Climate Change Policy Commitments: A Reality Check ductions in emissions to achieve the 2015 and the 2010 targets are 30.7 and 37.2 percent, respectively. The rate of decrease needed to achieve such percentage reductions is beyond anything experienced in U.S. history. 14 tons of carbon dioxide emissions resulting from the use of fossil fuels. Energy (E) is measured in quadrillion Btu of total primary energy, and includes both fossil and non-fossil fuels. Figure 2 shows decreasing carbon emissions relative to energy through the historical period, and continuously increasing carbon emissions relative to energy throughout the forecast period. The projection of an increasing C/E ratio requires an explanation. Table 2 depicts the consumption of fuels (in Quadrillion Btu) and corresponding level of carbon dioxide emissions (in million metric tons) in 1995. Changes in the C/E ratio could, in principle, result from changes in the fossil fuel share of total energy, from fuel substitutions among fossil fuels, or perhaps from changes in the C/E ratio of the specific fuels. For instance, the substitution of natural gas for coal in electricity generation would reduce carbon emissions; similarly, the substitution of nuclear power for natural gas would do so. Figure 2 Ratio of Carbon Emissions To Energy Consumption Years 1980 - 2015 Source: Energy Information Administration, Annual Energy Review1996, pp. 9 and 339, and Energy Infor- The trend in aggregate carbon emissions depicted in Figure 1 is the sum of emissions from three fossil fuels: petroleum, coal and natural gas. The carbon content of the fossil fuels could, in principle, affect trends in carbon emissions. The EIA (EIA, 1995) has developed carbon emission coefficients for each fuel on an annual basis for the 1984-1994 period. A carbon coefficient is defined as the million metric tons of carbon per quadrillion Btu of energy at full combustion. For crude oil, coal (used by electric utilities) and natural gas, the EIA estimates of the carbon coefficients are 20.21, 25.71 and 14.47 respectively for 1994 (see Table 2). A review of the EIA data indicates these coefficients are stable over time. Carbon emissions per unit of fuel are relatively constant for each fuel. Changes in these coefficients cannot explain the time trends in C/E depicted in Figure 2. Changes in the composition of fossil energy, such as shifts in fuel shares, could perhaps account for trends in the C/E ratio. Table 3 depicts the share of each fossil fuel in total fossil energy. During the historical period (1980 to 1995), the share of coal increased relative to the other fossil fuels, which would produce an increase in the C/E ratio. Nevertheless, the C/E ratio declined during the historical period, as shown in Figure 2. The EIA projects the share of natural gas to increase at the expense of coal during the forecast period (1995 - 2015). As seen in Figure 2, carbon emissions will increase relative to energy use during the forecast period. A shift from coal to natural gas would produce a decrease in these emissions. The shift in fossil fuel shares (away from coal and into natural gas) does not account for the projected increase in carbon emissions during the forecast period. Fuel substitutions between coal and natural gas are not the main force in historical or projected trends in the C/E ratio. Changes in the fossil energy share in total energy consumption are the third possible explanation of trends in the C/E ratio. As noted in Table 2, nuclear energy and renewable energy do not produce carbon emissions, hence changes in the share of fossil and non-fossil energy would affect the C/E ratio. As shown in Table 4, the fossil energy share of total primary energy declined significantly from 1980 to 1995, which would account for a declining C/E ratio during this period. The EIA projects the share of fossil energy to increase through the year 2015, which would account for the increasing C/E ratio during the forecast period. Non-fossil energy includes nuclear power, hydroelectric power, geothermal, biomass, and solar technologies. The conTable 3 Percent Of Fossil Fuel In Total Fossil Energy Use Source: Data for 1980 through 1995 obtained from Annual Energy Review 1996, p. 5. Data for the forecast year Source: Data for 1995 and 2015 obtained from Annual Energy Outlook 1997, p. 99. Data for 1980 and 1987 ob- tribution of hydropower to total electricity genera- The main component of non-fossil fuels that