Why U.S. Carbon Emissions Rose Last Year

Despite an expected increase in U.S. carbon emissions last year, emissions have been falling quite steadily over the past decade in a trend that’s likely to continue.

Jan 20, 2014 at 3:33PM

Thanks to a combination of horizontal drilling and hydraulic fracturing, the U.S. is awash with cheap natural gas extracted from shale formations around the country. Yet despite the nation's growing use of the cleaner-burning fuel, U.S. carbon dioxide emissions likely increased last year, according to recently released data from the federal Energy Information Administration (EIA).

Why U.S. carbon emissions likely increased
Though final estimates are not yet in, the agency estimates that carbon emissions linked to the use of oil, gas, and coal rose 2% in 2013 after reaching a 20-year low in 2012. This modest increase is due largely to a small rise in coal consumption by the electric power sector, as higher natural gas prices and increased summer demand for electricity led utilities to boost their use of coal-fired units.

In April 2012, when gas prices reached a record low of roughly $2 per MMBtu, the shares of natural gas and coal as a source of electricity reached parity for the first time ever, according to the EIA. But since then, coal has regained much of the market share it lost, accounting for more than 40% of the nation's electricity each month since November 2012, while natural gas' share fell to roughly 25% over the same period.

Still, one year does not a trend make, and the larger picture is that U.S. energy-related emissions have generally been falling since 2005 due to a combination of weak economic growth after the 2008 global financial crisis, major improvements in energy efficiency for transportation and buildings, greater use of America's abundant and cheap supply of natural gas coupled, and reduced use of coal. Indeed, 2013 carbon emissions are still expected to come in about 10% lower than 2005 levels.

Retirement of coal-fired plants
Going forward, emissions are expected to continue to drop through at least 2015, due to a combination of greater demand for natural gas and new environmental regulations that will essentially force the retirement of older coal-fired units. Through 2020, the EIA forecasts that roughly 49 gigawatts (GW) of coal-fired capacity will be retired, representing approximately one-sixth of existing U.S. coal capacity.

Several major utilities have already announced plans to retire some of their coal-fired plants over the next few years. For instance, Georgia Power, the largest unit of Southern (NYSE:SO), received approval from Georgia regulators in July to retire roughly 20% of its coal plants in the state by April 2015. The company's decision was shaped mainly by the high cost of complying with environmental regulations, as well as lower natural gas prices and expected economic conditions.

Similarly, the Tennessee Valley Authority (NYSE:TVE) said in November that it would retire more than 3,000 megawatts (MW) of coal-fired capacity, covering the five coal units at its Colbert plant in Alabama, one unit at the Widows Creek coal plant in Alabama, and two units at the Paradise coal plant in Kentucky. Though official dates for retiring these eight units have not yet been provided, the company's SEC filings say that the five Colbert units will be closed no later than June 2016.

Lastly, Duke Energy (NYSE:DUK) plans to retire up to 6,800 MW of coal-fired capacity by 2015 as part of its new fleet modernization strategy, which also entails construction of a new natural gas plant in North Carolina. By shuttering two coal-fired power plants in North Carolina, the company probably retired 3,800 MW of coal-fired generating capacity last year.

Slow and steady
The role of natural gas in U.S. power generation should continue to expand gradually over coming decades. The EIA said gas' share of power generation will grow from 24% in 2011 to 27% in 2025 and to 30% by 2040, while coal's share will decline from 42% in 2011 to 38% in 2025 and to 35% in 2040. So while coal will continue to play an overarching role in U.S. power generation, natural gas should slowly but surely start to catch up over the next couple of decades.

Get in on surging natural gas production
To the coal industry's detriment, the surge in US natural gas production over the past few years has truly revolutionized the United States' energy position. That's why the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.


Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Southern Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information