CLIMATE ACTION TRACKER BROWN TO GREEN: G20 TRANSITION TO A LOW CARBON ECONOMY USA
This country pro le assesses the USA’s past, present and indications of future performance towards a low-carbon economy by evaluating emissions, decarbonisation, climate policy performance and climate nance. The pro le summarises the respective ndings from, amongst others, the Climate Change Performance Index (CCPI, operated by Germanwatch and Climate Action Network Europe), the Climate Action Tracker (CAT, operated by Climate Analytics, NewClimate Institute, Ecofys and Potsdam Institute for Climate Impact Research), and analyses from the Overseas Development Institute (ODI).
Human Development Index Share of global GHG emissions Share of GDP GHG emissions per capita global GDP per capita (tCO e/cap) 0.91 2 G20 average 20.2 8.7 12% $ $ $ 0 0.82 1 G20 G20 average average 16.7% $ 45,664 $ 15,071
Source: UNDP, data for 2015 Source: World Bank Indicators, data for 2012 Source: IEA, data for 2013
GREENHOUSE GAS (GHG) EMISSIONS
8000 25 Greenhouse gas (GHG) emissions increased in the 7000 United States until 2007, have declined since, but 6000 20 are likely to increase again from 6,487 MtCO2e e/a) 2 5000
/capita) (2012) to ~6,900 MtCO e in 2030. Land use, land-use 2 2 4000 15 change and forestry (LULUCF) emissions amount to
3000 -941.5 MtCO2e. Per capita emissions, at 16 tCO2, are 2000 10 the second highest in the G20, nearly three times
1000 the G20 average, but have fallen slightly since 2005. Total emissions (MtCO Total In the CCPI, the US is a very poor performer on its 0 5 Emissions per capita (tCO Emissions per capita emissions levels, but also shows a trend towards -1000 fewer emissions. -2000 0 Composition of 1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 GHG emissions Historic emissions Energy-related Energy-related (excluding forestry) CO emissions 2 CO2 emissions per capita CO2* 79%
G20 average of energy-related N O Current policy emissions projections Historic forestry 2 7% CO emissions per capita (excluding forestry) emissions/removals 2 CH4 10% F-Gases 3% CCPI evaluation of emissions level and trend CO2 emissions Level from forestry -18%
Weak trend
*CO emissions incl. LULUCF very poor poor medium good very good Strong trend 2 Source: Anex I countries: UNFCCC (2015); Non-Annex I countries: IEA (2014) and CAT (2015)
Sources: Past energy related emissions from the Climate Change Performance Index (CCPI); past non-energy and future emissions projections from the Climate Action Tracker (CAT). CCPI calculations are primary based on the most recent IEA data; CAT calculations are based on national policies and country communications.
Brown to green: G20 transition to a low carbon economy USA - Country Pro le DECARBONISATION
Energy intensity of the economy
12 Energy intensity of the US economy (TPES/GDP) has 10 developed in line with the G20 average, gradually decreasing over the last decades. The level is still 8 relatively high and the CCPI ranks the USA economy’s
6 energy intensity as poor, with a positive trend.
4 (MJ per 2005 US dollar) (MJ per 2005 US
2 Total Primary Supply per GDP PPP Energy Total 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Energy intensity CCPI evaluation of energy intensity of GDP Level Average energy intensity in G20 Weak trend
Source: CCPI, 2016 very poor poor medium good very good Strong trend
Carbon intensity of the energy sector
70 CO2 emissions per primary energy supply (CO2/TPES) 60 were slightly above the average G20 level until 2006 /TJ) 2 50 when they decreased to 56 tCO2/TJ. It is expected this will only be temporary, and carbon intensity will reach and 40 remain on 2006 levels until 2030, exceeding the minimal per TPES (tCO 2 30 value for the 2-degree benchmark corridor. The CCPI ranks the USA’s carbon intensity level as relatively poor, 20 but recognises an improving trend.