changes is the share of nuclear energy. Figure 3 depicts the share of total energy consumption accounted for by fossil energy and nuclear energy. During the historical period (1980 to 95), the share of fossil fuel declined from 92.1 percent to 84.6 percent. During this period, the share of nuclear power more than doubled. The shift from fossil energy to nuclear energy accounts for much of the decline in the C/E ratio. During the forecast period, the share of fossil energy increases from 84.6 percent to 88.4 percent. The share of nuclear power declines as nuclear units are retired with no new units being constructed. The rise and fall of nuclear power appears to be the critical factor in accounting for changes in the C/E ratio. The amount of electricity generated from nuclear power is a critical factor because of the carbon free characteristic of this power source. In consequence, the retirement rate of U.S. nuclear capacity is important. The EIA assumes that nuclear units will last the projected lifetime of 40 years unless the variable costs of such power generation exceed 4 cents/kWh, at which point the units will be decommissioned. The 40 year lifetime estimate is a licensing period that reflects a political decision, not engineering or empirical evidence. Most nuclear units have not aged sufficiently to determine if 40 years is a reasonable estimate. However, as of 1996 there were 110 operable nuclear plants in the U.S. and 13 plants have been shut down." Since 1996, six plants have been decommissioned, or are expected to be decommissioned in the near future. These plants are part of the EIA Reference Case with 40 year lifetimes. The six plants are: Connecticut Yankee, Maine Yankee, Lyon 1 and Lyon 2, Oyster Creek and Big Rock Point. Plants are typically retired when they require a large capital investment to continue operation. For instance, a crack in the reactor vessel, or reactor embrittlement, would be a sufficient cause for shutdown. The most reasonable current estimate for the average lifetime of nuclear plants is less than 40 years and the EIA is currently revising its forecast downward. In AEO98 (available on internet), the EIA assumes that 24 nuclear units will be retired before the end of their 40year operating licenses. The early retirement of nuclear capacity implies that carbon emissions will be even higher than indicated in the EIA's Reference Case. This result is counter to an assumption of extended lifetimes made in a recent more optimistic study, authored by five national laboratories." B. Trends in Energy Use The Kaya identity can account for trends in carbon emissions in an accounting sense. The form of the Kaya identity used here is:7 "Energy Information Administration, Nuclear Power Generation and Fuel Cycle Report 1997, Washington, DC, September 1997, DOE/EIA-0436(97), p. 69. • Interlaboratory Working Group, Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond, Office of Energy Efficiency and Renewable Technologies, U.S. Department of Energy, Washington DC, September, 1997. 'Jones, Russell and Barbara Tierney, "Carbon Emissions A Kaya Identity Perspective on Historic Emissions and Proposed Emission Reduction Targets and Timetables "International Energy Markets: Competition and Policy, Conference Proceedings of the 18th Annual Conference of the API Discussion Paper #089 Figure 3 Percent Of Total Energy Consumption From Fossil Fuels And Nuclear Energy Years -Fossi energy, left scale -Nuclear Energy, right scale %% Nuclear Energy which accounts for carbon emissions using a carbon/energy ratio, the energy/GDP ratio and GDP. Table 5 depicts the annual average percentage change in each variable in Equation (2) during the historical and forecast periods. As indicated in Table 5, GDP growth is positively associated with the growth of carbon emissions; although emissions increase more slowly than GDP because of the declining energy/GDP ratio. The variables in this equation provide more of an accounting than economic explanation of carbon trends, because the equation does not explain changes in the terms, including the E/GDP ratio. An economic component is added to the above ratios by relating aggregate energy demand to an intercept, energy prices and real GDP growth. The model states that percentage changes in energy consumption (E) result from an autonomous trend (A) • The derivative of the (natural) logarithm Eq. (2) with respect to time expresses the terms in percentage rates of |