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Posted on on March 21st, 2013
by Pincas Jawetz (


Economic Scene

A Model for Reducing Emissions


Energy costs and market-driven technological advances have led to a major reduction in greenhouse gas emissions.

   Graphic: Cleaner Fuel Means Lower Emissions


The main argument of this New York Times article is:

The United States consumes 9 percent less energy for each $1 of G.D.P. than it did five years ago. Total energy use has fallen about 5 percent in the last five years.

To be sure, regulations have contributed to the process; tighter fuel economy standards are expected to lead automakers to double the fuel efficiency of new cars and light trucks by 2025. Tax breaks are encouraging companies to invest in renewable energy sources and retrofit buildings to increase energy efficiency.

But the main reasons are economic. The great recession and the world’s sluggish recovery have depressed energy use. As in the 1970s, high oil prices have encouraged drivers to drive less, and switch to cars and trucks with better fuel economy.

There is a new force as well: high prices underpinned the widely trumpeted investment in hydraulic fracturing, or fracking, of shale rock rich in oil and natural gas, which pushed the price of gas to some $2 per thousand cubic feet last April, down from $9 four years ago. Cheap gas, in turn, has encouraged power companies to switch to the cleaner fuel, replacing the most heavily polluting source of energy that we know, coal.

Since 2007 the share of the nation’s electricity produced by gas-powered generators has jumped to 30 percent from 21 percent; CO2 emissions from electricity generation have tumbled more than 15 percent. This new fuel brings potential problems of its own. Environmental groups have sounded the alarm about chemicals and methane leaking from wells, potentially contaminating local water supplies and releasing additional carbon into the air.

But fracking also appears, against all odds, to have brought Mr. Obama’s early, hopeful promise to cut CO2 emissions by 17 percent between 2005 and 2020 within reach.


The above analysis is saved nevertheless in the last two paragraphs of the article:

“In all my experience as an oil company manager, not a single oil company took into the picture the problem of CO2,” said Leonardo Maugeri, an energy expert at Harvard who until 2010 was head of strategy and development for Italy’s state-owned oil company, Eni. “They are all totally devoted to replacing the reserves they consume every year.”

Perhaps the most important lesson from the American natural gas boom is how prices drive both demand and supply. Putting a price on emissions of CO2 that reflects the burden they impose on the environment and the threat excessive amounts pose to future generations would almost certainly be the most effective strategy to persuade energy companies, power generators — and you and me — to spew less of it.

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