Tonnes of CO Tonnes 10
0
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
Carbon intensity Average carbon intensity (past trend) in G20 CCPI evaluation of carbon intensity of energy sector Level Carbon intensity Global benchmark (current policy projection) for a 2°C pathway Weak trend
Sources: Past: CCPI; future projections: CAT very poor poor medium good very good Strong trend
Share of coal in Total Primary Energy Supply (TPES)
40% 25000000 After being close to 25% until 2008, the share 35% of coal in primary energy supply dropped to 20000000 30% 20% in 2012. It is assumed the share will remain on this level until 2030, which would 25% 15000000 exceed the minimal value for the 2-degree 20% benchmark corridor. 15% 10000000 Total coal in TPES [TJ] coal Total 10% 5000000 5%
0 0 Evaluation of coal share in TPES 1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
% of coal (past trend) % of coal (current policy Total coal consumption (TJ) projections) poor medium good Average % of coal in G20 Global benchmark for a 2°C pathway (min & max) Source: CAT Source: own evaluation
Brown to green: G20 transition to a low carbon economy USA - Country Pro le Renewable energy in TPES and electricity sector
18% 7000000
16% 6000000 14% 5000000 The share of renewable energy in electricity 12% reached an all-time low in 2001, at 7%, but has 10% 4000000 since increased to 12% in 2012. Future projections show that a further increase - up to a level of 16% - 8% 3000000 can be expected. With only approximately 6% of 6% 2000000 renewable energy in the country’s primary energy 4% supply, the US is far below the G20 average and is 1000000 in TPES [TJ] energy renewable Total accordingly ranked as relatively poor by the CCPI. 2% However, a positive trend can be observed. 0 0
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
% of renewable energy % of renewable energy in electricity (past trend) in TPES (past trend)
% of renewable energy G20 average % of in electricity renewable energy in TPES (current policy projections)
Total renewable energy consumption (TJ) CCPI evaluation of renewable share in TPES Level Sources: CCPI and CAT Weak trend
very poor poor medium good very good Strong trend
Electricity demand per capita Emissions intensity of the electricity sector
In the US, electricity demand per capita is very high, increasing The carbon intensity of the USA's electricity sector has been from around 10,000 kWh per capita in 1990 to more than slightly below the G20 average since 2009, and projections see 12,000 kWh per capita in the 2000’s. Future projections it only slightly decreasing in the future. Electricity emissions estimate this to stay relatively stable at slightly below the intensity is nearly twice that of Denmark, the country with the 12,000 kWh mark until 2030, which is still three times the lowest value of all those countries globally, that neither have current G20 average. large hydro potential nor nuclear power.
14000 700 /kWh] 12000 2 600
10000 500
8000 400
6000 300
4000 200
2000 100
Electricity [kWh/cap] demand per capita 0 0 Emissions intensity of electricity [gCO
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
Electricity demand per capita Electricity demand per capita Emissions intensity Good practice benchmark: (past trend) (current policy projections) (past trend) without nuclear or large hydro potential (Denmark) Average electricity demand Average emissions intensity in G20 per capita in G20 Good practice benchmark: Emissions intensity with large hydro potential (Norway) (current policy projections)
Source: CAT, 2015 Source: CAT, 2015 Evaluation of the electricity emission intensity
poor medium good
Source: own evaluation
Brown to green: G20 transition to a low carbon economy USA - Country Pro le CLIMATE POLICY PERFORMANCE
Checklist of the climate policy framework Climate policy evaluation by experts
Since 2008, the US policy performance has Low emissions development plan for 2050* improved, and the CCPI sees it reaching an average level for the rst time. Experts emphasise recent 2050 GHG emissions target positive developments such as the rejection of an oil-sands pipeline and e orts to push international Building codes, standards and incentives for low-emissions options climate negotiations. The USA has requested the UNFCCC not to publish its GHG emissions Support scheme for renewables in the power sector development data.
Emissions performance standards for cars The CCPI evaluates a country‘s performance in national and international climate policy through feedback from national energy and climate experts. Emissions Trading Scheme (ETS)
very good Carbon tax
* Understood as decarbonisation plans and not speci cally as the plans called for in good the Paris Agreement Source: Climate Policy Database, 2016 medium
poor CCPI evaluation of climate policy
very poor
CCPI 2008 CCPI 2009 CCPI 2010 CCPI 2011 CCPI 2012 CCPI 2013 CCPI 2014 CCPI 2015 CCPI 2016 very poor poor medium good very good CCPI edition
National International
Source: CCPI, 2016
Compatibility of national climate targets (INDCs) with a 2°C scenario
8000 The USA submitted its Intended Nationally Max Min Determined Contribution (INDC) on 31 March 2015 6000 where it commits to reduce net GHG emissions by 26–28% below 2005 in 2025, including Land Use,
e/a) Max 2 4000 Min Land Use Change and Forestry (LULUCF). That is equivalent to a reduction of 24–31% below 2005 2000 levels, or 12–19% below 1990 levels, excluding Max LULUCF. Based on this target, and taking into 0 account the e ect of LULUCF accounting, CAT rates Total emissions (MtCO Total the US “medium”. The target is not yet consistent -2000 Min with limiting warming to below 2°C, unless other countries make much deeper reductions and
-4000 comparably greater e ort than the USA.
