EIA projects reduction in US energy-related CO2 emissions

28 March 2023

US energy-related CO2 emissions will by 2030 fall by 25% to 38% below what they were in 2005, according to projections from the US Energy Information Administration’s report ‘Annual Energy Outlook 2023’ (AEO2023). By end of the projection period, in 2050, the country’s energy-related CO2 emissions are 17% lower in this year’s Reference case compared with last year, after EIA accounted for the effects of the Inflation Reduction Act (IRA), energy technology costs and performance updates, a changed macroeconomic outlook, and other factors.

EIA’s projected reductions are driven by increased electrification, higher equipment efficiency, and the deployment of renewables in the electric sector. Emissions reductions are limited, however, by longer-term growth in US transportation and industrial activity.

With policy changes over the last year and continued technology innovation, we expect to see significant shifts in energy production and use over the next 30 years,” said EIA administrator Joe DeCarolis. “The resulting projections for energy-related CO2 emissions are most sensitive to our assumptions regarding economic growth and the cost of zero-carbon generation technology.”

EIA has also published a separate ‘Issues in Focus’ paper that examines the impacts of the IRA, taking into account uncertainty around some of the policy provisions. In the Reference case, implementation of the IRA results in a 33% reduction in energy-related CO2 emissions by 2030 relative to 2005 compared to a 26% reduction in the No IRA case. Because of the complexity of the IRA and related challenges to modelling some of its provisions, not all of its energy system impacts are represented in the Outlook.

Main factors

Renewable generating capacity grows in all regions of the United States in all AEO2023 cases, supported by growth in installed battery capacity. EIA sees stable growth in electric power demand through 2050 in all cases because of increasing electrification and ongoing economic growth. Investment in renewable sources such as wind and solar, and the operating cost advantage of those sources, increases the share of zero-carbon electricity generation in EIA’s projections. EIA projects growth in installed battery capacity in all cases to support growth in renewables.

Technological advancements and electrification drive projected decreases to demand-side energy intensity. EIA projects an increase in the deployment of heat pumps, electric vehicles, and electric arc furnaces in the iron and steel industry. In the residential and commercial sectors, higher equipment efficiencies and stricter building codes extend continuing declines in energy intensity. In the transportation sector, light-duty vehicle fuel efficiency improves due to rising Corporate Average Fuel Economy (CAFE) standards and electric vehicle (EV) sales.

High international demand leads to continued growth in US production, and combined with relatively little growth in domestic consumption, allows the United States to remain a net exporter of petroleum products and natural gas through to 2050 in all AEO2023 cases. Despite no significant change in the domestic consumption of petroleum and other liquids through 2040 across most cases, EIA expects US production to remain at historically high volumes. Domestic natural gas consumption also remains relatively stable, despite a shift in electricity generation towards renewables. Production of natural gas, however, continues to grow in response to international demand for liquefied natural gas.

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