A review of the structure of US GDP, imports and exports shows that none of these variables has contributed to the fall in US CO2 emissions post-2008 finance crash. The main contributions to reduced CO2 come from high energy prices and recession (36%), gas substitution for coal (20%) and growth in wind and solar (15%) which more or less corroborates the findings of Roger Andrew’s in his recent post on this topic.
At the review stage of his recent post The causes of the recent decrease in US greenhouse gas emissions, I suggested to Roger that he may wish to look into US exports and imports and the changing shape of US GDP as possible additional causes for the recent fall in US CO2 emissions. Roger suggested that maybe I could do this 😉 We have heard a lot recently about offshoring US industry, and the need to account for CO2 embedded in traded goods and so I decided to have a look.
US GDP, Imports and Exports
Figure 1 The makeup of US GDP according to UN Statistics. The description of the category codes are given in the Appendix. The main feature is the strong recovery post-2008 crash, although the rate of growth has slowed. To make trends easier to see, the data are plotted to 100% in Figure 2.
Figure 2 The data from Figure 1 plotted as %.
There are a number of interesting and key observations to be made from Figure 2. 1) “Services” that includes things like government, healthcare, education, defence and finance accounts for over 50% of US GDP but the proportion has changed little over the 45 year period, 2) transport etc and retail etc have both expanded steadily. The consumption part of the economy has grown and now accounts for 25%; 3) Construction has declined steadily and now accounts for only 4% (Figure 3); 4) manufacturing accounted for 13% of the economy in 2015 (Figure 3) and has changed little over 45 years, which is difficult to reconcile with the rhetoric emanating from the Trump camp. One must presume that manufacturing jobs lost in the rust belt have been replaced in other parts of the country; 5) Mining etc appears to have contracted with time, with perhaps a minor expansion in the last decade marking higher energy prices and the shale boom; and finally 6) agriculture etc, comprises only 1% of the US economy which I find to be astonishingly low.
There are two further points to make. First, I can see nothing in these data to account for the decline in CO2 emissions since 2008. And second, agriculture accounts for around 7% of US emissions, but only 1% of the economy.
Figure 3 The makeup of US GDP in so15.
If the slowly changing face of the US economy does not seem to account for the change in CO2 emissions then perhaps a change in the volume of imports does?
Figure 4 US imports and exports were roughly in balance until 1996, but since then they have diverged with imports running well ahead of exports.
Both imports and exports fell in 2008 as global trade shrank. In 2015, imports were running at $2.5 trillion out of a total economy of $14.6 trillion (17%). More significant is the observation that US manufacturing was $1.8 trillion in 2015 and is dwarfed by imports.
Figure 5 Looking at the difference between imports and exports we see that this actually contracted post-2008 crash.
The idea that the energy and CO2 embedded in traded goods should be accounted in estimating a country’s emissions is often cited, and while this is undoubtedly true, there is no evidence from the US GDP data that this has anything to do with the fall in CO2 emissions post-2008. If anything, US emissions should be adjusted upwards from 1996 which is when the trade gap began to yawn. This has been somewhat a wild goose chase (perhaps Roger already knew 😉 but I hope the data have been enlightening none the less.
So if not the structure of GDP, what else can we look at? Energy consumption and its structure is the obvious choice.
Primary Energy Consumption
Figure 6 Total primary energy consumption fell post-2008 crash and has remained flat ever since.
The fall in primary energy consumption is a principal cause for the decline in CO2 emissions. But what caused energy consumption to fall? We can see that the rising trend began to flatten in the noughties as energy prices began to rise. And this brings us to the conundrum of whether the crash was caused by high energy prices or defaults on sub-prime mortgages. Perhaps both were caused by reckless expansion of credit? A notable feature is the decline in coal production with expansion of gas production flowing from the shale boom (Figure 7). I’m unsure if the substitution of coal by gas came about because of the shale boom or because of Obama environment policy.
Figure 7 Looking at the percentages shows more clearly how coal has fallen out of favour with the expansion of gas.
Figure 8 Just to ram this point home, post-2008, coal consumption has declined and gas consumption has risen.
