In 2009, despite no cap-and-trade law, no carbon tax and no major reductions mandated by our EPA, U.S. carbon dioxide emissions dropped by 7.1%, more than in any year since they began tracking emissions in 1949. Meanwhile, China’s increased at near-record levels. What gives?
Our nonpartisan Energy Information Administration cites three causes for what happened here: “an economy in recession, a particularly hard-hit energy-intensive industries sector, and a large drop in the price of natural gas that caused fuel switching away from coal to natural gas in the electric power sector.”
Two of these factors are directly related to the horrendous economic tailspin that pundits tell us was caused by the subprime mortgage bubble (something history may adjudicate differently). The third is a proverbial green swan. Ten years ago the mantra was we were running out of natural gas. No one anticipated the massive volumes trapped in shale formations underneath the surface of much of the planet, nor the ease with which it can now be fractured out of the rock.
All developing (and developed) economies reduce their emissions intensity, unless something is really wrong.
When anticipated supply is sufficiently high, gas undercuts coal as the fuel of choice for electrical generation, which results in reduced carbon dioxide emissions, as natural gas produces only about 50% to 70% of the carbon dioxide per unit output (depending upon your metric) that coal does.
While our emissions drop in spite of our lack of specific policies, China’s go up, even as our environmentalist friends have been crowing, for years now, that China is “going green.”
There may be glimmers of green in their new (12th) Five Year Plan, which begins this year. But, in reality, the greening of China will require a reversal of current trends that is politically impossible. Chinese citizens want higher wages, cars, energy-hogging television, and air conditioning, just as do people in every other developing economy. Tamping down its torrid growth engine will be very difficult.
What about all these news reports that China is committed to major reductions in emissions? Well, they’re not exactly true. If this were Dr. Strangelove, General Turgidson would probably call them “a load of commie bull.”
Even in the new Five Year Plan that has my green friends swooning, emissions of carbon dioxide go up by 15%. All the Chinese have ever proposed to do is to in this timeframe is to reduce their emissions “intensity,” which is the amount released per unit economic output.
Secret: All developing (and developed) economies reduce their emissions intensity, unless something is really wrong. Simply put, there are incentives to produce things more efficiently, as long as energy feedstocks respond to supply and demand.
That said, China’s central planners haven’t always bought such bourgeois economics. As a result, between 2001 and now, their emissions intensity actually rose by 14%. Any pronouncement of great drops in their future intensity has to factor in that they have been going in the wrong direction for years.
Here are two charts that tell everything you need to know:
The top one shows that the Chinese emit about five times as much carbon dioxide per unit output as does the U.S. When it comes to carbon dioxide emissions, China is by far the world’s most inefficient large economy. The red line on that chart reveals that their emissions intensity bottomed out ten years ago and then stayed there.
(Note that the data for these figures comes from the Energy Information Administration and that the top one is based upon market exchange rates. If the renminbi is artificially undervalued by Chinese monetary policy, then the two lines are somewhat closer together).
So if the Chinese are to reduce their intensity by a whopping 50%, they would merely be back on to the trend line that was established in the 1990s. Big deal.
The bottom chart shows carbon dioxide emissions. Note that 2009 emissions in the U.S. were the lowest since 1995 and that our emissions have actually been trending downward since 1999. China’s increased by about 175%.
The bottom chart underscores why mandating emissions reductions here is simply inconsequential unless China does the same.
Every few years Congress attempts to pass some type of reduction mandate. These usually schedule a 20% cutback around 2020, 40% by 2030, and 80% by 2050. Note that China increases its emissions by about 10% of the U.S. total every year. So, if we reduce ours by 20% in 2020, the Chinese will have increased their total by four times that amount at the same time.
It looks like China may be talking a green line, but, thanks in part to our economic decline, the U.S. is walking one.