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Rhodium: US carbon emissions soared 6.2% in 2021 as coal plants made comeback

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American Electric Power's John E. Amos power plant in West Virginia.
Source: S&P Global Market Intelligence

With coal-fired power plants making a swift comeback amid high natural gas prices, total U.S. greenhouse gas emissions rose 6.2% in 2021 and faster than energy demand rebounded, the Rhodium Group estimated in a Jan. 10 report.

The world's second-largest carbon emitter, the U.S. is now slipping farther behind its pledge to cut greenhouse gas emissions by at least 50% below 2005 levels by 2030 and reach net-zero by midcentury, the research group warned in its preliminary assessment. After having achieved a 22.2% emission reduction since 2005 in 2020, the trajectory had slipped to just 17.4% in 2021.

Coal-fired generation in 2021 rose for the first time since 2014, as much as 17%, to reach 23% of all power produced in the U.S., the Rhodium Group said. The researchers also said greenhouse gas emissions appear to have risen faster than the country's gross domestic product, with the power sector seeing emissions jump 6.6% last year. Transportation, the largest source of U.S. carbon pollution, logged a 10% emission rise in 2021.

"We are certainly facing an uphill battle," Hannah Pitt, one of the co-authors of the Rhodium report, said in an email. "We still anticipate coal-fired power generation’s long-term decline will resume in the coming years as natural gas prices stabilize, and this will continue to be a major driver of emission reductions in the electric power sector. But as this year highlights, this trend is sensitive to swings in the natural gas market."

Still, overall emissions during 2021 were lower than in 2019, despite the economy more than bouncing back from a 3.4% drop in GDP in 2020. Goldman Sachs economists recently projected that the U.S. GDP grew 5.7% during 2021, down slightly from the International Monetary Fund's October 2021 estimate of 6% due to the new wave of COVID-19 infections at the end of the year caused by the highly infectious Omicron variant.

'Prompt action' required

The ability for the U.S. to fulfill President Joe Biden's climate pledges under the Paris Agreement on climate change is in question after his administration's Clean Electricity Performance Program was stripped from the $1.7 trillion Build Back Better bill, and the entire legislation itself stalled in late December. U.S. Sen. Joe Manchin, the West Virginia Democrat holding up the bill over cost and other concerns, has not indicated whether he is returning to the negotiating table.

Another challenge threatening to upend Biden's agenda is the U.S. Supreme Court's decision to hear challenges to the U.S. Environmental Protection Agency's authority to regulate power plants.

A reset is needed for the U.S. to be able to meet its climate targets, according to the Rhodium Group's report. "It’s still possible, but will require ambitious, coordinated, and prompt action on all fronts congressional, executive and state," Pitt said.