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 Current US implemented policies fall short of the Historic emissions Fair emissions reduction range INDC target, leading to emissions that are 28–31% (excluding forestry) in a 2°C pathway above the INDC target level for 2025. However, planned policies, such as the Climate Action Plan, Emissions in INDC scenario (min & max) Current policy emissions would bring the USA close to meeting its INDC, if projections (excluding forestry) they are fully implemented. Such planned policies Historic forestry emissions/removals would lead to emissions 9% above the INDC. The USA needs to implement further policies to achieve its INDC for 2025. For meeting the pledge for 2020, CAT evaluation of USA’s Intended the additional measures outlined by the Obama National Determinded Contributions (INDC) government in the “President’s Climate Action Plan” in June 2013, if implemented, would be su cient.
inadequate medium su cient role model
Source: CAT, 2015
Brown to green: G20 transition to a low carbon economy USA - Country Pro le FINANCING THE TRANSITION
Investment attractiveness The indices rate the USA’s investment attractiveness as medium to high(1), due to the overall size of the economy and commercial and regional importance of the country. However, investment attractiveness and Allianz Energy and ambition for renewables signi cantly di ers across states. Di erences in Climate Monitor MEDIUM party positions reduce long term policy predictability, particularly around the National Climate Action Plan. RECAI* (E&Y index) (1)RISE index developed by the World Bank gives a similar score for the USA Category (own assessment) HiGH Sources: Allianz Energy and Climate Monitor and RECAI reports
Trend** The Allianz Energy & Climate Monitor ranks G20 member states on their relative tness as potential investment destinations for building low-carbon electricity infrastructure. The investment attractiveness of a country is assessed through four categories: Policy *Adapted from RECAI and re-classi ed in 3 categories adequacy, Policy reliability of sustained support, Market absorption capacity and the (low, medium, high) for comparison purposes with Allianz Monitor. National investment conditions. The Renewable Energy Country Attractiveness Index (RECAI) produces score and rankings for countries’ attractiveness based on Macro **Taken from RECAI issue of May 2016 drivers, Energy market drivers and Technology-speci c drivers which together compress a set of 5 drivers, 16 parameters and over 50 datasets.
Historical investments in renewable energy and investment gap
This section shows the USA’s current investments in the overall power sector (including distribution and transmission) as well as in renewable energy expressed as the share of the total annual investments needed to be in line with a 2°C compatible trajectory
Investments Investments in renewable energy in the power sector for the power sector
% of current investments % of current investments in the power sector for renewable energy compared to in the power sector the investment needs 53% 24% compared to under a 2°C pathway the investment needs under a 2°C pathway
Source: Adapted from WEIO, 2014(1) (1) WEIO (2014) compares annual average investments from 2000 to 2013 with average annual investments needed from 2015 to 2030 under a 2°C scenario
Carbon pricing mechanisms
Although the US does not have a nationwide carbon pricing Emissions Trading Schemes (ETS) mechanism in place, at the state level the Regional Greenhouse Gas Initiative (RGGI) was introduced in 2005 and was the rst mandatory
An ETS caps the total level of GHG emissions and cap-and-trade program to limit CO2 from the power sector in the allows industries to trade allowances based on country. Additionally, in 2012, California launched its ETS covering their marginal abatement cost. By creating a 85% of the state’s emissions and aiming to reduce GHG emissions supply and demand for allowances, an ETS from regulated entities by more than 16% between 2013 and 2020. establishes a market price for GHG emissions.
Carbon Tax A Carbon tax directly sets a price on carbon by GHG de ning a tax rate on GHG emissions or – more commonly – on the carbon content of fossil fuels. Unlike an ETS, a carbon tax is a price-based instrument that pre-de nes the carbon price, but not the emissions reduction outcome of a carbon tax.
Sources: World Bank and Ecofys, 2016; other national sources
Brown to green: G20 transition to a low carbon economy USA - Country Pro le Fossil fuel subsidies
Over the past few years, fossil fuel production has shown a sharp increase. Despite the decline in coal- red power, government (Federal and State) continues to support coal mining, coal- red power, and oil and gas production. ODI’s assessment shows a 35% increase in federal subsidies to fossil fuel producers from 2009 levels, indicating an increase in oil and gas production. In its G20 progress report, the US provides a strategy for phasing out 11 federal fossil fuel production tax provisions, all permanent provisions in the tax code, estimated to cost US$4.3 billion in annual revenue. The Obama Administration’s Fiscal Year 2016 Budget is expected to eliminate preferential treatment of fossil fuels in the US tax code, provided the US Congress passes the legislation.
Average annual USA % of government’s income national subsidies (2013-14)* from oil and gas production (2013)* G20 total
$20.5 billion 1.9%
$70 billion
Source: ODI, 2015
*The indicators above refer only to subsidies for fossil fuel production, and include direct spending (e.g. government budget expenditure on infrastructure that speci cally bene ts fossil fuels), tax expenditure (e.g. tax deductions for investment in drilling and mining equipment) and other support mechanisms (e.g. capacity mechanisms).
Public climate nance
The USA has made the largest pledge to the GCF by volume. Relative to GDP, this commitment is the fth largest of all the G20 donors. It also provided the fth largest total climate nance commitments (not only to the GCF) relative to GDP. The USA notes that its climate nance is increasing in the context of growing foreign assistance net of climate nance. Its bilateral climate nance contribution includes export credits.
Green Climate Fund Average climate nance pledge provided (2013-14)
$ $ $ +
$3 $2.7 billion billion
bilateral multilateral climate nance climate funds $2.3 billion $0.4 billion
Source: ODI, 2016
Brown to green: G20 transition to a low carbon economy USA - Country Pro le