As Roger documented, substitution of coal by gas is a primary reason for the fall in US CO2 emissions. There are two reasons for this. First, gas burned in a CCGT is far more energy efficient than coal fired electricity generation. Roughy 50% versus 35%. Second, in methane it is C-H bonds that yield energy producing CO2+H2O while in coal it is C-C bonds that yields CO2+CO2. Combined, this results in gas producing roughly half of the CO2 produced by coal per unit of electricity generated.
In rough terms between 2008 and 2015, 168 Mtoe of coal was substituted by 113 Mtoe gas for a net saving of 55 Mtoe.
From Figure 8, we also need to note that oil consumption dropped by roughly 100 Mtoe post-2008 and has stayed down. It is this drop in oil consumption that accounts for the fall in primary energy consumption and is major factor that contributes to the fall in US CO2 emissions. In the 1970s, the drop in oil consumption was mainly due to the closure of oil-fired electricity generation (Figure 9). Figure 9 shows that fuel oil consumption has declined steadily since the mid-80s, and there is a fall of about 500,000 bbls/day post 2005 suggesting that a further reduction in fuel oil consumption for electricity generation and home heat may account for 25 Mtoe.
Figure 9 CO2 emissions/mile and fuel economy for US cars and trucks, 1975-2016
That leaves transport and the low hanging fruit of improving vehicle efficiency in a land of gas guzzlers. And that brings us back to the fuel economy charts posted by Roger (Figures 10 and 11).
Figure 10: US deliveries of gasoline and diesel fuel and total miles traveled, 1984-2015
Figure 11 CO2 emissions/mile and fuel economy for US cars and trucks, 1975-2016
Figure 12 US oil and biofuel consumption. The fall in oil consumption can be divided into two parts. 100 Mtoe that is below-trend can be allocated to the recession and a further 90 Mtoe to fuel efficiency in vehicles and further substitution of fuel oil with other energy sources.
Figure 12 provides an interpretation of US oil consumption . Had it continued on trend it would arguably be 190 Mtoe higher than it is now. Figure 10 shows that vehicle miles travelled have returned to pre-2008 crash levels and all other things being equal we might have expected oil consumption to have returned to the same pre-crash level. We can allocate 100 Mtoe savings to Americans driving less and put that down to high energy prices and the recession. In 2015, the USA consumed 3.34 billion bbls of gasoline, and looking at Figure 10 I estimate 1.48 billion bbls of diesel. Looking at Figure 11 I estimate efficiency improvements of 4% 2008-2015. I’m unsure if that is a figure that can be applied to the whole vehicle fleet, but that’s what I’m going to do. 4% of 4.82 billion bbls (gasoline + diesel) = 193 million bbls or 26 Mtoe.
The remaining 90 Mtoe deficit (Figure 12) can therefore be accounted for as follows: 25 Mtoe on less fuel oil used; 26 Mtoe on improved energy efficiency of cars leaving 29 Mtoe unaccounted for that must surely lie in aviation and shipping.
Growth in bio-fuels 2008-2015 was 8.4 Mtoe. I’m unsure how to handle this since the ERoEI for corn ethanol is close to unity and any energy savings imagined in the vehicle fleet is matched by energy used to produce the biofuel.
This leaves CO2 savings from wind and solar combined which have increased by 40 Mtoe 2008-2015.
Summary and Conclusions
There is no evidence to support the notion that the changing face of US GDP may have contributed to the fall in CO2 emissions post-2008 finance crash. Nor is there evidence to support the notion that offshoring of manufacturing with attendant increase of imports with embedded energy and CO2 emissions has contributed to the fall in US emissions. In fact, to the contrary, US imports have fallen. These observations are difficult to reconcile with rhetoric from the recent US presidential race.
In his recent post, Roger summarised CO2 emissions reductions in the USA as follows:
- Gas replacing coal in electricity generation: 40%
- Decrease in gm/mile vehicle CO2 emissions: 30%
- Growth in low-carbon renewables generation: 30%
My estimates are as given below:
- Gas replacing coal 55 Mtoe – 20%
- Fall in oil consumption owing to high price and recession 100 Mtoe – 36%
- Fall in fuel oil consumption 25 Mtoe – 9%
- Improved vehicle efficiency 26 Mtoe – 9.5%
- Aviation, shipping and unallocated oil savings 29 Mtoe – 10.5%
- [Biofuels 8.4 Mtoe]
- Growth in wind and solar 40 Mtoe – 15%
Total excluding biofuels = 275 Mtoe
Assuming CH2 as a general formula for oil that translates to 931 MtCO2 which is darned close to Roger’s estimate of 1 billion tCO2 that has been saved in the USA.
