NRDC’s 8th Annual Energy Report: Slow and Steady Will Not Win the Climate Race

Introduction

There was good, mixed, and bad news for the U.S. energy sector and our climate in 2019. After a sharp uptick in 2018, total U.S. carbon pollution declined by 3 percent in 2019 (but still remained above 2017 levels). The power sector—which has helped drive these reductions—officially hit the 2030 emission reduction targets from President Obama’s Clean Power Plan 11 years early, despite the Trump administration repealing and replacing the rule. Wind and solar energy are thriving, and state laws, utility commitments, and corporate clean energy goals made in 2019 are poised to further accelerate the growth of renewable energy across the country.

Unfortunately, these commitments are insufficient to avoid the worst impacts of climate change. The reductions achieved, and the pace at which we have achieved them, are well below the level we need if we are to keep the increase in global warming below 1.5 degrees Celsius. The regulatory and environmental rollbacks over the last four years at the federal level have greatly hindered the nation’s ability to clean up its energy systems. However, the incoming Biden administration offers new opportunities for climate action by strengthening, expanding, and building upon the clean energy policies already in place at the city and state levels.

This is NRDC’s eighth Annual Energy Report detailing U.S. energy trends, incorporating final data released 10 months after the year’s end. The trends and milestones from 2019 offer insights into today’s circumstances and where we are headed in terms of our future energy system, economy, and climate. This year, however, the events of 2020 and the unexpected shifts in the energy world amid a deadly pandemic and global recession have largely overshadowed the final energy outcomes of 2019. Therefore, we are including references to early energy signs from 2020 in this edition.

Climate and Air Pollution

President Obama’s Clean Power Plan—the nation’s first standard limiting carbon pollution from power plants—set sector-wide carbon emissions targets for 2030. In 2019 the power sector met those standards a full 11 years ahead of schedule, even after the Trump administration officially repealed the plan. Power sector emissions in 2019 fell to 33 percent below 2005 levels as the nation continued to move away from the dirtiest (and increasingly uneconomic) fossil fuels and invest in clean energy technologies. Most notably, 2019 was the first year that coal provided less than 25 percent of total U.S. electricity generation.

Power sector pollution is expected to be even lower in 2020, due largely to the pandemic, as decreased consumption from businesses and industry more than offset increases in demand from residential customers. This shift in demand hit coal power especially hard in 2020, as it tends to be the most expensive source of electricity and thus was the first source of power to be dropped when electricity demand fell. In the first nine months of 2020, power-related carbon emissions were 12.5 percent lower than during the same period last year.

The decreased reliance on and use of coal in the United States over the last few years has had numerous benefits. In 2019, for the first time since the 1990 passage of the Clean Air Act Amendments, health-harming nitrogen oxide (NOx) and sulfur dioxide (SO₂) pollution from power plants fell to below 1 million tons each. Since the passage of the amendments, annual SO₂ pollution from power plants has fallen by 94 percent (from 15.7 million to 970,000 tons) and annual NOx emissions fell by 86 percent (from 6.4 million to 880,000 tons). The annual monetized public health benefits from these pollution reductions amount to between $500 billion and $1 trillion.

The power sector continues to provide the bulk of U.S. pollution reductions. Economy wide, carbon pollution fell 3 percent year-over-year—a welcome change from 2018, when carbon pollution rose for the first time in five years—though it still remained slightly higher than carbon pollution levels in 2017. Additionally, 2019 emissions were just 8 percent lower than 2010 levels; by contrast, the Intergovernmental Panel on Climate Change (IPCC) says global carbon dioxide (CO₂) emissions must drop to 50 percent below 2010 levels by the end of this decade in order to keep warming below 1.5 ⁰C by the end of this century. Over the next 10 years, the United States will have to quintuple the amount of emission cuts made in the last decade to achieve this target.

While much work remains to be done, states, cities, and businesses have accelerated their progress, even as the federal government made little headway or even went backward. Since the start of 2019, 13 states plus the District of Columbia and Puerto Rico have set “net zero” requirements or goals (where climate-warming emissions are balanced, or “netted out,” by sequestering an equal amount from the atmosphere) covering either their power sector or entire economy. That brings the total to 16 states plus DC and Puerto Rico. The states are Arizona, California, Connecticut, Hawaii, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, New York, Virginia, Rhode Island, Washington, and Wisconsin. More than 210 cities and 150 business have pledged the same to date.

