Carbon Emissions Made a Rapid Recovery From Covid
(Bloomberg Opinion) -- The chief benefit of the International Energy Agency’s new monthly data on global carbon emissions, published Tuesday, is getting to see just how awful our predicament is on a much more up-to-date basis.
In its latest Global Energy Review, the IEA found that Covid-19 touched off the biggest annual drop in carbon emissions ever, down almost two billion tonnes, or about 6%. Within that, though, there was wide disparity between countries; China’s emissions actually rose slightly for the year. Plus, following the contours of the pandemic itself, emissions plunged last spring but recovered from there in many countries. This is where the monthly data come in. In April, global emissions were down almost 15%, year over year; but by December, they were up 2%, year over year.
To get the obvious out of the way, relying on worldwide pestilence, societal lockdowns and economic destruction isn’t the preferred method of dealing with our emissions problem.
Yet there are a couple of lessons to be drawn from the 2020 figures. First, the biggest swing factor was mobility, accounting for “well over 50%” of the total drop in emissions, according to the IEA. Conversely, as restrictions have been lifted, so demand for gasoline and diesel have picked up, particularly in emerging markets such as India and Brazil, where emissions from road transport were back up year-over-year by the fall. Recovery in the U.S. has been more subdued, with vehicle miles traveled still 11% lower in December, year over year, having slumped by more than 40% in April.
Still, the message is quite clear. As vaccination expands and restrictions are lifted, the behavioral slump in carbon emissions from going slowly mad inside your own four walls is reversing.
Second, and in contrast, lower emissions from the global power sector wasn’t just a result of Covid-19. Yes, last year did see the biggest decline ever for that sector, down 3.3%, contributing about a fifth of the overall drop. But lower demand for electricity wasn’t the biggest factor behind that. The vast majority of it was explained by increasing penetration of renewable energy, whose share of global generation recorded its biggest annual gain ever. Over the past decade, renewables have risen from 20% of the mix to 29%, surpassing natural gas; coal’s, meanwhile, has dropped from 40% to about 35%.
The contrasting impact of 2020 on the transportation and power sectors — one mostly behavioral, one mostly structural — gets at a fundamental aspect of the energy transition.
The day before the IEA’s figures dropped, Bernard Looney, CEO of BP Plc, was speaking on a virtual panel at CERAWeek, IHS Markit’s annual get-together for the oil business which has taken on an increasingly greenish tinge in recent years. Asked about the role of customers in reinventing the energy business, he said “it’s not enough to just lay it at the door of the customer or consumer,” adding “we have to change the product.”
The power sector’s technology-based decline in emissions, which will outlast the pandemic, is an example of changing the product. Transport’s lockdown-related decline, on the other hand, is what happens when you just lay it at the door of the consumer.
The rebound seen there toward the end of 2020 shows the inadequacy of that approach. A systemic problem like climate change demands systemic solutions. Last Friday, the newly installed Biden administration reinstated higher figures for the social cost of carbon to be used in federal regulation. Such actions reset the economics of energy and related fields to take account of the climate challenge — pushing industry to change the product and, ultimately, the behaviors they engender.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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