The main material difference between my estimates and Roger’s is that I allocate 36% savings to reduced oil use as a result of high price and the recession.
Codes applied to the various categories of economic activity shown in Figure 1. Source is UNstats.
- A – Agriculture, hunting and forestry
- 01 – Agriculture, hunting and related service activities
- 02 – Forestry, logging and related service activities
- B – Fishing
- 05 – Fishing, aquaculture and service activities incidental to fishing
- C – Mining and quarrying
- 10 – Mining of coal and lignite; extraction of peat
- 11 – Extraction of crude petroleum and natural gas; service activities incidental to oil and gas extraction, excluding surveying
- 12 – Mining of uranium and thorium ores
- 13 – Mining of metal ores
- 14 – Other mining and quarrying
- D – Manufacturing
- 15 – Manufacture of food products and beverages
- 16 – Manufacture of tobacco products
- 17 – Manufacture of textiles
- 18 – Manufacture of wearing apparel; dressing and dyeing of fur
- 19 – Tanning and dressing of leather; manufacture of luggage, handbags, saddlery, harness and footwear
- 20 – Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials
- 21 – Manufacture of paper and paper products
- 22 – Publishing, printing and reproduction of recorded media
- 23 – Manufacture of coke, refined petroleum products and nuclear fuel
- 24 – Manufacture of chemicals and chemical products
- 25 – Manufacture of rubber and plastics products
- 26 – Manufacture of other non-metallic mineral products
- 27 – Manufacture of basic metals
- 28 – Manufacture of fabricated metal products, except machinery and equipment
- 29 – Manufacture of machinery and equipment n.e.c.
- 30 – Manufacture of office, accounting and computing machinery
- 31 – Manufacture of electrical machinery and apparatus n.e.c.
- 32 – Manufacture of radio, television and communication equipment and apparatus
- 33 – Manufacture of medical, precision and optical instruments, watches and clocks
- 34 – Manufacture of motor vehicles, trailers and semi-trailers
- 35 – Manufacture of other transport equipment
- 36 – Manufacture of furniture; manufacturing n.e.c.
- 37 – Recycling
- E – Electricity, gas and water supply
- 40 – Electricity, gas, steam and hot water supply
- 41 – Collection, purification and distribution of water
- F – Construction
- 45 – Construction
- G – Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods
- 50 – Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel
- 51 – Wholesale trade and commission trade, except of motor vehicles and motorcycles
- 52 – Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods
- H – Hotels and restaurants
- 55 – Hotels and restaurants
- I – Transport, storage and communications
- 60 – Land transport; transport via pipelines
- 61 – Water transport
- 62 – Air transport
- 63 – Supporting and auxiliary transport activities; activities of travel agencies
- 64 – Post and telecommunications
- J – Financial intermediation
- 65 – Financial intermediation, except insurance and pension funding
- 66 – Insurance and pension funding, except compulsory social security
- 67 – Activities auxiliary to financial intermediation
- K – Real estate, renting and business activities
- 70 – Real estate activities
- 71 – Renting of machinery and equipment without operator and of personal and household goods
- 72 – Computer and related activities
- 73 – Research and development
- 74 – Other business activities
- L – Public administration and defence; compulsory social security
- 75 – Public administration and defence; compulsory social security
- M – Education
- 80 – Education
- N – Health and social work
- 85 – Health and social work
- O – Other community, social and personal service activities
- 90 – Sewage and refuse disposal, sanitation and similar activities
- 91 – Activities of membership organizations n.e.c.
- 92 – Recreational, cultural and sporting activities
- 93 – Other service activities
- P – Activities of private households as employers and undifferentiated production activities of private households
- 95 – Activities of private households as employers of domestic staff
- 96 – Undifferentiated goods-producing activities of private households for own use
- 97 – Undifferentiated service-producing activities of private households for own use