Renewable Energy

States, cities, utilities, and businesses made strong commitments to renewable and clean energy in 2019. Renewable energy has seen ever-improving economics and steady growth; wind and solar generation officially made up 10 percent of the nation’s electricity mix for the first time, while their costs fell 65 percent in the past decade. 

In 2019 alone, seven states plus Washington, D.C., and Puerto Rico increased their renewable portfolio standards (RPS) or clean energy standards (CES), which specify the percentage of retail electricity sales that must be supplied with renewable or clean electricity. These policies have been responsible for driving roughly 50 percent of the total U.S. renewable energy growth since 2000. Despite the challenges associated with COVID-19, 2020 is expected to be a record-setting year for new wind and solar development.

In addition to state and local governments, utilities have a large role to play in the energy transition. In 2019, seven investor-owned utilities and two major municipal utilities—the Los Angeles Department of Water and Power and Omaha Public Power District—made commitments to achieve carbon-free electricity or net-zero emissions by mid-century or earlier. In just the first nine months of 2020, an additional eight large investor-owned utilities pledged to reach the same goals, though not all detailed reasonable pathways to achieve them. In total, states and utilities that have committed to transitioning to 100 percent clean power serve nearly 83 million households and businesses, representing around 50 percent of all U.S. electricity demand in 2019.

The business sector also made significant strides in 2019 toward a carbon-free future. Large U.S. companies committing to operate on 100 percent renewable or clean electricity by 2050 included Budweiser, 3M, Target, Estee Lauder, and many more. According to one report, climate commitments from major U.S. corporations over the next 10 years will create demand for up to 85 gigawatts of renewable energy, equivalent to all renewable energy capacity today in California, Texas, and Washington combined. Businesses have been a major driving force for near-term utility-scale wind and solar development, providing private funding and affecting both the number and size of projects built across the country.

Energy Efficiency

Energy efficiency is central to combating the climate crisis—and is the cheapest way of doing so. Using energy more efficiently in the energy, transportation, industry, and buildings sectors means less pollution and lower customer energy costs. Without advances in energy efficiency, harmful carbon emissions would be 60 percent higher than they are today. Driven by investments, innovation, and policies, everything from household appliances to factories has become more efficient, saving consumers roughly $800 billion in energy costs annually. But there is so much more potential to be tapped: energy efficiency alone could slash U.S. energy consumption enough to cut greenhouse gas emissions in half by 2050 while saving consumers and businesses more than $700 billion.

Despite all this, the Trump administration has rolled back critical efficiency standards across the economy while failing to meet statutory deadlines for reviewing and updating 25 of them. For example, in 2019 the administration rolled back two rules phasing out inefficient light bulbs. An NRDC analysis shows that this action, which is being contested in court, could cost consumers an extra $14 billion annually on their utility bills.

In the face of federal efforts to undercut energy-saving electricity and appliance standards, cities, states, and utilities have doubled down on efficiency rules. California, Vermont, Nevada, Washington, and Colorado have already enacted legislation to require more efficient light bulbs. In addition, nearly 40 utilities signed on to a letter to the U.S. Department of Energy expressing opposition to the rollback of the federal standard. And just recently, thousands of local officials from around the country participated in the process for establishing the 2021 International Energy Conservation Code for new residential and commercial buildings, which will lead to substantial energy savings relative to the current code once approved by states and localities. Washington, Colorado, Hawaii, and Nevada all passed laws strengthening appliance standards, while six other states plus the District of Columbia filed bills for the same purpose.

In 2019 energy efficiency was the largest job creator of the clean energy economy, adding 54,000 new jobs for a total of more than 2.3 million workers in areas such as HVAC, materials production, lighting, and more. All states plus Washington, D.C., saw growth in efficiency employment, with California, Texas, and New York at the top.

