We’re making much more progress decarbonizing the electricity sector than decarbonizing transport.
The transport and electricity sectors are the two behemoths in climate circles, together accounting for about half of worldwide greenhouse gas (GHG) emissions. Any serious attempt to mitigate climate change will require significant reductions in both sectors.
At a high level, mitigating GHGs in the electricity sector will involve things like retiring coal plants and switching to renewables, while mitigating GHGs in the transport sector will involve things like switching to low- or zero-carbon vehicles (e.g., electric) and improving fuel efficiency.
All of these things – renewables, electric vehicles – are part of the current discussion, so you might think that we’re making some progress in both sectors. But, the data tell a different story. The graphs below reveal that we’re making much, much more progress in electricity.
GHG trends by sector in the UK and California
The first graph plots GHG emissions by sector relative to 2000 in the UK. Emissions from the transport sector are in red while emissions from the electricity sector are in teal. Note that transport includes all vehicles, not just passenger, plus domestic aviation, railways and domestic shipping.
The figure shows that emissions in the transport sector in the UK were about 6 percent lower in 2018 compared to 2000 (if 2000 is a 1, 2018 is a .94) while emissions in the electricity sector plummeted by more than 50 percent.
Source: UK National Statistics
The lines reflect trends in total emissions, not normalized by population or income, two important drivers of economic activity. For example, total vehicle miles traveled has increased in the UK by about 10 percent since 2000, likely driven by more drivers (higher population) and more shipments (higher incomes) as well as other factors. This means that a reduction in GHG emissions, even if modest, is a partial victory. But, nowhere near as big a victory as the Brits have had in the electricity sector.
Why am I looking at the UK? Of all the OECD countries (roughly, the developed world), the UK has had the most success reducing overall GHG emissions since 2000, driving them down by more than 30 percent. It’s useful to look at the leader as some indication of where other countries might be headed in the near future.
The next graph plots the same lines for California, which is near and dear to my heart, plus I know where to look for the data. Like the UK, transport sector emissions fell slightly while emissions in the electricity sector dropped by about 40 percent.
Source: California Air Resources Board
The explanations behind the drops in the electricity sector are similar in the UK and California. The UK, which generated 70 percent of its electricity from coal as recently as 1990 (mined by the archetypical British coal miners), have stopped burning coal at nearly all of its plants, switching to gas and renewables.
California hasn’t had coal plants within its borders for a while, but the electricity emissions in the graph reflect imports, which include some coal-fired power. Coal imports have fallen since 2000 (though perhaps more so on paper than in reality), and the state has added massive amounts of wind and solar.
California and the UK are not unique
The same story emerges in other jurisdictions. In Texas, emissions from transport have increased by almost 25 percent since 2000 – reflecting a booming economy and growing population – but electricity sector emissions have come down a bit. (I chose Texas as a counterpoint to California, plus since it has its own electricity grid, it’s easy to interpret the electricity sector emissions.)
Source: Energy Information Administration
In the US as a whole, emissions from transport were almost exactly the same in 2017 as they were in 2000, while emissions from the electricity sector dropped by almost 25 percent.
Source: Climate Watch
In the OECD countries overall, transport emissions have increased by almost 5 percent while electricity sector emissions have fallen by about 8 percent.
Source: Climate Watch
What’s going on?
I have a couple conjectures about possible explanations for these trends, but this is not something I’ve studied in detail, so I am very curious to hear some reactions.
- It’s harder to export transport emissions – COULD BE TRUE.
It’s possible that one of the reasons GHG emissions from the electricity sectors in OECD countries are going down is because developed countries have exported electricity-intensive production to non-OECD countries. Transport, by contrast, is inherently local and so harder to export.
The graph below suggests that electricity emissions have grown by more than transport emissions in non-OECD countries – the opposite of what we’ve seen in the OECD countries.
