy ...
Other Posts by John Miller
The Energy Collective
- Rod Adams
- Scott Edward Anderson
- Charles Barton
- Barry Brook
- Steven Cohen
- Dick DeBlasio
- Simon Donner
- Big Gav
- Michael Giberson
- James Greenberger
- Lou Grinzo
- Tyler Hamilton
- Christine Hertzog
- David Hone
- Gary Hunt
- Jesse Jenkins
- Sonita Lontoh
- Rebecca Lutzy
- Jesse Parent
- Jim Pierobon
- Vicky Portwain
- Tom Raftery
- Joseph Romm
- Robert Stavins
- Robert Stowe
- Geoffrey Styles
- Alex Trembath
- Gernot Wagner
- Dan Yurman