Local governments also played a significant role in advancing efficiency—from improving building energy codes and appliance standards to more actively engaging with low-income communities and communities of color, which are disproportionately impacted by high energy bills and inefficient systems. Milwaukee, for example, provided energy efficiency funding to low-income neighborhoods by offering a combination of payback, deferred, and forgivable loans to make home efficiency improvements. Cities such as San Francisco, Washington, D.C., New York, Portland, and Seattle implemented programs to expand efficient and clean modes of transportation for low-income communities.

Unfortunately, the COVID-19 crisis took a devastating toll on efficiency employment. Since March 2020, net job losses have reached nearly 320,000, the most of any clean energy sector. Thankfully, employment numbers have started to climb again since June and could rise even more with aid from federal and state governments.

Transportation

The transportation sector is America’s leading source of greenhouse gas emissions. We have the solutions, but there are many challenges when it comes to implementation, which will require substantial investments in vehicle electrification, charging infrastructure, battery technologies, and newly imagined public transit systems. And the Trump administration made decarbonizing the transportation sector even more challenging by weakening clean car and fuel economy standards. The rollback gives automakers license to produce highly polluting vehicles that, by the administration’s own analysis, could increase carbon emissions by at least 867 million metric tons of CO₂—equal to the annual pollution from 187 million cars—relative to the standards being rolled back, while forcing individual motorists to spend $500 more on gasoline over the life of a vehicle.

Despite this federal blockade, states and other sectors continue to drive the transportation industry toward a clean energy future. California Governor Gavin Newsom recently issued an executive order requiring all new passenger cars and trucks sold in California to be zero-emission by 2035. In 2019 the business and utility sectors saw several groundbreaking deals, with Amazon purchasing 100,000 electric delivery vehicles from Rivian and Dominion Energy laying out a plan to electrify buses in all of Virginia’s school districts by 2030. Additionally, the California Public Utilities Commission approved plans by four large private utilities to install $55 million worth of electric vehicle (EV) charging stations in underserved areas.

The United States saw more than 320,000 new EV sales in 2019, making it the third-largest EV market behind China and Europe. EV sales (including plug-in hybrids and battery electric vehicles) increased by over 355 percent from 2011 to 2019, and total EV sales in this period reached more than 1.4 million.

In 2019, the United States deployed 1,535 new public EV chargers, bringing the total number of public chargers to more than 26,000. The average cost of charging an electric car in 2019 was $0.15 per kilowatt-hour, meaning that for every 100 vehicle miles traveled, the average EV cost $4.50, compared with $10.80 per 100 miles for conventional gasoline-powered vehicles.

Oil and Gas

Domestic oil and gas production far outpaced demand in 2019, contributing to a global supply glut and falling prices (both of which worsened in 2020 due to COVID-related demand reductions). Despite what this clearly augurs for the fossil fuel industry, we continue to produce oil and gas in vast quantities. In the United States, oil and gas consumption accounted for 80 percent of carbon emissions in 2019—and fossil fuel production also emits other harmful greenhouse gases such as the climate super-pollutant methane. It is imperative that we move away from new oil and gas development, investing instead in clean, efficient, and electric options both at home and abroad, to avoid environmental disaster.

The advent of horizontal drilling and hydraulic fracturing, also known as fracking—wherein water, sand, and chemicals are injected into shale and other so-called tight rocks at high pressure to fracture the rocks and release gas trapped inside—has vastly increased domestic gas and oil production. This has come at a severe cost, harming both our communities and the environment by contaminating air and drinking water. Fracking has also ruined landscapes, caused earthquakes, harmed human health, and contributed to climate change.

Crude Oil

The United States officially became the world’s top producer of crude oil in 2019 (overtaking Russia), with domestic production surpassing 12 million barrels per day. Most of the growth was in the Permian Basin, which covers portions of Texas and New Mexico. Texas now produces over 40 percent of all the nation’s crude oil, and its production has quadrupled since 2010.

This rapid growth has led to a huge increase in flaring in the Permian Basin region—where fossil (aka “natural”) gas is burned off and released into the atmosphere, essentially wasting the gas that comes up as a by-product of drilling for oil. Flaring also poses a significant health risk to local communities, where it is linked to preterm births and reduced birth weight, eye and skin irritation, as well as headaches and nausea. Flaring and venting consumed about 293.2 billion cubic feet of gas last year—enough wasted gas to supply every household in New Mexico and Texas for a year and meet the annual gas needs of New Mexico’s industrial sector.