Source: Climate Watch
If anything the “excess” GHG emissions from the electricity sector in the non-OECD countries – the amount by which electricity sector emissions would be lower if they grew at the same rate as transport – are higher than the “reduced” GHG emissions from the electricity sector in the OECD. (There’s a +19% difference between electricity and transport emissions in non-OECD countries, meaning that if electricity sector emissions in these countries slowed to the pace of transport emissions, they’d be over 900 million metric tons lower, and there’s only a -13% difference between transport and electricity in OECD countries, meaning that if electricity sector emissions kept pace with transportation emissions, they’d be almost 750 million metric tons higher.)
This is a very rough calculation, and there are other reasons why emissions in the electricity sector and the transport sector might grow at different relative rates in low- and middle-income countries compared to rich countries. But, these data are at least consistent with the possibility that de-industrialization in the OECD countries is part of the explanation for falling electricity sector emissions.
- Progress in passenger vehicles leads slower progress in commercial vehicles – SEEMS FALSE.
I also wondered whether the modest reductions in transport masked more progress in passenger vehicles. After all, I see a lot of Teslas around the Bay Area, but electric trucks are still pretty futuristic. As it turns out, that’s not the case in California, where the data are broken out by vehicle type. As of 2018, reductions in passenger vehicle emissions are actually a tiny bit smaller than reductions in other parts of the transport sector.
Source: California Air Resources Board
- It’s easier to drive change in a regulated sector – COULD BE TRUE.
Worldwide, most electricity is generated by either state-owned companies or regulated utilities. I suspect that it’s easier for policymakers to influence outcomes in an industry that they’re already involved with. This certainly isn’t the whole story – falling gas prices in the US certainly helped reduce electricity sector emissions here and it’s hard to trace that to regulatory interventions. But, I suspect that it’s a lot easier to tell scores of regulated electric utilities that a certain share of their electricity needs to be generated by renewables – as a lot of US states have done with renewable portfolio standards – than to tell millions of drivers that they need to use different vehicles.
I mainly wanted to put up some provocative graphs and start a discussion. My economist friends have proposed some other explanations, including differences in the degree of difficulty plugging new technologies into the existing network infrastructure, overstated electricity reductions due to reshuffling, and the difficulties replacing gasoline given its energy density. The die-hard economists point out that both the UK and California have cap-and-trade programs, and wonder if we’re just seeing that the market has found that it’s a lot easier to get reductions from the electricity sector. But, this doesn’t account for the fact that a lot of the electricity sector reductions have come from outside the market, through complementary measures like the renewable portfolio standard.
Whatever the explanation, it’s hard not to conclude with the hope that the next decade brings dramatic changes in the transport sector.
Thank you to Sophie Andrews for awesome research assistance.
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.
Suggested citation: Wolfram, Catherine. “A Tale of Two Sectors” Energy Institute Blog, UC Berkeley, January 11, 2021, https://energyathaas.wordpress.com/2021/01/11/a-tale-of-two-sectors/
Catherine Wolfram is Associate Dean for Academic Affairs and the Cora Jane Flood Professor of Business Administration at the Haas School of Business, University of California, Berkeley. She is the Program Director of the National Bureau of Economic Research's Environment and Energy Economics Program, Faculty Director of The E2e Project, a research organization focused on energy efficiency and a research affiliate at the Energy Institute at Haas. She is also an affiliated faculty member of in the Agriculture and Resource Economics department and the Energy and Resources Group at Berkeley.
Wolfram has published extensively on the economics of energy markets. Her work has analyzed rural electrification programs in the developing world, energy efficiency programs in the US, the effects of environmental regulation on energy markets and the impact of privatization and restructuring in the US and UK. She is currently implementing several randomized controlled trials to evaluate energy programs in the U.S., Ghana, and Kenya.
She received a PhD in Economics from MIT in 1996 and an AB from Harvard in 1989. Before joining the faculty at UC Berkeley, she was an Assistant Professor of Economics at Harvard.