In a meeting with the leaders of China, India, and nearly 40 other countries, the US announced an increase in its non-binding US Nationally Determined Contribution (NDC) to the Paris Agreement. It committed to reduce US emissions to between 50% and 52% below 2005 levels by 2030, up from the prior commitment of a 26% to 28% reduction by 2025. This comes after both the environmental community and a group of 300 businesses — including Google, McDonald’s, Amazon, Apple, Microsoft, Ford, GM, GE, Shell, and Walmart — urged the Biden Administration to adopt this more ambitious target.
Achieving a 50% reduction below 2005 levels in the next ten years will be a huge undertaking, especially in light of projected rapid economic growth as the economy recovers from the COVID-19 pandemic. Additionally, slim Democratic majorities in the House and Senate may prove difficult to corral, along with a 6-3 conservative Supreme Court that is eager to provide a check on executive authority in a Democratic administration. While some other rich countries — such as the UK and Denmark — have already achieved emission reductions of around 50%, the magnitude of reductions needed over the next decade to meet the target will prove challenging.
The good news is that the US has already made significant progress toward the goal; US emissions of CO2 from fossil fuels are projected to be 20% below 2005 levels in 2021. However, nearly all of that progress has come from the electric power sector, where emissions have dropped by around 37% since 2005. Both transportation and residential emissions have fallen a modest 8% since 2005, while industrial sector emissions have been effectively flat and commercial sector emissions have actually increased. These declines are based on a linear regression of the 2005-2020 period, and avoid giving too much weight to somewhat-transient COVID-19 related declines in 2020.
If current trends in emissions continue across the different sectors of the US economy, we would expect US CO2 emissions to be around 30% below 2005 levels by 2030, well short of the new 50% NDC. This is in line with recent estimates from the IEA World Energy Outlook 2020 Stated Policies Scenario, which projects a 31% decline in US CO2 emissions from energy by 2030. Figure 1, below, shows both historical emissions since 2000 by sector, as well as projected emissions between 2021 and 2030 if current trends continue in each sector.
In this current-trends-continue scenario, electric power sector emissions will fall 60% by 2030 compared to 2005 levels. Residential emissions will fall 18%, transportation emissions 15%, industrial emissions 5%, and commercial emissions will increase by 14%.
Achieving a 50% reduction in emissions by 2030 would require a dramatic acceleration in the rate of decarbonization across multiple sectors of the economy. The electric power sector, which has been responsible for the bulk of emissions reductions to date, cannot achieve the goal alone. Even fully eliminating power sector emissions by 2030 — an unlikely outcome given the timeframe and limitations of current clean electricity technologies — would only result in a 47% reduction by 2030 if current trends continue in other sectors of the economy.
One possible pathway toward meeting the 50% target would involve a combination of accelerated power sector CO2 reductions, rapid electric vehicle uptake in the transportation sector, and a modest decline in other sectors relative to the current-trends-continue scenario.
In the power sector, this would involve fully eliminating coal by 2030 and cutting natural gas usage by a third relative to current levels. In the transportation sector, it would involve accelerating the adoption of electric vehicles (EVs), such that EVs make up 15% of new vehicle sales in 2025 and 50% of new vehicle sales in 2030. Because the stock of existing vehicles lags well behind new vehicle sales given their long lifetimes, this would translate into approximately 25% of vehicles on the road being electric by 2030. Other transportation sector emissions — those from aviation, rail, and shipping — are assumed to remain around current levels.
Other sectors of the economy — residential, commercial, and industrial — are assumed to reduce their emissions a further 15% below the current-trends-continue scenario in this hypothetical pathway. This would result in overall US CO2 emissions from energy falling by approximately 50% in 2030 relative to 2005 levels, as shown in Figure 2.
In this ambitious scenario, power sector emissions decline by 83% in 2030 relative to 2005 levels. Transport emissions decline by 33%, residential emissions by 26%, industrial emissions by 19%, and commercial emissions by 10%. The overall emissions declines are similar to those forecast for the US by the IEA under their Sustainable Development Scenario.
Another approach to demonstrating the scale of the challenge facing the US in achieving a 50% reduction in emissions by 2030 is to look at how the rate of decarbonization of the economy — the amount of CO2 emitted per unit of GDP — would have to change. The Congressional Budget Office provides updated forecasts of US GDP through 2030, accounting for expected near-term economic rebounds in the aftermath of COVID-19. Figure 3 shows the historical year-over-year change in both GDP (yellow) and decarbonization (green), as well as the change in CO2 emissions (black), and future projections of what would be needed to meet the 50% reduction target. Note that 2021 emissions are based on the latest EIA Short Term Energy Outlook projections to account for recovery-related decarbonization dynamics.
The 50% target would require a dramatic expansion of the rate of decarbonization. Since 2005 the US has decarbonized its economy at an average rate 3.1% per year. This would have to double to a rate of 6.2% per year through 2030, and 7% per year for the 2022-2030 period given expected increases in 2021.
This pace of emissions declines will not be achieved solely by technological progress in a current policy world. Even the policies currently proposed by the Biden administration — such as the infrastructure bill — would be unlikely to achieve this goal by themselves. It remains unclear what the political pathway might be to meet this target; while it is possible that political dynamics might change significantly in the next nine years, the slow turnover of capital — particularly for transport and buildings — means that a transition to clean energy technologies needs to begin sooner rather than later across all of these sectors.
All of these estimates focus on CO2 emissions from energy, as up-to-date data on other greenhouse gases and non-energy-related CO2 emissions are not readily available. For example, agricultural sector emissions are largely excluded (beyond those included in energy-related emissions), and this will likely be among the hardest to decarbonize parts of the economy. A full accounting of greenhouse gas emissions — and embodied emissions in electric vehicle batteries and other new energy infrastructure — would likely make the target more difficult to achieve.
Targets can have a useful role in signaling intent, and can help convince other countries to adopt more ambitious measures in turn. At the same time, there is a notable disconnect between the types of broad industrial policies that the Biden administration is pursuing and the specificity implied in a 50% by 2030 target. There is unlikely to be any sort of binding sectoral-level emission caps introduced in the US in the next few years — outside of the possibility of a clean electricity standard. Whether the US reduces emissions by 40%, 45%, or 50% in 2030 is ultimately less important than making changes that put us on track for net-zero emissions in the following decades.