Fossil Gas

Fossil gas was the only fuel source to see increased carbon pollution in 2019 (a year in which, economy wide, emissions fell 3 percent). U.S. gas consumption in 2019 was the highest on record, with more than 85 billion cubic feet consumed every day on average. This increase was driven by the power sector, which consumed 7 percent more gas than in 2018.

In 2019 gas accounted for 38 percent of total electricity generation, followed by 23 percent for coal and 20 percent for nuclear. Gas’s dominance of our electricity system is relatively new, resulting from an influx of cheap, under-regulated fracked gas.

In response to this troubling trend, Michigan, Ohio, and Pennsylvania have more than 8 gigawatts (GW) of new gas power plants under construction—which could produce as much carbon pollution as four million cars each year. Meanwhile, it’s not just climate activists who have been saying there isn’t room in the emissions budget for all this gas. Financial institutions, regulators, and think tanks have all begun to warn that gas plants may quickly become unnecessary, stranded assets. Minimizing investments in new polluting gas infrastructure is crucial to meeting our long-term climate goals. Better options, such as energy efficiency, renewables, renewable-supporting storage, and clean electrification, should be pursued instead.

Coal

Coal’s economic woes only worsened in 2019, and these financial hits helped accelerate the transition away from the dirtiest fuels, even as the administration weakened and rolled back many environmental regulations. For the first time in 130 years, energy from renewable resources surpassed that from coal in 2019. And for the first time on record, coal power’s market share dipped below 25 percent (it was about 50 percent a decade ago).

Looking ahead at 2020, coal’s share is expected to fall to around 20 percent, largely because reduced electricity demand due to quarantine measures has hit coal power especially hard. This is because coal tends to be the most expensive kind of energy by unit and thus was the first pushed out when electricity demand slumped due to stay-at-home orders.

The decrease in coal generation and market share in 2019 (before the pandemic hit) was driven by both the retirement of coal plants and the decreased utilization of those coal plants that remain online. Almost 16 GW of coal capacity was retired in 2019, or about 7 percent of the capacity of the entire fleet (and similar to the near-record number of retirements in 2018). A total of 91 GW of coal capacity has been retired in the last decade, or over 40 percent of the coal fleet operating today.

Another 62 GW of planned coal retirements have already been announced for this decade, representing up to 462 million avoided tons of carbon pollution annually—comparable to the amount of pollution associated with the electricity consumed by 71 million homes each year. The recent retirements and decisions to close plants over the next year have occurred as market forces, state policies, and business, utility, and state interest in clean energy continue to drive coal out of the economy.

Meanwhile, states, local communities, and utilities are working to ensure that the transition away from coal does not leave communities stranded. A number of state and utility actions in 2019—such as passage of the New Mexico Energy Transition Act—have highlighted the need for businesses, cities, and states to work together and proactively to help impacted workers and communities move past coal toward a cleaner, more diverse, and more resilient future.

Looking Forward

The U.S. energy trends of 2019 highlight both the progress that we’ve made and challenges we face in transitioning to a carbon-free economy.

Amid the coronavirus pandemic, energy trends shifted dramatically in the first months of 2020 due to stay-at-home orders. Power sector pollution is expected to decrease further as a result of lower electricity demand in the business and industrial sectors—but at the cost of a deadly pandemic. Job losses in sectors vital to the clean energy transition reached critical highs. Fighting COVID-19 and restoring jobs will be crucial to building out a strong clean energy economy.

With a new federal administration comes new hope, however. According to a recent report, the Biden administration could reduce carbon emissions by a cumulative 1.5 billion to 2.9 billion metric tons through 2050—equivalent to the emissions from 13 to 25 coal-fired power plants over that period—just by establishing and strengthening energy efficiency standards.

The United States is at a critical moment. We must move full speed ahead toward a system that prioritizes a clean and equitable economy—a system that centers health, community well-being, and climate action.