Why 2016 Had the Lowest Carbon Emissions In Decades

Last year, human civilization produced its lowest carbon emissions since 1992. In this segment from Industry Focus: Energy, energy analysts Taylor Muckerman and Sean O'Reilly talk about a few of the big trends that led to those lower emissions even in a year when gas consumption was relatively high. Also, they talk about Texas' booming solar energy industry, why so many solar company stocks are falling in price despite increasing panel installations, how solar and wind power might be expected to grow in the future, where natural gas fits into the greener energy future, and more.

A full transcript follows the video.

This podcast was recorded on Jan. 5, 2017.

Sean O'Reilly: Carbon emissions for 2016, we just found out, are expected to be the lowest since 1992. What were you doing in 1992, Taylor?

Taylor Muckerman: Well, let's see. I was 7.

O'Reilly: You were playing Power Rangers.

Muckerman: Probably playing outside and harnessing the power of the sun myself. Vitamin D.

O'Reilly: I have to think that a lot of this is just because of way more efficient cars.

Muckerman: Efficient cars, yeah, that's big. The switch from coal to natural gas to generate power in the United States. We saw, this year [2016], for the first time ever, natural gas overtook coal as the largest provider of fuel to create electricity. So that's a big thing. And I think people drove a lot more this year because gas is so cheap. I don't have the exact specifics on me.

O'Reilly: There were statistics. It's a calculation, like, do we fly or drive? Especially if you have a family of four, it's very price-dependent. And gas was cheap.

Muckerman: When you start keeping Volkswagen honest, you get down to the bottom of it, and you take all those older cars off the street that were polluting more than we thought...

O'Reilly: Wait, are you implying that Volkswagen is the reason for this drop? 

Muckerman: Quite possibly. Maybe they should be lauded now instead of...

O'Reilly: There were a lot of Volkswagen Jettas included in this, now that you mention that.

Muckerman: Yeah, millions! Globally. I don't know about how many were impacted in the U.S. But yeah. Big deal.

O'Reilly: Also a part of it might be -- and we talked about this before -- but solar power is on the rise in Texas in 2016. That's, of course, the other part of this. Also, I don't know if you saw, Fool.com writer Travis Hoium recently wrote a piece about how Las Vegas[' city government] is entirely green now for their energy.

Muckerman: No kidding?

O'Reilly: Yeah. They're in a desert, so it's like, what are you going to do?

Muckerman: So that hockey stadium is going to be completely solar powered?

O'Reilly: Yeah. Isn't that nice? But, same deal in Texas. Desert land, nothing grows, let's put up some solar panels.

Muckerman: They're catching up to California and Nevada in terms of solar installations. I think this was the strongest year ever for them.

O'Reilly: It's also fun for them, because there are three power grids nationally in the United States. There's the Eastern grid, the Western grid, and Texas.

Muckerman: I had no idea.

O'Reilly: They have their own power grid.

Muckerman: I wonder who negotiated that.

O'Reilly: Well, think about the Texas mentality. "We could have been our own country if we wanted to."

Muckerman: Could have been. They probably will one day. Who knows? But yeah, you're looking at 77% of all the solar that was installed in Q3 [was utility-scale solar]. Q3 was twice as big as Q2 of 2016, in terms of [total solar] installations, and [nearly] three times as big as Q3 of 2015, so year over year, three times more in terms of solar power capacity was installed in Q3. You're looking at great expectations for Q4. We haven't seen those results out yet. But about three-quarters of the Q3 installations were of the utility-scale variety. So that means you're looking at potential companies like First Solar or SunPower really benefiting there.

O'Reilly: The price dropped this past year. A lot of the solar stocks you're talking about just now, their stocks aren't doing that great because they're having to cut prices because, at the end of the day, it's a hardware commodity. This is what happened with computers. If memory serves, the prices of these solar cells were dropping 10% to 20% last year. This isn't surprising at all.

Muckerman: Yeah, they're down big, and obviously the market is responding by increasing the demand. You're seeing the parity start to creep up in terms of it costing the same or less to use solar power.

O'Reilly: So I do need to ask, because it lends itself to what we were talking about before -- the switch from coal to natural gas is obviously awesome, lower emissions, etc. Should natural gas be worried now?

Muckerman: Because of solar power and wind power? No, I don't think so. Right now, you're looking at natural gas being the baseload provider.

O'Reilly: Because you do need it overnight. The sun sets.

Muckerman: In terms of aggregate, I'm pretty sure natural gas is...

O'Reilly: Here to stay.

Muckerman: ...multiples above solar and wind right now. That being said, they're catching up. You are talking about doubling and tripling growth quarter over quarter, year over year. That's pretty meaningful. And I don't really see it slowing down. If you talk about reduced costs and utility scale, that's what it's going after.

O'Reilly: They're getting efficient, too. The cheap cells are, like, 19% efficient now. Which, 10 years ago, 10% efficiency was a big deal. The more expensive, super-quality cells are in the 23% efficiency ranges. It's getting good, if you want to do something like this.

Muckerman: And I don't know how many homes there are in the United States, but enough solar capacity was installed, supposedly, they're predicting, once they get Q4 numbers.

O'Reilly: I think there's 110, 120 million households. I'm talking about census data. I could be wrong. I don't know how many houses that is, because you have single people in there, too.

Muckerman: Yeah. So, arguably, you have a long way to go. But in 2016 alone, they estimate that enough was installed to power 2.3 million homes. That's a pretty decent number.

O'Reilly: I was going to guess 1 million. That's high.