Rise in U.S. Gas Production Fuels Unexpected Plunge in Emissions

U.S. carbon-dioxide emissions have fallen dramatically in recent years, in large part because the country is making more electricity with natural gas instead of coal.

Energy-related emissions of carbon dioxide, the greenhouse gas that is widely believed to contribute to global warming, have fallen 12% between 2005 and 2012 and are at their lowest level since 1994, according to a recent estimate by the Energy Information Administration, the statistical arm of the U.S. Energy Department.

While other factors, including a sluggish U.S. economy and increasing energy efficiency, have contributed to the decline in carbon emissions from factories, automobiles and power plants, many experts believe the switch from coal to natural gas for electricity generation has been the biggest factor. Carbon-dioxide emissions account for nearly 84% of greenhouse-gas emissions, while methane—the main ingredient in natural gas—makes up 8.8%, according to a recent Environmental Protection Agency report.

Natural gas emits half as much carbon dioxide as coal when used to make electricity, though the calculation fails to take into account the release of methane from natural-gas wells and pipelines, which also contributes to climate change.

Few people predicted this drop in carbon emissions. "Everybody just figured that emissions were just going to continue to increase rapidly," says Ted Nordhaus, chairman of the Breakthrough Institute, an energy and climate think tank based in Oakland, Calif. "Nobody was expecting the worst recession since the Great Depression, but also no one was really expecting this remarkable shift from coal to gas either."

Last year, 30% of power in the U.S. came from burning natural gas, up from 19% in 2005, driven by drilling technologies that have unlocked large and inexpensive new supplies of the fuel.

The U.S. trend hasn't led to a global decline in carbon emissions, which increased 15% from 2005 through 2011, according to federal statistics. An International Energy Agency report this week concluded that China's rising reliance on coal to fuel economic growth jeopardizes progress toward what the IEA calls "a low-carbon future." But the U.S., which has decreased its carbon-dioxide output tonnage more than any other nation, demonstrates that market forces can have an impact on greenhouse gases even as politicians continue to disagree over what, if any, federal regulations are needed to force industries to reduce their emissions.

White House spokesman Clark Stevens said important progress had been made reducing emissions and the federal government was committed to implementing standards that "help ensure that we remain on a path to reduce these emissions."

U.S. carbon-dioxide output rose steadily in the 1990s and 2000s, peaking in 2007. In 2008, the economy weakened and power generation from natural gas and renewables began to increase, a combination that led to a sharp reduction in emissions. The Energy Department, which had been expecting increasing emissions, began lowering its forecasts in 2009. It now says carbon-dioxide emissions will begin rising year-on-year in 2015 but won't return to 2005 levels through 2040.

These rapid U.S. declines may be short-lived, as natural-gas prices rise and utilities increase coal consumption. "Our coal-fired generation has certainly picked up" in recent months, says Nick Akins, chief executive of Ohio-based American Electric Power Co. AEP +0.77% Natural-gas prices have risen for eight straight weeks, recently closing at $4.40 per million British thermal units, more than twice its price a year ago.

Mr. Akins also says that stronger economic growth in the U.S. would reverse some of the recent changes. "If the economy were to pick back up considerably before you are able to put new natural-gas capacity in place," he said, "you would expect carbon emissions to increase because coal is going to pick up as well."

As the U.S. has reduced its coal consumption, it has increased its coal exports to Europe, which rose 23% in 2012 from a year earlier, according to federal statistics. Gérard Mestrallet, chief executive of French power group GDF Suez SA, GSZ.FR +2.22% says that European utilities imported and burned that coal, raising carbon-dioxide emissions from power plants in Europe. He said as-yet unpublished figures for GDF will show an increase in emissions last year.

Other European utilities used more coal also, likely reversing a recent trend of carbon reductions. European carbon emissions fell 8% between 2005 and 2011, the latest year for which data are available. In February, the German environment ministry said it expected there was a 1.6% rise in greenhouse-gas emissions in Germany last year.

European officials have criticized both the U.S. and China at recent United Nations climate summits for a lack of political will to reduce greenhouse-gas emissions. The European Union instituted regulations requiring its member states to lower emissions. The EU has also reduced its overall greenhouse-gas emissions to meet requirements of the Kyoto Protocol, a U.N. compact adopted in 2005 which the U.S. hasn't signed. Late last year, the EU said its emissions have fallen 17.5% since 1990 and were "on track" to meet its 20% reduction target under the Kyoto agreement by 2020. Since 1990, U.S. greenhouse-gas emissions are up 8%. But since 2005, U.S. emissions have fallen faster than Europe's.

The rapid decline in U.S. emissions has taken some pressure off the White House after the 2010 failure of a cap-and-trade bill meant to put a price on carbon emissions. Instead, the Obama administration has embraced environmentally responsible production of natural gas as a relatively painless way to meet both energy and environmental goals.

The decline in U.S. emissions from 2005 to 2012—706 million metric tons of carbon dioxide—puts the U.S. a long way toward achieving the 17% reduction in greenhouse-gas emissions from 2005 the Obama administration set as its 2020 goal a few years ago.

Groups in favor of cutting greenhouse-gas emissions to reduce the threat posed by climate change say far deeper reductions than that 17% are needed. "The wildfires, storms and droughts we've seen over the past few years have shown us we need to make even steeper reductions in emissions that were proposed a few years ago," says Michael Brune, executive director of the Sierra Club.

There is considerable worry by many observers of the gas industry that federal figures of overall greenhouse-gas-emissions reductions may be misleading because they fail to account for the impact of natural gas that leaks into the atmosphere from drilling and pipelines. A recent EPA report noted that U.S. greenhouse-gas emissions, including carbon dioxide, methane and other contributors, were 6.9% below 2005 levels, but this data didn't include 2012.

"The fundamental question is, are we making progress in reducing global warming—and that is a question of whether or not we are controlling methane leaks," says Mark Brownstein, head of the U.S. Climate and Energy Program at the Environmental Defense Fund, which is leading new studies to determine how much natural gas leaks from wells and pipelines.

"If you measure the extent of the problem, you can manage the problem," he says. "We just haven't been measuring and therefore we haven't been managing."

Some states require natural-gas companies use technology to capture gas during the construction and drilling of wells. While much of the energy industry has resisted such requirements as too expensive, some companies that use this technology report that it pays for itself. Houston-based Southwestern Energy Co., SWN -1.67% a large shale-well driller, said capturing gas is no more costly than burning it off, or flaring it.